WORLD TRADE  
ORGANIZATION  G/SCM/N/123/THA 
G/SCM/N/128/THA 23 June 2005 
 
(05-2808) 
Committee on Subsidies and 
Countervailing Measures Original:  English 
 
 
 
SUBSIDIES 
New and Full Notifications Pursuant to Article XVI:1 of  
the GATT 1994 and Article 25 of the SCM Agreement1 
 
Extension under SCM Article 27.4 of the Transition Period  
for the Elimination of Export Subsidies Pursuant to the  
Procedures in Document G/SCM/39  
 
Updating Notification  
 
THAILAND 
 
 The following communication, dated 23 June 2005,  is being circulated at the request of the 
Delegation of Thailand. 
_______________ 
 Pursuant to Article XVI:1 of the GATT 1994, and Articles 25 and 27 of the SCM Agreement, 
Thailand would like to submit herewith our ne w and full notification according to the above 
obligations.   Thailand is pleased to inform the SCM Committee that one of Thailand’s subsidy 
programmes:  Export Market Diversification Pr omotion Programme, has been terminated since 
31 December 2003 in accordance with Article 27.4 of the Agreement on Subs idies and Countervailing 
Measures (SCM Agreement).   Furthermore, as notified in G/SCM/101/Suppl.1 and G/SCM/101/Suppl.2, since 1 January 2003 Thailand has eliminated the export requirement for the Export Processing Zone, which 
is notified herein as part of item V:  Industrial Es tate Authority of Thailand (IEAT).  Regarding the 
current status of the legislative amendment of the IEAT Act as per the workplan submitted to the 
SCM Committee in G/SCM/101/Suppl. 1, the draft bill is currently under the review of the Cabinet.  
The bill will be submitted to the Parliament for fi nal approval once it is approved by the Cabinet. 
 
 Because Thailand’s export subsidies under th e Export Market Diversification Promotion 
Programme and the Industrial Estate Authority of Thailand have been eliminated, only one of the 
three export subsidy programmes for which Thailand re quested an extension of the transition period 
for the elimination of export subsidies
2 remains, which is the Board of Investment (BOI) Programme, 
                                                      
1 This notification, in particular the relevant sec tions of items I and VIII, also satisfies the annual 
transparency and notification provisions contained in G/SCM/101 and G/SCM/102. 
2 See G/SCM/N/74/THA. G/SCM/N/123/THA 
G/SCM/N/128/THA Page 2 
 
 
 notified herein under item I: Investment Promotion In centives.  As previously notified by Thailand via 
various documents such as G/SCM/N/71/THA, G/SCM/N/71/THA/Suppl.1, G/SCM/Q3/THA/7,  
G/SCM/Q3/THA/10, G/SCM/Q3/THA/17, G/SCM/Q3/THA/20, G/SCM/Q3/THA/23 and G/SCM/N/99/THA dated 23 July 2003, as well as via several consultations between Thailand and the 
SCM Committee and members thereof, Thailand h as satisfied the standstill requirement and is 
undertaking the phase-out and elimination requi rements contained in G/SCM/102 for the BOI 
Programme.  For the year 2004, 90 projects receiv ing export subsidies were eliminated so that 
currently only 4 projects notified last year remain.
3 
                                                      
3 See G/SCM/N/95/THA and G/SCM/N/99/THA dated 23 July 2003.  G/SCM/N/123/THA 
 G/SCM/N/128/THA 
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TABLE OF CONTENTS  
                       P a g e  
I. INVESTMENT PROMOTION INCENTIVES .....................................................................2 
II. CREDIT REFINANCING SCHEMES...................................................................................5 
III MERCHANT MARINE FINANCING ...................................................................................6 IV. MACHINERY UPGR ADING FINANCING .........................................................................7 
V. INDUSTRIAL ESTATE AUTHO RITY OF THAILAND (IEAT).......................................9 
 
 
I. INVESTMENT PROMOTION INCENTIVES 
1. Title of the subsidy programme 
 Investment Promotion Incentives 
 2. Period covered by the notification 
 1 January–31 December 2004 
 
