Thailand Investment Review, February 2015

CONTENTS
February 2015
Volume 25
No. 2
Page
Tech-Savvy Thailand 1
News Bites / BOI Net Applications 2
Thailand: Increased Consumer and
Investor Confidence
4
Industry Focus: E&E Industry 5
Company Interview:
Seagate Technology
7
PWC CEO Survey 9
Bangkok, A Visitors Choice
Destination
10
BOI’s Missions and Events 11
Thailand Economy-At-A-Glance 12
Continued on P. 3
Tech-Savvy Thailand
As Thailand surges up the ladder of economic development, the country naturally
has moved away from an over-reliance upon labour-intensive industries to a more
tech-savvy, knowledge-based economy. To further support this move towards a
high value-added economy, the government has prioritised the development and
promotion of science, research and development, technology and innovation.
The Ministry of Science and Technology is now looking to increase the budget
on research and development to one per cent of GDP, enhance SME’s access
to technology and improve the education system, incentive system, regulations
and laws. Furthermore, large funding initiatives to help Thailand develop its own
technologies will be promoted in certain sectors such as clean energy, railways,
automotive, electricity, water and waste management.
Thailand’s National Innovation Agency (NIA) supports the nation’s innovation
development with a focus on three strategic areas, namely, Bio-Business,
Eco-Industry and Design & Solutions. There are also programmes to upgrade
innovation capacity in the Bioplastics Industry and the Organic Agriculture
Business. The National Innovation Awards is one of the NIA’s mission to
promote an innovative culture in Thailand. To celebrate the 10th anniversary
of the National Innovation Awards, 25 top innovative projects in the area of
economic and social contribution awarded in the last decade were published in
the BrandAge Essential Magazine. You can learn more about some of these
projects below.

NEWS BITES BOI NET APPLICATIONS
Government Accelerating
Infrastructure Development in
Special Economic Zones
The Government is accelerating infrastructure
development, especially the logistics system,
in special economic zones.
The government’s policy is to promote
connectivity and regional economic
development on a sustainable basis. There
are currently 13 major border economic areas
in Thailand, with trade and investment valued
at almost 800 billion baht a year.
At a meeting of the Committee on the Special
Economic Development Zone Policy, 19
January 2015, the Government approved an
infrastructure development plan in special
economic zones. The plan comprises 45
projects for 2015, which require a budget of
2.6 billion baht. Another 79 projects, worth 7.9
billion baht, will be carried out in 2016.
The Ministry of Labor has been instructed to
seek ways to manage migrant labor in these
zones. Migrant workers will be allowed to work
here and return to their countries on the same
day. Moreover, relevant government agencies
were told to prepare for the establishment
of the zones, in terms of local public health,
education, and safety measures.
Bureaucratic Reform in
Facilitating the Granting of
Official Permission
People will find it easier to seek official permission from all
government agencies in Thailand, as the country’s Facilitation
of Official Permission Granting Act 2015 was published in the
Royal Gazette on 22 January 2015 and will be effective within
180 days.
The principles of good governance were taken into consideration
in order to increase efficiency in the public sector and reduce
costs for the people. In order to facilitate the granting of official
permission, a “guidebook for the people” will be offered to provide
them with details about applications for various services, such
as the steps for submitting documents, the length of time, and
service fees. The clear information will enable the people to work
out their business plans and make it possible for officials to work
with greater transparency. A new channel through electronic
media will also be provided, so that people will not have to come
to government offices themselves for the applications.
2012
(US$ = 31.57 THB)
2013
(US$ = 32.34 THB)
2014
(US$ = 32.90 THB)
Number of
projects
Value
Number of
projects
Value
Number of
projects
Value
Total Investment 2,582 46,773 2,237 34,334 3,469 66,738
Total Foreign Investment 1,584 20,525 1,132 16,227 1,573 31,094
By Sector
Agricultural Products 85 1,026 64 742 116 2,188
Minerals / Ceramics 34 506 28 1,144 60 3,155
Light Industries / Textiles 80 1,080 59 327 80 954
Automotive /
Metal Processing
532 7,424 378 7,668 458 8,348
Electrical / Electronics 289 4,943 207 2,784 267 4,138
Chemicals / Paper 228 2,665 124 722 260 7,382
Services 336 2,881 272 2,838 332 4,929
By Economy
Japan 872 11,846 562 8,746 672 8,916
Europe 166 1,697 132 972 234 4,672
Taiwan 53 280 53 216 75 789
USA 53 783 55 359 74 3,979
Hong Kong 72 1,669 39 624 45 781
Singapore 134 858 93 704 127 1,337
By Zone
Zone 1 417 2,618 366 3,339 381 3,309
Zone 2 922 14,867 586 7,897 857 19,749
Zone 3 245 3,040 180 4,990 335 8,028
Unit: US$ Million
Note: Investment projects with foreign equity participation from more than one country are
reported in the figures for both countries.
