Thailand seeks to lure companies fleeing China with 50% tax break – effects on real estate seen

Thailand Seeks To Lure Companies Fleeing China With 50% Tax Break

The Thai government has introduced a package of incentives for companies in China affected by the China-US trade war to relocate manufacturing to Thailand, including a 50-per cent corporate tax break. To qualify for the incentives, companies must invest one billion baht ($32.7 million) or more in the country and carry out the investment by 2021. Approved investors in Thailand will see their corporate tax obligations reduced by half for five years.

To encourage training of skilled workers, tax breaks will be offered to offset the cost of building training centers and providing employee development programs. Labour rules will be eased to help skilled foreigners work in Thailand, the announcement said.

Beyond offering tax relieve, the government also will create a single portal that advises companies on their applications and allows them to file.

The incentives show Thailand is seeking to attract foreign investment in competition with booming neighbours like Vietnam as the country wants to transform its manufacturing sector into higher-value activities.

Experts say that the incentives will not only have an effect on the Thai manufacturing sector, but also on the country’s real estate market.

“We believe the Thai government’s newly announced incentives to companies relocating from China will be successful to at least a small degree,” Georg Chmiel, executive chairman of Chinese property portal Juwai.com, said.

“Investment in Thailand has been restrained in 2019 by the high baht. The trade war has had further negative impact by reducing demand for Thai exports in their largest market, China,” he added.

But Thailand was winning some direct investment as an alternative to China, Chmiel said, citing motorcycle maker Harley Davidson as an example. But there were also risks, he noted, because the Thai industry is integrated into the Chinese supply chain. When Chinese exports fall, so do Thai exports.   

“If Bangkok’s new incentives attract new investment to Thailand, as we believe they will, there will be an impact on real estate. The most direct increase in demand will be in the industrial and commercial property markets. In as much as Chinese companies take up the incentives, there will also be an increase in Chinese participation in the residential rental and transaction market,”Chmiel remarked.

Data shows that in 2018, Chinese buyers spent $630 million on Thai residential property and made up approximately 50 per cent of foreign buyers in Bangkok.

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The Thai government has introduced a package of incentives for companies in China affected by the China-US trade war to relocate manufacturing to Thailand, including a 50-per cent corporate tax break. To qualify for the incentives, companies must invest one billion baht ($32.7 million) or more in the country and carry out the investment by 2021. Approved investors in Thailand will see their corporate tax obligations reduced by half for five years. To encourage training of skilled workers, tax breaks will be offered to offset the cost of building training centers and providing employee development programs. Labour rules will be...

Thailand Seeks To Lure Companies Fleeing China With 50% Tax Break

The Thai government has introduced a package of incentives for companies in China affected by the China-US trade war to relocate manufacturing to Thailand, including a 50-per cent corporate tax break. To qualify for the incentives, companies must invest one billion baht ($32.7 million) or more in the country and carry out the investment by 2021. Approved investors in Thailand will see their corporate tax obligations reduced by half for five years.

To encourage training of skilled workers, tax breaks will be offered to offset the cost of building training centers and providing employee development programs. Labour rules will be eased to help skilled foreigners work in Thailand, the announcement said.

Beyond offering tax relieve, the government also will create a single portal that advises companies on their applications and allows them to file.

The incentives show Thailand is seeking to attract foreign investment in competition with booming neighbours like Vietnam as the country wants to transform its manufacturing sector into higher-value activities.

Experts say that the incentives will not only have an effect on the Thai manufacturing sector, but also on the country’s real estate market.

“We believe the Thai government’s newly announced incentives to companies relocating from China will be successful to at least a small degree,” Georg Chmiel, executive chairman of Chinese property portal Juwai.com, said.

“Investment in Thailand has been restrained in 2019 by the high baht. The trade war has had further negative impact by reducing demand for Thai exports in their largest market, China,” he added.

But Thailand was winning some direct investment as an alternative to China, Chmiel said, citing motorcycle maker Harley Davidson as an example. But there were also risks, he noted, because the Thai industry is integrated into the Chinese supply chain. When Chinese exports fall, so do Thai exports.   

“If Bangkok’s new incentives attract new investment to Thailand, as we believe they will, there will be an impact on real estate. The most direct increase in demand will be in the industrial and commercial property markets. In as much as Chinese companies take up the incentives, there will also be an increase in Chinese participation in the residential rental and transaction market,”Chmiel remarked.

Data shows that in 2018, Chinese buyers spent $630 million on Thai residential property and made up approximately 50 per cent of foreign buyers in Bangkok.

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