3. Policy objective and/or purpose of the subsidy 
 Investment promotion incentives aim at pr omoting the establishment of industries and  the 
strengthening of technological capability in Thailand to accelerate the country’s industrialization 
process and encourage regional development.   During recent years, investment incentives have been 
geared towards decentralization to address the on- going development disparities between the urban 
and rural areas in accordance with the Thai Govern ment’s policy theme of regional development.   
 4. Background and authority for the subsidy 
 The legal basis of the investment promoti on incentives is the Investment Promotion Act 
(1977) amended in 1991 and 2001.   The responsi ble authority is the Office of the Board of 
Investment (BOI). 
 
 G/SCM/102: Decision of 19 December 2002, gran ts Board of Investment projects with an 
export requirement an extensi on under SCM Agreement Article 27.4 of the transition period under 
Article 27.2(b).  For details con cerning the operation of these projects and other details as required in 
G/SCM/102, see G/SCM/Q3/THA/1 to G/SCM/Q3/THA/23, as well as the responses below to 
question 7:  Amount of the subsidy and question 8:  Duration of the subsidy and/or any time limit 
attached to it.  
5. Form of the subsidy 
 Tax concessions, such as exemption/reduction of corporate income tax, exemption/reduction 
of import duties on machinery, reduction of import duties on raw materials, and special deduction of certain expenditures. 
 
 The new investment promotion policy, eff ective since 1 August 2000, has abolished the 
export and local content requirements to comply with WTO obligations.  
 G/SCM/N/123/THA 
G/SCM/N/128/THA Page 4 
 
 
 6. To whom and how the subsidy is provided 
 
General
 
 
 A wide range of activities covering primary, secondary, and tertiary sectors are eligible for 
investment promotion incentives.  The scheme is no t specific to any particular sector.  Moreover, 
companies in every province in Thailand can have  access to the investment promotion incentives.  
The Board of Investment has established the criteri a in granting tax incentives, which are generally 
based on the location of the investments.  The en tire country is divided into 3 zones as follows: 
 
 Zone 1: Bangkok and vicinities (Samut Prakan , Samut Sakhon, Pathum Thani, Nonthaburi, 
and Nakhon Pathom)   Zone 2: Samut Songkram, Ratchaburi, Kanc hanaburi, Suphanburi, Ang Thong, Ayutthaya, 
Saraburi, Nakhon Nayok, Chachoengsao , Chonburi, Rayong and Phuket 
  Zone 3: The remaining 58 provinces (the least developed area of which per capita income is 
below 85 per cent of the national average and which has less developed infrastructure).  All areas in 
Zone 3 provinces are designated as Investment Promotion Zones. 
 
 Zone 1 is granted the least incentives wher eas Zone 3, the most disadvantaged and least 
developed area, is granted the maximum incentives.   Since September 2002, most activities eligible 
for investment promotion may be located in any zone  except certain activities that are required to be 
located in industrial estates or zones for environmental safety reasons. 
 Factory Relocation
 
 
 In order to further encourage decentralizati on, the Board of Investment also provides 
incentives for the relocation of existin g factories to other regions.  The following criteria are applied: 
 1. The operation must relocate from Zone 1 to Zone  2 or from Zone 1 or Zone 2 to Zone 3. 
2. The operation must relocate to an industrial estate or promoted industrial zone. 
3. The existing operation must be closed down and the operation at the relocated location must 
start within 2 years after receiving the promotion certificate. 
The following incentives are granted: 
 
1. For relocation to Zone 2: Corporate income tax exemption for 5 years.
4 
2. For relocation to 40 provinces in Zone 3:  Corporate income tax exemption  for 8 years2; 
50 per cent reduction of corporate income tax for 5 years after the exemption period; and 
double deduction from taxable income of water, electricity, and transportation costs for 10 
years.5 
                                                      