February 2015
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Continued from P. 1
Continued on P. 4
DINSOW MINI – ROBOT FOR THE ELDERLY
Dinsow Mini was developed by CT Robotics. It is the first robot
in the world that cares for the elderly people and was awarded
“Honorable Mention Consolation Prize” for Social Contribution
from the NIA in 2014. Other uses for the robot have also been
found such as being waiters in a restaurant in Sweden.
The impetus for developing the Dinsow Mini stems from the
increase proportion of the elderly population who may sometimes
have to care for themselves at home. In order to meet the actual
needs of the elderly, the developers of the robot did extensive
field work to collect data directly from the elderly, caretakers and
family members.
While the first few versions of the Dinsow Mini were focused
on entertainment and basic conversations, the current version
has become more sophisticated and is the result of various
technologies working together, such as image processing, voice
recognition and telemedicine. It is particularly suitable for elderly
people with limited mobility or those who are bed-ridden usually
from the age of 80 years onward.
The Dinsow Mini can prevent the elderly from falling, by detecting
them through its monitor, and also act as an alarm by reminding
them to eat and exercise at the right time. In addition, it can
also collect health data such as blood pressure and if anything is
abnormal, it will send a signal to a smartphone to seek medical
attention from doctors. Family members who live far away can
upload various contents onto the robot to entertain their elderly
relatives such as movies, music or photos.
The robot can also help the elderly maintain good mental health.
Even though it cannot completely replace a human, it can still
help the patient relax and act as a companion. Doctors and
family members can download the free Dinsow Application onto
their smartphone to start a video call with the patient. Family
members using the smartphone application can turn the robot’s
head and see what the robot sees in real time. This allows
doctors and family members to react immediately if there is an
emergency.
The developers decided to give the robot a characteristic of a
10 year old boy because this is the age when children are cute,
curious and carefree. Dinsow Mini comes in two sizes, one
weighs less than 20kg and the other less than 10kg. The smaller
version is aimed at countries such as Japan where residence
space is more limited.
The fourth version of the Dinsow Mini with moving ability is under
development and expected to be completed in the second half of
2015. The fifth and sixth versions which will be designed to care
for the elderly with specific illnesses are in the pipeline.
BLURIBBON –
DRESSING FOR HARD
TO HEAL WOUNDS
“BluRibbon” is a world-class
innovative, advanced wound
dressing product developed
by Novatec Healthacare, a
Thai medical device company
awarded winner of National
Innovation Awards 2012 for
Social Contribution and Gold
Medal Award from the Grand Prix of the 40th International
Exhibition of Inventions in Geneva 2012.
BluRibbon was developed from the combination of two technology
platforms, namely, nano-biocellulose technology and engineered
Blue Silver Nanotechnology. BluRibbon can speed up the wound
healing process due to maintaining a moist wound environment
and helping to clean the wound with its autolytic debridement and
anti-microbial action. Preclinical and clinical tests have shown
that BluRibbon has a better and faster wound healing effect
especially for hard to heal wounds such as diabetic foot ulcer,
pressure sore and cavity wounds. The company is aiming to list
BluRibbon as a standard treatment for diabetic foot ulcer with the
World Health Organization.
BluRibbon also allows easy and painless removal with no wound
residue left. Unlike normal wound dressings which must be
changed daily, BluRibbon can be changed two to three times a
week to be effective for moist wounds. The colour of the dressing
changes after the release of Silver ions which indicates the
proper time to change the dressing.
