Special Economic Zones in Thailand (SEZ)

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There’s a lot of talk in the news on how the newly government appraised land values for SEZ’s have gone up by 50%, in some cases increasing by 90%, against a national land appraisal average increase of 25% going into effect this January 2016.

But what are SEZ’s and where are they in Thailand?

Find out the difference between government-appraised land values and market-based land values and how they affect your property buying decision

What are the SEZ’s and where are they in Thailand?

SEZ stands for Special Economic Zones, which are areas where business and trade laws are different from the rest of the country to accelerate business, attract investment and create jobs.

Increased border trade and the onset of the ASEAN Economic Community have compelled the Thailand government to set up 13 Special Economic Zones (SEZ) in 10 provinces around its countryside borders to support economic growth.

The Special Economic Zones are scheduled in two phases.  The first phase of SEZ’s belong to areas in the provinces of Tak, Mukdahan, Sa Kaeo, Songkhla, and Trat as illustrated below.

Special Economic Zones

www.thaigov.go.th

 

The Thai government has already approved 45 infrastructure projects worth 2.6 billion baht and another 79 projects worth 7.9 billion baht, the latter to start in 2016 along with the second-phase of SEZ roll-outs in provinces Chiang Rai, Kanchanaburi, Nong Khai, Nakhon Phanom, and Narathiwat.

These infrastructure projects are focused on improving the area’s logistic systems including customs checkpoints that connects trade at the borders and links back with Thailand’s entire network.

In addition to the focus on logistics, infrastructure projects will create centers for distribution, warehouse, processing and multi-modal transport at the point-of-trade at the borders.  Tourism is the SEZ’s eventual goal.

Special Economic Zones targeted industries 

Thailand’s Board of Investment (BOI) has granted incentives for 61 target businesses operating in the Special Economic Zones.  These targeted SEZ businesses fall under the industries of-

  • agriculture & fisheries
  • ceramics
  • garments, textiles, leather
  • medical equipment
  • automobiles & parts
  • electronics & electrical
  • plastics
  • pharmaceuticals
  • logistics
  • industrial estates
  • tourism related

Incentives for targeted businesses in Special Economic Zones

  • 8 year corporate income tax exemption and 50% reduction on corporate income tax the following 5 years
  • Import duty exemption on machinery and raw materials
  • Double deductions from the costs of transportation, electricity and water supply for 10 years
  • An additional 25% cost deduction for installation or construction of facilities

Examples of non-tax incentives

  • Allowing migrant workers from bordering countries to work in SEZ zones returning to their countries in the same day
  • One-stop centers that facilitate accelerated licensing and permission issuance

The Industrial Estate of Authority of Thailand (IEAT) will be developing industrial estates in the special economic zones.  Mae Sot in Tak is one of the first places the IEAT is focusing on with investments of 1.5 million baht per rai on the propsed 775-rai industrial state there.

Meanwhile, Mae Sot has been reported as receiving the highest increase in SEZ land appraisal values – a 95% increase on the Intarakhiri Road.  The Mae Sot’s Special Economic Zone will connect trade with Yangon, India and southern China.

*Deadline for submitting applications to the BOI is December 31, 2017.

 

Full List of Special Economic Zones 

Tak Special Economic Zone (north)

  • bordering Myanmar
  • connecting trade with Yangon, India and southern China
  • to be a center for warehousing and cross-border facilities

Chiang Rai Special Economic Zone (north)

  • bordering Myanmar and Laos
  • to be promoted as a tourism destination, 
  • to be promoted as a production site for agriculture and food products
  • to be promoted as n international logistics and multi-modal transport hub
  • extended trade routes to southern China

Mukdahan Special Economic Zone (northeast)

  • bordering Laos
  • planned to be distribution center and multi-modal transport hub
  • key trade routes for agriculture and electronic parts to Vietnam and southern China

Nong Khai Special Economic Zone (northeast)

  • bordering Laos
  • to be promoted as an area for international trade, tourism and multi-modal transport
  • highest value of cross-border trade with Laos with most convenient trade route

Nakhon Phanom Special Economic Zone (northeast)

  • bordering Laos
  • designated for logistics services and cross-border trading
  • connects major economic zones in Laos, central and northern Vietnam, and southern China

Sa Kaeo Special Economic Zone (east)

  • bordering Cambodia
  • to be the center of agricultural processing industries such as fruit and vegetable preserves
  • a multi-modal transport hub
  • cross-border trading for wholesale and retail
  • close proximity to Laem Chabang port and Bangkok
  • extended trade routes Phnom Penh and southern Vietnam

Trat Special Economic Zone (east)

  • bordering Cambodia
  • to be a center for wholesale, multi-modal transport and regional tourism
  • located at eastern end of the Gulf of Thailand coast which possess abundant tourism resources
  • access to Laem Chabang port in Thailand and the Sihanoukville port and Koh Kong Special Economic Zone in Cambodia

Kanchanaburi Special Economic Zone (west)

  • bordering Myanmar
  • designated as an area for industrial estates, conservation tourism and cross-border trading
  • access to Dawei Special Economic in Myanmar and the Eastern Seaboard in Thailand

Songkhla Special Economic Zone (south)

  • bordering Malaysia
  • to attract the processing industry for export and multi-modal transport
  • approximately 50% of Thailand’s total border trade took place here between Sadao (Thailand) and Padang Besar (Malaysia)

Narathiwat Special Economic Zone (south)

  • bordering Malaysia
  • to encourage cross-border trading, foods industry and multi-modal transport
  • multiple access points into Kuala Lumpur

 

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