4 Provided that such a project with capital investment of 10 million baht or more (excluding cost of 
land and working capital) obtains ISO 9000 or similar international standard within 2 years from start-up date of its new plant, otherwise the corporate income  tax exemption will be reduced by 1 year. 
5 Starting from the date of first revenue derived from promoted activity.  G/SCM/N/123/THA 
 G/SCM/N/128/THA 
 Page 5 
 
 
 3. For relocation to the 18 provinces which are the least developed and most disadvantaged in 
Zone 3: Corporate income tax exemption for 8 years2; 50 per cent reduction of corporate 
income tax for 5 years after the exemption pe riod; double deduction from taxable income of 
water, electricity, and transportation costs for 10 years 3; and deduction from net profit of 25 
per cent of cost of installation or construction of infrastructure facilities for 10 years starting 
from the date of first sales. 
 
7. Amount of the subsidy 
 There is no specific budget earmarked for invest ment promotion incentives.  The information 
on the subsidy per unit therefore cannot be provided.  No statistics on corporate income tax exemption 
and reduction are available.    Pursuant to Thailand’s obligations under Article 27.4 of the SCM Agreement and the 
standstill requirement in G/SCM/102, the Board of I nvestment has eliminated the export requirement 
for projects applying for investment promotion in centives since 1 August 2000.  Therefore, no export 
subsidies have been granted to new operato rs applying for such incentives since then.
6  Furthermore, 
Thailand has progressively phased-out BOI projects with an export requirement approved prior to 
1 August 2000, which as notified in Dece mber 2002 totalled 532 projects, until as of 
 31 December 2004 only 4 projects remain.7 Details relating to the remaining 4 projects can be found 
in G/SCM/Q3/THA/23, and details relating to the ope ration of these projects in general can be found 
in G/SCM/Q3/THA/1 to G/SCM/Q3/THA/20.  In acco rdance with G/SCM/102, none of these projects 
have been modified so as to make them more fa vourable regarding scope, c overage, and intensity of 
benefits relative to the level of  benefits that existed as indicated in G/SCM/N/74, G/SCM/N/71/THA, 
G/SCM/Q3/THA/1 to G/SCM/Q3/THA/17 and Suppl.1.  8. Duration of the subsidy and/or any time limit attached to it 
 
 The duration of the Investment Promotion Incen tives programme is indeterminate.  However, 
the incentives granted to each investment are subject to certain time limits.   
  Regarding investment projects receiving an  extension under G/SCM/102, as previously 
mentioned in G/SCM/Q3/THA/20, G/SCM/Q3/THA/23, and G/SCM/N/95/THA, the working group 
to study the elimination of the export requireme nt has already since 26 July 2004 eliminated the 
export requirements for 174 projects scheduled to expire beyond 2005.  Th e BOI will continue to 
make progress on eliminating the remaining export subsidies.   
                                                     
 
6 See, e.g., G/SCM/Q3/THA/17. 
7 See G/SCM/Q3/THA/17, G/SCM/Q3/THA/20, and G/SCM/Q3/THA/23. G/SCM/N/123/THA 
G/SCM/N/128/THA Page 6 
 
 
 9. Statistical data permitting an assessment of the trade effects of the subsidy 
Statistics on Start-up of Investment Projects Granted Promotion Status by the Board of Investment 
 
Year Number of Investment Projects Total Investment Volume 
(billion baht) 
1999 526 205.3 
2000 625 304.9 
2001 611 267.9 
2002 626 203.7 
2003 251 74.5 
2004 279 83.0 
 Source:   Office of the Board of Investment, Ministry of Industry  
 
II. CREDIT REFINANCING SCHEMES 
1. Title of the subsidy programme 
 Credit Refinancing Schemes 
 
2. Period covered by the notification 
 1 January 2004 – 31 December 2004 
 
3. Policy Objective and/or purpose of the subsidy 
 To reduce financial burden for those entrepreneurs in priority sectors. 
 
4. Background and authority for the subsidy 
The legal basis of this scheme is the Royal Decree Regulation the Affairs of the Bank of 
Thailand B.E. 2485, Section 12(4) and 12(7).  Th e responsible authority is the Bank of Thailand 
(BOT). 
 
