WORLD TRADE  
ORGANIZATION  G/SCM/N/155/THA 
12 November 2007 
 (07-4905) 
Committee on Subsidies and 
Countervailing Measures Original:   English 
 
 
 
SUBSIDIES 
 
New and Full Notification Pursuant to Article XVI:1 of the  
GATT 1994 and Article 25 of the Agreement on  
Subsidies and Countervailing Measures  
 
THAILAND 
  
 The following notification, dated 9 November 2007, is being circulated at the request of the 
Delegation of Thailand.     
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 Pursuant to Article XVI:1 of the GATT 1994 a nd Article 25 of the SCM Agreement, Thailand 
would like to submit herewith our new and full notific ation in accordance with the above obligations.   
  Thailand is pleased to inform the SCM Co mmittee that, to date, all export subsidy 
programmes that were granted an extension of th e transition period for the elimination of export 
subsidies
1 have been terminated.   
 
                                                      
1 See G/SCM/101 and G/SCM/102.   G/SCM/N/155/THA 
Page 2  
 
  TABLE OF CONTENTS 
 
   Page
 
 
I. INVESTMENT PROMOTION INCENTIVES ...................................................................... 3 
II. CREDIT REFINANCING PROGRAM .................................................................................. 5 III. MERCHANT MARINE FINANCING ................................................................................... 6 IV. INDUSTRIAL ESTATE AUTHORI TY OF THAILAND (IEAT) ....................................... 7 
 
 
  G/SCM/N/155/THA 
 Page 3 
 
 
  I. INVESTMENT PROMOTION INCENTIVES 
1. Title of the subsidy programme  
  Investment Promotion Incentives.    
2. Period covered by the notification
 
  1 January 2005 – 31 December 2006.    3. Policy objective and/or purpose of the subsidy
 
 
 To promote the establishment of industries and strengthen the technological capability of Thailand in order to accelerate the country's indus trialization process as well as encourage regional 
development.  During recent years, investment in centives have been geared towards decentralization 
to address the on-going development disparities betw een the urban and rural areas in accordance with 
the Thai Government's policy theme of regional development.   
 4. Background and authority for the subsidy
 
  The legal basis of the investment promotion incentives is the Investment Promotion 
Act (1977) amended in 1991 and 2001.  The responsib le authority is the Office of the Board of 
Investment (BOI).     G/SCM/102:  Decision of 19 December 2002, gr ants 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 concerning the opera tion of these projects as well as other details as 
required in G/SCM/102, please see G/SCM/Q3/THA/1 to G/SCM/Q3/THA/23, as well as the information contained in section 7 (Amount of the s ubsidy) and 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, effec tive since 1 August 2000, has abolished export 
and local content requirements to comply with WTO obligations.   
 6. To whom and how the subsidy is provided
 
 
General 
  A wide range of activities covering all sect ors are eligible for investment promotion 
incentives.  The scheme is not specific to any pa rticular sector.  Moreover, companies in every 
province in Thailand can have access to the inv estment promotion incentives.  The Board of 
Investment has established criteria in granting tax incentives, which are generally based on the 
location of the investments.  The entire count ry is divided into 3 zones as follows:   
 
 Zone 1:   Bangkok and vicinities (Sam ut Prakan, Samut Sakhon, Pathum Thani, 
Nonthaburi, and Nakhon Pathom).   
 G/SCM/N/155/THA 
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  Zone 2:   Samut Songkram, Ratchaburi,  Kanchanaburi, Suphanburi, Ang Thong, 
Ayutthaya, Saraburi, Nakhon Nayok, Ch achoengsao, 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 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 existing factories to ot her 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.
2   
2. For relocation to 36 provinces in Zone 3:  Corporate income tax exemption for 
8 years3;  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 years3.   
3. For relocation to 22 provi nces 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 period;  double deduction from 
taxable income of water, electricity, and transportation costs for 10 years3;  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 
                                                     
 
2 Provided that such a project with capital investment of 10 million baht or more (excluding cost of 
land and working capital) obtain ISO 9000 or similar intern ational standard within 2 years from start-up date of 
its new plant, otherwise the corporate income  tax exemption will be reduced by 1 year. 
3 Starting from the date of first revenue derived from promoted activity  G/SCM/N/155/THA 
 Page 5 
 
 
  subsidies have been granted to new operato rs applying for such incentives since then.4  Furthermore, 
Thailand has progressively phased-out BOI projects with an export requirement approved prior to 
1 August 2000 as previously reported in the notifications.5  In other words, to date, all export 
subsidies have been eliminated .  Details relating to projects phased -out throughout the year 2002 and 
the operation of these projects in general can be found in G/SCM/Q3/THA/1 to G/SCM/Q3/THA/20.  
In accordance with G/SCM/102, none of these projects have been modified so as to make them more 
favourable regarding scope, coverage, 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 BOI has 
eliminated all export subsidies, therefore no export subsidies remain .   
 
 II. CREDIT REFINANCING PROGRAM 
1. Title of the program
 
 
Small and Medium Enterprises (SMEs) Refinancing.   
 2. Period covered by the notification
 
 
1 January 2005 – 31 December 2006.   
 3. Policy Objective and/or purpose of the program
 
 
To assist small and medium entrepreneurs access to  financial resource at market cost.   
 
4.   Background and authority  
 
 The legal basis of this scheme is the Royal Decree Regulating the Affairs of the Bank of 
Thailand B.E. 2485, Section 12(4) and 12(7).  The responsible authority is the Bank of 
Thailand (BOT).   
 5. Form of the program
 
 
Short-term refinance.   
 
