TIR-pilot issue

BOI is right on track with the country’s ambitious goal of attracting a trillion investment within the next three years. TIR SUBCON Thailand continues successful business matching Thailand’s petrochemical industry shifting to high value-added Thailand Investment Review production May 2017 vol. 27 Bio Circular Green Economy Thailand’s petrochemical industry shifting to high value-added production THAILAND BOARD OF INVESTMENT www.boi.go.th

BOI NET APPLICATION (January - March 2022) TOTAL INVESTMENT 1,273 projects US$ 15,500.95 Million FOREIGN INVESTMENT 587 projects US$ 11,076.75 Million FOREIGN INVESTMENT BY TARGET SECTOR 2,176.39 1,024.38 939.50 587.82 473.68 Electronics Petrochemicals & Medical Biotechnology Automotive 81 projects chemicals 54 Projects 81 Projects 54 projects 54 projects 457.52 156.02 7.32 3.10 360.11 Agriculture & Tourism Digital Automation & Aerospace food processing 54 projects 54 Projects Robotics 54 Projects 54 projects 54 Projects FOREIGN INVESTMENT BY MAJOR ECONOMIES 1 Japan 57 Projects 463.38 M 7 2 Hong Kong 8 Projects 75.25 M 3 Singapore 20 Projects 71.10 M 9 4 Malaysia 6 Projects 58.05 M 5 Germany 6 Projects 47.59 M 8 4 6 US 4 Projects 30.68 M 6 7 Taiwan 8 Projects 27.74 M 51 8 China 8 Projects 24.03 M 32 9 Netherlands 4 Projects 12.59 M 10 Switzerland 2 Projects 9.97 M 10 Unit: US$ (US$ = 34.7099 THB ) Note: Investment projects with foreign equity participation from more than one country are reported in the figures for both countries / Statistics on net applications are adjusted whenever applications are returned to applicants due to insufficient information. For more details, please see link http://www.boi.go.th/index.php?page=Report_investment Thailand Investment Review

THAI ECONOMY AT A GLANCE KEY ECONOMIC FIGURES GDP (2020*) GDP Growth 2.5-3.5% US$ 506.5 Billion 6.1% 2021*f GDP per Capital (2020*) 2020* Note* Estimate value US$ 506.5 Billion Source: NESDC Data as of March 2021 Unemployment Investment Growth MARKET PROFILE (2019) 1.5% 4.8% 5.7% Dec 2020* 2020 Dec 2021*f Headline Inflation Export Value of Goods Growth 0.85% 6.6% 5.8% Population Average 2020* 2020 Dec 2021*f 66.56Million Source: National Statistical Office, Note* Estimate value Minimum Wage Ministry of Commerce Source: NESDC 3.1-3.56 TRADE STATISTICS (Jan-Dec 2021) US$ Approximate EXPORT US$ 215,012.51 Billion 9.98-10.71 IMPORT Source: Ministry of Labour US$ 193,842.20 Billion SET INDEX TOP 5 EXPORT MARKETS (October 2020) 1.62 Rank Value (US$million) Share 3.43 1 Motor cars 26,883.93 11.1% 1.50 2 Computer parts 25,169.40 7.3% 5.68 6.1% 3 Precious stones 16,560.27 4.4% 1.56 3.7% 8.69 4 Rubber products 8,504.96 Sep Oct Nov 5 Plastic beads 7,621.75 TAX RATE (As of May 2021) TOP 5 IMPORT MARKETS (October 2020) Corporate Income Tax: 0-20% Personel Income Tax: 5-35% 1 Electronic circuit 7,513.19 3.4% Vat: 7% 3.2% Witholdind Tax: 1-15% 2 Rubber 7,182.71 3.2% 3.1% Source: The Revenue Department 3 Chemical products 5,806.76 2.6% 4 Machinery 5,697.72 5 Petroleum products 5,168.06 EXCHANGE RATE (As of 2 May 2017) 31.44 32.61 33.12 33.04 33.48 33.10 Jun-21 Jul-21 Aug-21 Sep-21 Oct-21 Nov-21