5. Form of the subsidy 
 Term loan. 
 
6. To whom and how the subsidy is provided 
 At present, the BOT has only Small and Medi um Enterprises (SMEs) scheme which provide 
financial assistance to Small and Medium Enterprises.   This financial assistant scheme is done in the 
form of term loan with preferential interest ra te through commercial banks and specialized banks.  
 
7. Amount of the subsidy 
 By the end of 2004, the outstanding loan of SMEs scheme was at 33,431.69 million baht. 
  G/SCM/N/123/THA 
 G/SCM/N/128/THA 
 Page 7 
 
 
 8. Duration of the subsidy and/or any time limit attached to it 
 The BOT will provide financial assistance to each enterprise for a maximum of 5 years. 
 
9. Statistical data permitting an assessment of the trade effects of the subsidy 
 Not applicable. 
 
III. MERCHANT MARINE FINANCING  
1. Title of the subsidy programme 
Merchant Marine Financing 
2. Period covered by the notification 
 1 January – 31 December 2004 
 
3. Policy objective and/or purpose of the subsidy 
- To alleviate the country’s current account deficit 
- To strengthen Thailand’s merchant marine business 
4. Background and authority for the programme 
 In 1995, the Thai Government took a serious look into the country’s problem of current 
account deficit, and discovered that the neglected merchant marine business not only incurred revenue 
foregone but also brought about subs tantial outflow of freight and shipping expenses, not to mention 
the insufficiency of Thailand’s shipping business. 
 
 As a result, EXIM Bank launched a financial service for the merchant marine business from 
its own funds in early 1996.  La ter, in September 1996, the governme nt provided, through the Bank of 
Thailand (BOT), a credit line of 2 billion baht fo r Merchant Marine Financing at the EXIM Bank.  
Then, in February 1998, a portion of 1 billion baht from the Structural Adjustment Loan (SAL) from 
the ADB World Bank Co-financing to the Thai G overnment was provided to EXIM Bank to on-lend 
under Merchant Marine Financing together  with Machinery Upgrading Financing. 
  In the meantime, EXIM Bank still provided financing from its own source of funds, especially to customers who did not qualify under th e BOT’s conditions, for ex ample, ships aged over 
20 years. 
 
5. Form of the subsidy 
Loan 
 
6. To whom and how the subsidy is provided 
 EXIM Bank extended credit to entrepreneurs of  merchant marine business to buy/renovate 
their ships, new or used ones.  G/SCM/N/123/THA 
G/SCM/N/128/THA Page 8 
 
 
  Customers qualifying under the BOT’s conditi ons could utilize the BOT’s funds in baht 
denomination which offered interest rates of up to 5 per cent p.a. while the BOT charged EXIM Bank at 
3 per cent p.a. EXIM Bank co-financed the other ha lf with the BOT’s funds in baht or US dollar 
denominations at the market interest rate. 
 
 From EXIM Bank’s own funds, financing was pr ovided in baht or US dollar denominations, 
both at the market interest rate , with more relaxed conditions. 
  As for the SAL fund, since the cost of fund was relatively high, i.e., above 6.41 per cent in US 
dollar lending, the fund was not co mmercially acceptable for customers. 
 Criteria for the BOT’s fund for Merchant Marine Financing:
 
- The business must be a company registered in Thailand with over 50 per cent of its 
registered capital contributed by Thai shareholders. 
- The loan must be used to finance investment  in new ships or old ones with an operating 
period of not exceeding 20 years.   
- The ship purchased must be registered in Thailand and sailed under the Thai flag. 
- The company must engage in merchant marine as its main business. 
The term of lending from the BOT’s fund was up to 5 years, while that from EXIM Bank’s 
funds was up to 7 years, depending on business conditions.  
7. Total amount of the subsidy 
- BOT’s fund  0.1 billion baht 
 -            SAL fund   25.7 million US dollars, together with funds for Machinery 
    Upgrading Facility (terminated at the end of 2004) 
 