6. To whom and how the fund is provided  
 
 During the covered period of this notifica tion, the BOT has only the SMEs refinancing 
program which provides financial assistance to SMEs.  The program is extended to SMEs in general, 
and is not confined to any product, sector or market .  This financial assistance is done in the form of 
                                                      
4 See, e.g., G/SCM/Q3/THA/17.   
5 WTO Document No. G/SCM/N/71/THA, G/ SCM/N/71/THA/Suppl.1 , G/SCM/N/95/THA, 
G/SCM/N/99/THA, G/SCM/N/114/THA,  G/SCM/N/123/THA and G/SCM/N/128/THA.   G/SCM/N/155/THA 
Page 6  
 
  short-term loans at preferential interest rates th rough financial institutions.  Participating financial 
institutions are required to contribute 40 per cent of total loan amount.    7.   Amount of the assistance
 
 
By the end of 2006, the outstanding balance on SMEs financing program was 
33,089.02 million baht.   
 
8.   Duration of the assistance and/or any time limit attached to it  
 
Each entrepreneur will obtain financial assistance for a maximum of 5 years.   
 9.   Statistical data permitting an assessment of the trade effects of the program
 
 
Not applicable.   
 
 
III. MERCHANT MARINE FINANCING 
1.  Title of the subsidy programme  
 
 Merchant Marine Financing.    
2. Period covered by the notification
 
 
  1 January 2005 – 31 December 2006.   
 
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 l ook into the country's current account deficit 
problem, and discovered that the neglected merc hant marine business not only incurred revenue 
foregone but also brought about subs tantial outflow of freight and sh ipping expenses, not to mention 
the insufficiency of Thailand's shipping business.   
 
As a result, Export-Import Bank of Thailand (EXIM Bank) launched a financial service for 
the merchant marine business from its own funds in early 1996.  Later, in September 1996, the 
government provided, through the Bank of Thaila nd (BOT), a credit line of 2 billion baht for 
Merchant Marine Financing at the EXIM Bank.  Then, in February 1998, a portion of 1 billion baht 
from the Structural Adjustment Loan (SAL) fro m the ADB World Bank Co-financing to the Thai 
Government was provided to EXIM Bank to on-lend under Merchant Marine Fi nancing together with 
Machinery Upgrading Financing (see below responses for item V:  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 the BOT's conditions, for example, ships aged 
over 20 years.   
 5. Form of the subsidy
 
 
  Loan.    G/SCM/N/155/THA 
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  6. To whom and how the subsidy is provided  
 
1. EXIM Bank extended credit to entrepre neurs of merchant marine business to 
buy/renovate their ships, new or used ones.   
 
2. Customers qualifying under the BOT's conditions could utilize the BOT's funds in 
baht denomination which offered interest ra tes 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 half with the BOT's funds in baht or US dollar denomina tions 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.   
 
Criteria for the BOT's fund for Merchant Marine Financing 
 
- The business must be a company registered in Th ailand 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 sail 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.   
- 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.   
 
9. Statistical data permitting an assessmen t of the trade effects of the subsidy  
 
  (Unit:  Billion baht) 
 2001 2002 2003 2004 2005 2006 
Total credit granted 2.58 3.10 3.04 4.36 5.95 5.30 
Total BOT financing 0.92 0.36 0.15 0.09 0.04 0.01 
Credit outstanding at year-end 2.67 2.87 3.00 4.21 6.01 4.93 
 
 
IV. INDUSTRIAL ESTATE AUTHORI TY OF THAILAND (IEAT) 
1. Title of the subsidy programme  
  Export Promotion Incentives.    G/SCM/N/155/THA 
Page 8  
 
  2. Period covered by the notification
 
  1 January 2005 – 31 December 2006.    3. Policy objective and / or purpose of the subsidy
 
 
Export promotion incentives aim at promoting an establishment of industrial plants and 
industrial related activities in Export Processing Zon es (EPZs) in industrial estates in Thailand to 
accelerate the industrialization process of the countr y and create more value to the products for 
exporting.  Meanwhile, the growth of industries is made in an harmony with environmental 
management and quality of life in order to gu arantee balanced development of the economy, 
environment and society.    4. Authority for the subsidy
 
 
 The legal basis of the export promotion incentiv es is specified in the Industrial Estate 
Authority of Thailand Act 1979 amended in 1991 an d 1996.  The responsible authority is IEAT.   
 5. Form of the subsidy
 
  Incentives cover the exemptions of payment of surcharge under the law on promotion of 
investment, import duty, value added tax on machinery, equipment, tools and supplies including the 
components thereof which are essential for the produc tion of goods or trading for export, as the case 
may be, and on materials to be used for the cons truction, assembly or installation of factory or 
building and goods imported and taken into an e xport processing zone by industrial operator and 
trader for export for use in the production of good or trading for export.   
 
6. To whom and how the subsidy in provided
 
  Incentives are provided to the industrial operators  who are permitted to engage in industrial 
operations in EPZs in industrial estates.    
 Current status of the legislation: 
  Since 1 January 2003, Thailand has eliminat ed the export requirement for the Export 
Processing Zone (EPZ) in accordance with G/SCM/101.
6  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.    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.   
                                                      
6 See G/SCM/101/Suppl.1 and G/SCM/101/Suppl.2.    G/SCM/N/155/THA 
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  9. Statistical data permitting an assessmen t of the trade effects of the subsidy  
   (Unit:  Billion Baht) 
Year Export Value in EPZs 
2003 338.53 
2004 462.93 
2005 415.06 
2006 378.60 
 
 Note :  There are 10 EPZs in Thailand .   
 
  
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