COVER STORY BOI is right on track with the country’s ambitious goal of attracting a trillion investment within the next three years. On May 9, 2017, Mrs. Hirunya Suchinai, Secretary General of the BOI, announced Thailand’s investment performance over the past year throughout the first quarter of 2017. Investment for the period totaled THB 570 billion (USD 16.29 billion) with an ambitious target of reaching THB 600 billion (USD 17.14 billion) at the end of this year, followed by a trillion in investments within the next three years. The BOI’s new investment promotion tools of the Revised Investment Promotion Act and Competitiveness Enhancement Act offer a wider range of benefits to investors, which will ensure the government’s ambitious goal is both on track and within reach. The summary of investments in the first quarter of 2017 concluded with 293 BOI net applications with a value of THB 61,980 million (USD 1,770 million), where 182 were new projects established at a total value of THB 42,452 million (USD 1,212 million), accounting for approximately 68% of the total value of net applications. The remaining 111 applications were expansions of projects of existing BOI companies. Over half of the investment applications for BOI incentives were under the 10 S-curve industries as the government’s initiative for the targeted industries under the Thailand 4.0 model gathers momentum. This can be further broken down in terms of investment value under the new S-curve industries which amounted to THB 7,800 million (USD 222.85 million) and the existing S-curve industries which came to THB 34,300 million (USD 980 million). The newly launched tools of the Revised Investment Promotion Act and Competitiveness Enhancement Act are not only proving effective in promoting investments in value-added activities in the targeted industries but will have positive implications for the country’s long-term competitiveness and in achieving sustainable growth for Thailand’s future Thailand Investment Review

The BOI’s new investment promotion tools of Business Matchmaking & Business Transactions the Revised Investment Promotion Act and Competitiveness Enhancement Act offer a wider 2007-2017 range of benefits to investors, which will ensure the government’s ambitious goal is both on track Business Transaction Business Matching and within reach. (Billion THB) (pairs) Investment for the period totaled THB 570 12- Financial Transcations Business Matching 6,419 -6,500 billion (USD 16.29 billion) with an ambitious target of reaching THB 600 billion (USD 17.14 -6,000 billion) at the end of this year, followed by a trillion in investments within the next three years. 10- 5,216 10.26 -5,500 8.62 -5,000 The BOI’s new investment promotion tools of 8- 3,826 4,611 -4,000 the Revised Investment Promotion Act and 3,540 7.05 7.92 -3,500 Competitiveness Enhancement Act offer a wider 3,473 6.80 -3,000 range of benefits to investors, which will ensure 6- 3,109 6.33 -2,500 the government’s ambitious goal is both on track 2,537 5.48 -2,000 and within reach. 2,041 4.53 -1,500 4- 1,563 -1,000 The summary of investments in the first 3.02 quarter of 2017 concluded with 293 BOI net 1,024 2.56 applications with a value of THB 61,980 million 2- (USD 1,770 million), where 182 were new projects established at a total value of THB 42,452 million 1.20 -500 (USD 1,212 million), accounting for approximately 68% of the total value of net applications. The 0- 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 -0 remaining 111 applications were expansions of projects of existing BOI companies. Source: BOI Over half of the investment applications for million (USD 980 million). The summary of BOI incentives were under the 10 S-curve investments in the first quarter of 2017 concluded industries as the government’s initiative for the with 293 BOI net applications with a value of THB targeted industries under the Thailand 4.0 model 61,980 million (USD 1,770 million), where 182 gathers momentum. This can be further broken were new projects established at a total value of down in terms of investment value under the new THB 42,452 million. S-curve industries which amounted to THB 7,800 million (USD 222.85 million) and the existing The BOI’s new investment promotion tools of S-curve industries which came to THB 34,300 the Revised Investment Promotion Act and Competitiveness Enhancement Act offer a wider range of benefits to investors, which will ensure the government’s ambitious goal. Investment for the period totaled THB 570 billion (USD 16.29 billion) with an ambitious target of reaching THB 600 billion (USD 17.14 billion) at the end of this year, followed by a trillion in investments within the next three years. FDI in Thailand from 2016 to the first quarter of 2017 by sectors (THB Million ) Thailand Investment Review