EXIM Bank’s own source of funds was up to customers’ demand for financing and funding 
availability.  
8. Duration of the subsidy and/or any time limit attached to it 
Date of Commencement: 
  EXIM Bank’s facility : Early 1996 
BOT’s fund   : September 1996 SAL fund   : February 1998   
9. Statistical data permitting an assessment of the trade effects of the subsidy 
                    (Unit: Billion baht) 
    2000 2001 2002 2003 2004 
Total credit granted 3.37 2.58 3.10 3.04 4.36 
Total BOT financing 1.17 0.92 0.36 0.15 0.09 
Credit outstanding at year-end 3.48 2.67 2.87 3.00 4.21 
  G/SCM/N/123/THA 
 G/SCM/N/128/THA 
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 IV. MACHNINERY UPGRADING FINANCING 
1. Title of the subsidy programme 
 Machinery Upgrading Financing 
 2. Period covered by the notification 
 1 January–31 December 2004 
3. Policy objective and/or purpose of the subsidy 
- To improve the productivity of Thai industrial operators 
- To encourage the renovation/upgrading of the technology of production/quality of Thai 
products 
4. Background and authority for the subsidy 
 The government deemed it necessary to improve the productivity of Thai industrial operators.  
Moreover, some industries faced the serious prob lem of outdated technology of production, which 
brought about low quality of products.  
 
 EXIM Bank, therefore, introduced a financial service to facilitate the machinery upgrading of 
the operators. The Thai government later supported this policy through the provision of funds from 
the Bank of Thailand (BOT) to co-finance this faci lity with EXIM Bank.  Then came the SAL fund to be 
mutually used in Machinery Upgrading Fi nancing and Merchant Marine Financing. 
 5. Form of the subsidy 
Loan 
 
6. To whom and how the subsidy is provided 
EXIM Bank extended credit to operators who se plans to renovate/upgrade their machinery 
were approved by agencies authorized by the Ministry of Industry (MOI). 
 
Operators eligible for the BOT’s fund must meet the following criteria: 
 
- Operator’s renovation plans must have been approved by agencies authorized by MOI. 
- The financing may be used to replace old machin ery with new machinery, or to modify or  
further enhance the performance of existing ma chines or equipment in order to increase 
efficiency. 
- Investments may also be related to energy  conservation, or related to environment 
conservation, including the relocation of factories into industrial estates, etc. 
 G/SCM/N/123/THA 
G/SCM/N/128/THA Page 10 
 
 
  In addition, targeted industries eligible for this facility were also clearly identified to 
cover the 13 industries
8 under the Industrial Restructuring Pl an, with small-and-medium scaled 
enterprises (SMEs) as the priority.  
 Operators meeting the BOT’s criteria could utilize the BO T’s fund in baht denomination 
by 50 per cent of total lending at an interest rate of not more than MLR-1 (MLR quoted by the 4 largest commercial banks). EXIM Bank co-financed th e other half, in baht or US dollars, at EXIM 
Bank’s prime rate plus up to 1.5 per cent p.a. for ba ht lending; or LIBOR plus up to 3.5 per cent p.a. 
for US dollar lending. 
 
 Apart from co-financing with the BOT’s fu nd, EXIM Bank also provided Machinery 
Upgrading Financing on its own, with more relaxed conditions, for instance, to finance investment in some kinds of machinery not included in the MOI’s conditions.  The lending inte rest rate of EXIM Bank 
stayed at EXIM Prime plus 1.5 per cent p.a. in baht lending, while US dollar lending was at the rate of 
up to LIBOR plus 3.5 per cent p.a. (EXIM Prime stayed at 5.75 per cent p.a. as of the end of 2004). 
  The term of lending for machinery upgrading was up to 5 years for the BOT’s fund and up 
to 7 years for EXIM Bank’s fund due to the repayment capability of operators.  
7. Amount of the subsidy 
- BOT’s fund   0.4 billion baht 
- SAL fund  25.7 million US dollars, together with funds for Merchant 
    Marine Financing (terminated at the end of 2004)   
EXIM Bank’s own source of funds was subject to fund availability. 
 8. Duration of the subsidy and/or any time limit attached to it 
Date of Commencement: 
EXIM Bank’s facility : Early 1997 
  BOT’s fund   : May 1997 
SAL fund   : February 1998 
 
