RESTRICTED
WORLD TRADE G/SCM/N/16/THA
15July1996
ORGANIZATION(95-2746)
Original: English Committee onSubsidies andCountervailing Measures
SUBSIDIES
Updating Notifications Pursuant toArticle XVI:1 oftheGATT 1994
andArticle 25oftheAgreement onSubsidies and
Countervailing Measures
THAILAND
Thefollowing communication, dated July1996, hasbeenreceived fromthePermanent Mission
ofThailand.
_______________
Table ofContents
1. Industrial Credit Refinancing Scheme .............................2
1.1 Medium andLarge Scale Industries .........................2
1.2 Small Scale Industries ..................................2
2. Livestock Raising andAqua-Culture Credit .........................3
3. Rural Development Credit Refinancing Scheme .......................3
4. Incentives topromoted industries under theBoard ofInvestment
(BOI) 'sprivileges onZone 3Programmes ..........................4
5. Investment Promotion Incentives ................................4G/SCM/N/16/THA
Page2
1. Industrial Credit Refinancing Scheme
1.1 Medium andLarge Scale Industries
Period covered bythenotification
1January 1995 -31December 1995
(a) Nature andextent oftheprogramme
(i) Background andauthority
Same asprevious notification.
(ii) Incidence
TheBank ofThailand (BOT) willpurchase from commercial banks andthe
Industrial Finance Corporation ofThailand (IFCT) promissory notes (P/N)
drawn bymanufacturers tofund their working capital. Theamount of
refinancing is50percentoftheP/N'sfacevalue withamaturity period of
120days. Theratecharged bytheBOT tocommercial banks ortheIFCT
issetat5percentp.a.Inturn,commercial banks cancharge issuers notmore
than10percentp.a.ofthenotes'facevalue.
(iii) Amount ofpayment (total)
BOT'spurchase ofpromissory notes isB870million.
(b) Effect oftheprogramme
Theobjective ofthescheme istoimprove access toresources forindustries essential
toruraldevelopment butwhich havedifficulties inborrowing directly fromfinancial
institutions.
1.2 Small Scale Industries
Period covered bythenotification
1January 1995 -31December 1995.
(a) Nature andextent oftheprogramme
(i) Background andauthority
Same asprevious notification.
(ii) Incidence
Thesmall scale industries, withfixed assets ofnotmore thanB20million,
areeligible forthisscheme. TheBank ofThailand (BOT) willpurchase from
commercial banks, theIndustrial Finance Corporation ofThailand (IFCT) and
theSmall Industry Finance Corporation (SIFC) promissory notes (P/N) drawnG/SCM/N/16/THA
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bymanufacturers foruseasworking capital. Theamount ofrefinancing is
50percentoftheP/N'sfacevalue withamaturity period of120days. The
BOTcharges commercial banks, theIFCT ortheSIFC 3percentp.a.forthe
refinancing amount while permitting themtocharge theircustomers notmore
than10percentp.a.forthefullamount oftheP/N.
(iii) Amount ofpayment (total)
BOT'spurchase ofpromissory notes isB359million.
(b) Effect oftheprogramme
Thescheme isaimed atimproving means offinancing forsmall scale industries.
2. Livestock Raising andAqua-Culture Credit
Period covered bythenotification
1January 1995 -31December 1995.
(a) Nature andextent oftheprogramme
(i) Background andauthority
Same asprevious notification.
(ii) Incidence
Same asprevious notification.
(iii) Amount ofpayment (total)
BOT'spurchase ofpromissory notes isB943million.
(b) Effect oftheprogramme
Thescheme isaimed atimproving means offinancing commercial livestock raising
andaqua-culture.
3. Rural Development Credit Refinancing Scheme
Period covered bythenotification
1January 1995 -31December 1995.
(a) Nature andextent oftheprogramme
(i) Background andauthority
Same asprevious notification.G/SCM/N/16/THA
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(ii) Incidence
TheBank ofThailand (BOT) willpurchase from commercial banks, the
Industrial Finance Corporation ofThailand andtheSmall Industry Finance
Corporation theamount of50percentoftheP/N'sfacevalue drawn byproject
operators orproject participants (farmers orworkers). Theloanmust be
combined withcommercial banks credit insupporting eachruralproject. The
maximum period forproject support isfiveyears. Generally, theBOTcharged
theabove-mentioned financial institutions notexceeding 3percentp.a.while
theycharge project operators orparticipants forthefullamount ofP/Nnot
more than10percentp.a.
(iii) Amount ofpayment (total)
BOT'spurchase ofpromissory notes isB20million.
(b) Effect oftheprogramme
Same asprevious notification.
4. Incentives topromoted industries under theBoard ofInvestment (BOI) 'sprivileges on
Zone 3programmes
Period covered bythenotification
1January 1995 -31December 1995.
(a) Nature andextent oftheprogramme
(i) Background andauthority
Same asprevious notification.
(ii) Incidence
Same asprevious notification.
(iii) Amount ofpayment (total)
BOT'spurchase ofpromissory notes isB640million.
(b) Effect oftheprogramme
Same asprevious notification.
5. Investment Promotion Incentives
Period covered bythenotification
1January 1995 -31December 1995.G/SCM/N/16/THA
Page5
(a) Nature andextent oftheprogramme
(i) Background andauthority
TheBoard ofInvestment provides bothlocalandforeign companies withfiscal
incentives inanattempt topromote theestablishment ofindustries inThailand
toaccelerate thecountry 'sindustrialization process andregional development.
During recent years, investment incentives aregeared towards decentralization
asoneoftheGovernment 'spolicy themes isregional development aimed at
addressing theon-going imbalances between urban andruralareas. Investment
incentives areoffered toattract more investment toregional areas which face
disadvantages invarious aspects. Awide range ofactivities covering
manufacturing andservices areeligible forinvestment incentives.
(ii) Policy objectives
Theinvestment promotion oftheBoard ofInvestment aimsatencouraging industrial
development anddecentralization.
(iii) Incidence
Major fiscal incentives granted include corporate income taxexemption andreduction,
andexemption andreduction ofimport duties onmachinery, rawmaterials andessential
materials. Asageneral principle, themagnitude ofincentives provided varies according
toproject locations. Theentire country isdivided into3zones. Zone 1comprises
Bangkok andfiveneighbouring provinces whereas Zone 2consists oftenprovinces
adjacent toZone 1.Zone 3comprises oftheremaining provinces andtheLeam
Chabang Industrial Estate. Zone 3,which isthemostremote area,isgranted greater
incentives thantheother twozones.
(iv) Amount ofpayment (total)
There isnospecific budget earmarked forinvestment incentives. Theextent of
incentives depends onthenumber ofprojects promoted bytheBoard ofInvestment.
Thus, theGovernment revenue foregone inthisregard fluctuates from yeartoyear.
Nodataoncorporate income taxexemption andreduction isavailable. However, data
onexemption ofimport duties onmachinery, rawmaterials andessential materials
granted toBOI-promoted projects isavailable asfollows:G/SCM/N/16/THA
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Import Duty Exemption and
Reduction Granted toBOI-Promoted Projects
Machinery
*Exemption B7,382.9 million
*Reduction B83.9million
*Total B7,466.8 million
Rawmaterials andessential materials
*Exemption B38,808.5 million
*Reduction B133.2 million
*Total B38,941.7 million
TOTAL B46,408.5 million
(b) Effect oftheprogramme
Thisscheme isaimed forindustrial development anddecentralization.