FDI in Thailand from 2016 to the first quarter of 2017 by sectors 215,515 220,977 223,771 237,616 (THB Million ) 78,141 151,638 85,808 94,290 104,132 117,884 36,039 57,971 5,435 10,518 41,816 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar 16 16 16 16 16 16 16 16 16 16 16 16 17 17 17 Automotive Petrochemicals Electrical & Electronics Agro Processing Tourism Source: BOI Medical Digital Automation & Robotics Aerospace Textile Over half of the investment applications for BOI incentives terms of investment value under the new S-curve industries were under the 10 S-curve industries as the government’s which amounted to THB 7,800 million (USD 222.85 million) initiative for the targeted industries under the Thailand 4.0 and the existing S-curve industries which came to THB 34,300 model gathers momentum. This can be further broken down in million (USD 980 million). The summary of investments in the terms of investment value under the new S-curve industries first quarter of 2017 concluded with 293 BOI net applications which amounted to THB 7,800 million (USD 222.85 million) with a value of THB 61,980 million (USD 1,770 million). and the existing S-curve industries which came to THB 34,300 million (USD 980 million). The summary of investments in the Investment for the period totaled THB 570 billion (USD first quarter of 2017 concluded with 293 BOI net applications 16.29 billion) with an ambitious target of reaching THB 600 with a value of THB 61,980 million (USD 1,770 million), where billion (USD 17.14 billion) at the end of this year, followed by a 182 were new projects established at a total value. trillion in investments within the next three years. Over half of the investment applications for BOI incentives The BOI’s new investment promotion tools of the Revised were under the 10 S-curve industries as the government’s Investment Promotion Act and Competitiveness Enhancement initiative for the targeted industries under the Thailand 4.0 Act offer a wider range of benefits to investors, which will ensure model gathers momentum. This can be further broken down in the government’s ambitious. terms of investment value under the new S-curve industries which amounted to THB 7,800 million (USD 222.85 million) The summary of investments in the first quarter of 2017 and the existing S-curve industries which came to THB 34,300 concluded with 293 BOI net applications with a value of THB million (USD 980 million). The summary of investments in the 61,980 million (USD 1,770 million), where 182 were new projects first quarter of 2017 concluded with 293 BOI net applications established at a total value of THB 42,452 million (USD 1,212 with a value of THB 61,980 million (USD 1,770 million), where million), accounting for approximately 68% of the total value of 182 were new projects established at a total value of THB 42,452 net applications. The remaining 111 applications were expansions of projects of existing BOI companies. Investment for the period totaled THB 570 billion (USD 16.29 billion) with an ambitious target of reaching THB 600 Over half of the investment applications for BOI incentives billion (USD 17.14 billion) at the end of this year, followed by a were under the 10 S-curve industries as the government’s trillion in investments within the next three years. initiative for the targeted industries under the Thailand 4.0 model gathers momentum. This can be further broken down in The summary of investments in the first quarter of 2017 terms of investment value under the new S-curve industries concluded with 293 BOI net applications with a value of THB which amounted to THB 7,800 million (USD 222.85 million) 61,980 million (USD 1,770 million), where 182 were new projects and the existing S-curve industries which came to THB 34,300 established at a total value of THB 42,452 million (USD 1,212 million (USD 980 million). The summary of investments in the million), accounting for approximately 68% of the total value of first quarter of 2017 concluded with 293 BOI net applications net applications. The remaining 111 applications were expansions with a value of THB 61,980 million (USD 1,770 million), where of projects of existing BOI companies. 182 were new projects established at a total value of THB 42,452 million. Over half of the investment applications for BOI incentives were under the 10 S-curve industries as the government’s Promotion Act and Competitiveness Enhancement Act are initiative for the targeted industries under the Thailand 4.0 not only proving effective in promoting investments in value- model gathers momentum. This can be further broken down in added activities in the targeted industries but will have positive implications for the country’s long-term future. Thailand Investment Review