9. Statistical data permitting an assessment of the trade effects of the subsidy 
                                                                                                                     (Unit: Bil lion baht) 
 2000 2001 2002 2003 2004 
Total credit granted 0.74 0.56 0.50 0.27 0.18 
Total BOT financing 0.15 0.12 0.27 0.19 0.15 
Credit outstanding at year-end 0.63 0.40 0.49 0.27 0.18 
 
 
                                                      
8 The thirteen industries eligible under this programme are as follows: (1) Food and animal food; (2) 
Textiles and articles of apparel and cl othing accessories; (3) Footwear and parts and leather and bovine leather 
products; (4) Wood and wood sheets and housewear; (5) Pharmaceutical and chemical products; (6) Rubber and 
rubber products; (7) Plastic products; (8) Ceramic products and tableware and kitchenware of glass; (9) Electrical equipment and elect ronic appliances; (10) Motor cars, parts and accessories; (11) Precious stones and 
jewellery; (12) Iron or steel products; and (13) Petrochemical industry and its related  G/SCM/N/123/THA 
 G/SCM/N/128/THA 
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 V. INDUSTRIAL ESTATE AUTHORI TY OF THAILAND (IEAT) 
1. Title of the subsidy programme 
 Industrial Estate Authority of Thailand (IEAT) 
 2. Period covered by the notification 
 1 January – 31 December 2004 
 
3. Policy objective and / or purpose of the subsidy 
- To procure suitable land for the establishmen t or expansion of industrial estates which 
include the General Industrial Zone and Export Processing Zone. 
- To provide facilities for industrial ope rators in the industrial estates 
- To promote and control industrial estates owned by the private sector or other 
government agencies 
 
4. Authority for the subsidy 
 Industrial Estate Authority of Thailand (IEAT)  
 
5. Form of the subsidy 
 Incentives cover the exemptions of payment of surcharge under the law on promotion of 
investment, import duties, value added tax and excise  tax on machinery, equipment, tools and supplies 
including the components thereof which are essen tial for the production of goods or trading for 
export, as the case may be, and on materials to be u sed for construction, assembly or installation of 
factories or buildings and goods imported and taken into the Export Processing Zones (EPZ) by 
industrial operators and traders for export for use in the production of goods or trading for export. 
 6. To whom and how the subsidy in provided 
 Incentives are provided to the industrial operato r who is permitted to engage in industrial 
activities in an industrial estate.    Regarding the current status of the legislative   
  Since 1 January 2003, Thailand has elimin ated the export requirement for the Export 
Processing Zone (EPZ) in accordance with G/SCM/101.
9  As indicated in G/SCM/101/Suppl.1 and 
G/SCM/101/Suppl.2, IEAT announcements No. 1/ 2531 and No. 2/2538 have been amended by 
announcement No. 1/2546, thereby effectively elim inating the export requirement for the EPZ.  
Regarding the current status of the legislative ame ndment of the IEAT Act, the Cabinet is currently 
reviewing the draft bill.  The draft bill will be submitted to the Parliament for final approval once 
approved by the Cabinet.  
                                                     
 
9 See G/SCM/101/Suppl.1 and G/SCM/101/Suppl.2 G/SCM/N/123/THA 
G/SCM/N/128/THA Page 12 
 
 
 7. Amount of the subsidy 
 No specific budget provided 
 
8. Duration of the subsidy and / or any time limit attached to it 
 Upon operation period. 
 
9. Statistical data permitting an assessment of the trade effects of the subsidy 
             ( U n i t  :  B i l l i o n  b a h t )  
YEAR IMPORT VALUE EXPORT VALUE 
1999 126.01 205.45 
2000 115.51 208.43 
2001 152.67 259.47 
2002 171.00 296.01 
2003 215.64 338.53  
2004 302.19 462.93 
TOTAL 1,083.02 1,770.82 
         Source: Customs Department 
 
 
 
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