COMPANY INTERVIEW Driving the next chapter of Thailand’s petrochemical industry SCG is a leading business conglomerate company bulk going throughout Asia to China, Japan, India Mr. Cholanat Yanaranop, in the ASEAN region, with three major product and Southeast Asian countries. President of SCG portfolios, chemicals, cement-building materials Chemicals and packaging. According to KPMG, over the next decade, the Asia-Pacific is expected to drive two-thirds of global Mr. Cholanat Yanaranop, In 2016, the company earned THB 423.4 billion petrochemical demand. This can be attributed to President of SCG (USD 12.1 billion) in consolidated revenues from the rapid modernization taking place in the region, Chemicals sales with a consolidated profit of THB 56.1 billion the huge demographic changes underway, robust (USD 1.6 billion), an increase of 24% from the economic growth, and escalating domestic Mr. Cholanat Yanaranop, previous year. consumption. President of SCG Chemicals SCG has substantial business operations in the It therefore makes practical business sense for region and is highly regarded in terms of its companies to look at the region as a whole, and the management team and industry acumen. The same is true for the petrochemical industry. Mr. company has pledged to continue expanding its Cholanat Yanaranop, President of SCG Chemicals, investments in ASEAN along with utilizing stated that in recent years, the ASEAN market has innovation to enhance competitiveness to become shown very promising opportunities, with growth the region’s sustainable business leader. rates ranging from the high single-digits to double- digits. Mr. Cholanat also stressed that the potential SCG Chemicals contributed approximately for further growth remains massive and SCG is half of the company’s total revenue, at THB 188.2 well-positioned to take advantage of the many billion (USD 5.38 billion) with profit of THB 42.1 opportunities to consolidate its leadership position billion (USD 1.2 billion), which increased by 48% in the future. from the previous year, attributed to healthy earnings in chemicals as a result of lower feedstock Reasons behind SCG’s remarkable success costs. Thailand is widely recognized as a strong manufacturing base for the petrochemical industry Today, the capacity of SCG’s petrochemical having served regional demand for over 30 years. plants stands at over three million tons a year, This experience has contributed to the industry’s making the company one of the largest key competitive advantages, which has been petrochemical producers in the region. strengthening Thailand’s production base as the largest in Southeast Asia, enabling the country to Reasons behind SCG’s remarkable success reap the benefits from operating at economies of Thailand is widely recognized as a strong scale. manufacturing base for the petrochemical industry In addition, the industry is well-established having served regional demand for over 30 years. through advances in production technologies, This experience has contributed to the industry’s making Thailand not only be a petrochemical key competitive advantages, which has been production center for the region, but also a strengthening Thailand’s production base as the production model for neighboring countries. largest in Southeast Asia, enabling the country to The production base in Thailand largely serves reap the benefits from operating at economies of both domestic and regional demand, though the scale. country is increasingly viewed as an important and In addition, the industry is well-established growing base to produce and export worldwide through advances in production technologies, given its strategic location in the heart of Southeast making Thailand not only be a petrochemical Asia and growing bilateral and regional trade links. production center for the region, but also a Today, SCG exports over 45 percent of its production model for neighboring countries. production to countries around the world, with the The production base in Thailand largely serves bulk going throughout Asia to China, Japan, India both domestic and regional demand, though the and Southeast Asian countries. country is increasingly viewed as an important and According to KPMG, over the next decade, the growing base to produce and export worldwide Asia-Pacific is expected to drive two-thirds of global given its strategic location in the heart of Southeast petrochemical demand. This can be attributed to Asia and growing bilateral and regional trade links. the rapid modernization taking place in the region, Today, SCG exports over 45 percent of its production to countries around the world, with the Thailand Investment Review

Dr. MnmzMXn the huge demographic changes underway, robust well-positioned to take advantage of the many Nmxmxmmxxmmxm economic growth, and escalating domestic opportunities to consolidate its leadership position CEO consumption. in the future. Dr. MnmzMXn It therefore makes practical business sense for Reasons behind SCG’s remarkable success Nmxmxmmxxmmxm companies to look at the region as a whole, and the Thailand is widely recognized as a strong CEO same is true for the petrochemical industry. Mr. manufacturing base for the petrochemical industry Cholanat Yanaranop, President of SCG Chemicals, having served regional demand for over 30 years. stated that in recent years, the ASEAN market has This experience has contributed to the industry’s shown very promising opportunities, with growth key competitive advantages, which has been rates ranging from the high single-digits to double- strengthening Thailand’s production base as the digits. Mr. Cholanat also stressed that the potential largest in Southeast Asia, enabling the country to for further growth remains massive and SCG is reap the benefits from operating at economies of well-positioned to take advantage of the many scale. opportunities to consolidate its leadership position In addition, the industry is well-established in the future. through advances in production technologies, making Thailand not only be a petrochemical Reasons behind SCG’s remarkable success production center for the region, but also a Thailand is widely recognized as a strong production model for neighboring countries. manufacturing base for the petrochemical industry The production base in Thailand largely serves having served regional demand for over 30 years. both domestic and regional demand, though the This experience has contributed to the industry’s country is increasingly viewed as an important and key competitive advantages, which has been growing base to produce and export worldwide strengthening Thailand’s production base as the given its strategic location in the heart of Southeast largest in Southeast Asia, enabling the country to Asia and growing bilateral and regional trade reap the benefits from operating at economies of links. scale. In addition, the industry is well-established Strength in the people that make up SCG through advances in production technologies, SCG has always believed in the quality of its making Thailand not only be a petrochemical Thai workforce, and Mr. Cholanat cited the production center for the region, but also a company’s human resource strategy as a key production model for neighboring countries. success factor, with a strong emphasis placed on The production base in Thailand largely serves supporting and developing the internal growth of both domestic and regional demand, though the SCG staff. country is increasingly viewed as an important and Under this concept, SCG has been collaborating growing base to produce and export worldwide with leading Thai universities on research and given its strategic location in the heart of Southeast development, using local resources and knowledge Asia and growing bilateral and regional trade links. to innovate and improve to more advanced Today, SCG exports over 45 percent of its products and solutions in order to serve consumers production to countries around the world, with the worldwide. bulk going throughout Asia to China, Japan, India SCG’s production plants in Thailand have and Southeast Asian countries. successfully transitioned towards high value-added According to KPMG, over the next decade, the activities from 2-3 percent of the production Asia-Pacific is expected to drive two-thirds of process about ten years ago, to currently over 50 global petrochemical demand. This can be percent. attributed to the rapid modernization taking place Mr. Cholanat discussed the company’s strategic in the region, the huge demographic changes expansion plans, where SCG has selected Vietnam underway, robust economic growth, and escalating to establish the first petrochemicals complex in the domestic consumption. country, as well as Indonesia, with plans to leverage It therefore makes practical business sense for those countries’ competitive advantages of lower companies to look at the region as a whole, and the labor costs at the lower-end of the value chain, same is true for the petrochemical industry. Mr. while positioning Thailand as a nerve center for Cholanat Yanaranop, President of SCG Chemicals, research and development. stated that in recent years, the ASEAN market has The intent is to further build out its regional shown very promising opportunities, with growth operations in line with each country’s growth rates ranging from the high single-digits to double- prospects, with a vision of becoming a leading digits. Mr. Cholanat also stressed that the potential sustainable enterprise in Southeast Asia. for further growth remains massive and SCG is Thailand Investment Review

INDUSTRY FOCUS Thailand’s petrochemical industry shifting to high value-added production The volatility in oil prices is back in the spotlight. Mr. Clement Choo, the editor for petrochemicals with Platts, the London-based provider of energy and petrochemical informa-tion, said that increases in petrochemical prices were capped by market concerns about oversupply and poor demand. Ethylene faces an oversupply as healthy production margins are allowing cracker operators to run the plants at full capacity whereas olefins production is expected to remain thin when steam cracker turnarounds take place. As a result, the prices of several key petrochemical products in Asia hit their lowest levels in years. Among them was ethylene which hovered at six-year lows, said Mr. Choo. OPEC and non-OPEC oil producers shrank their production levels to 94% in February 2017. OPEC produced 32 million barrels per day, a 3% decrease from December 2016. However, despite the decrease in production levels, in the second quarter of 2017, the market is expected to have an over-supply of 400,000 barrels of crude oil per day, pushing prices lower, according to Thailand’s Environmental Impact Evaluation Bureau. The Platts Global Petrochemical Index (PGPI) indicated that monthly average petrochemical prices fell USD 9 per ton from June to USD 1,013. The last time global petrochemical prices declined on a monthly basis was in January this year when they dipped 14% to USD 850. The monthly PGPI is a benchmark basket of seven. The slide in oil prices has brought down the cost of naphtha, a feedstock needed for petrochemicals that is used to make plastics, rubber, nylon and other cosmetics products. Asia-Pacific – the world’s largest market for petrochemicals China is the largest petrochemicals consumer in Asia and the third largest globally, accounting for one-quarter of global consumption. KPMG has estimated that consumption in China rose by about 10% a year over the past decade on the back of demand for Chinese manufactured goods. Industry players are now observing a slower increase in petrochemical product imports by the country. Strengthening Thailand’s innovation-based economy ASEAN countries have continued to develop their petrochemical sectors, yet Thailand and Singapore are at the forefront of the industry and Thailand remains well ahead of its regional rival. Today, Thailand’s petrochemical industry has an annual capacity of 30 million tons, the second largest in Southeast Asia and the 16th largest in the world. Thailand is home to a strong downstream industrial sector, exporting more than 40%of major polymers to international markets. The expansion is supported by significant growth in the automotive, packaging, electrical and electronics, construction and agricultural industries.Owing to the fluctuation in oil prices in recent years, Thailand has aggressively increased its high value-added. The third wave in petrochemical growth The country is currently in the third wave of its development plan for petrochemical growth (2004- 2018) with an increasing focus on competitiveness, asset integration and strategic alliances for growth and value-added. The petrochemical plan forecasts considerable growth and opportunities for investors in petrochemical products with a combined capacity of 10 million tons per annum and increases in research and development for further product development, according to the BOI. Thailand’s petrochemical industry is in a transition to effectively adapt to a new era of intense global competition in which leadership in environmental initiatives and sustainability could be important factors in growth for the industry. Thailand Investment Review