BIOMASS GASIFICATION PLANTS: RECYCLING
MATERIALS FOR SUSTAINABLE ENERGY
With rising energy needs and prices, it has become important for
Thailand to produce environmentally-friendly, alternative energy
at a low cost. One of the options available that has an important
role for energy sustainability in Thailand is biomass due to the
abundance of waste from the local agriculture industry.
A Thai company, Alternative Energy Systems, has developed
small biomass power plants using gasification process, a simple
and environmentally-friendly technology that also promotes local
labour and can produce energy without water. Small power plants
February 2015
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Continued from P. 3
are particularly suitable for small communities in rural areas due
to its low investment. The innovation received “Silver Prize”
in the economic category of the National Innovation Awards in
2014.
The first plant was built in Chiang Rai province with a production
capacity of 160 kilowatts per hour in 2007. At least 40 000 tons
of corn cropped in the area which is usually burnt as waste
each year is now being used as fuel for the plant. In 2010, the
company expanded its business to Roi Et province and built a
biomass power plant with a larger production capacity of 350
kilowatts per hour using eucalyptus waste as fuel.
Currently there are three biomass power plants using gasification
technology in Thailand. Alternative Energy Systems is now
looking to develop a prototype plant to produce low-cost liquid
fuel from biomass in Thailand.
By the Thai Office of Science and Technology, Brussels
Thailand: Increased Consumer
and Investor Confidence
The United Nations Economic and Social Commission for Asia
and the Pacific (ESCAP) released its 2014 year end update of the
Economic and Social Survey of Asia and the Pacific. According
to ESCAP the Survey “… has been monitoring regional progress,
providing cutting-edge analyses and guiding policy discussion
on the current and emerging socioeconomic issues and policy
challenges to support inclusive and sustainable development in
the region since 1947.”
The region, writes ESCAP, will see a moderate increase in
growth to 5.8% in 2015 from 5.6% in 2014, with inflation dropping
to 3.5 percent from 3.9 percent over the same period. Driving
this change is the improved economic situation in a number of
countries, including Thailand.
The report notes among the challenges that confront the
region is a lack of infrastructure which has held back growth in
manufacturing and trade. “At the domestic level, the contribution
of the private sector to infrastructure development can be
significantly increased through growth in capital markets and
better use of public-private partnerships (PPPs).”
It is pertinent to note that the government in Thailand has
announced its intention to embark on infrastructure enhancement,
with attention being given to connectivity to neighboring
countries. Already several bridges have been built across the
Mekong in order to boost investment, trade and tourism with
Thailand’s neighbors, and plans are underway to improve rail
connections. In fact, the Survey recognizes the actions being
taken by Thailand to enhance infrastructure development.
The forecast for Thailand’s economic growth this year is for 3.9
percent, which is in line with the estimates offered by government
officials at approximately 4 percent, marking a significant
improvement over the previous year. ESCAP writes that “The
assumption of power of a military government in mid-2014 has
increased consumer and investor confidence in the short-term as
it has brought a halt to an extended period of political instability.
The main economic action of the government in 2014 has been
to resume government budgetary spending and planning for
large infrastructure spending.”
In terms of exports, “ESCAP forecasts that merchandise export
growth could increase to 6.8% for the developing Asia-Pacific
region in 2015. This rebound will be conditional upon several
factors, including among others (a) sustained recovery and
growth in developed economies and (b) policy support measures
being put in place to stimulate trade in major developing countries
in the region.”
On a positive note for Thailand, ESCAP estimates that for
energy-importing countries a $10 per barrel fall in the oil price
in 2015 would translate into an increase in GDP growth of up to
0.5 percentage points. Some investment sources have already
made crude oil price forecasts as low as $31 by the end of the
first quarter of 2015. This is in stark contrast to the 2013 OPEC
Reference Basket average of US$106/b. ESCAP notes that
Thailand is among the energy importing countries that would
benefit from the drop in oil prices, and that “Thailand would
experience the highest increase in current account balance, of
2.2% of GDP.”
The beginning of the ASEAN Economic Community is seen as
something that will “further improve the business environment
and contribute to growth performance across the subregion.” The
Survey refers to the ASEAN summit meeting held last November,
noting that “82.1% of the 229 prioritized deliverables identified
for 2013 and an additional 61 deliverables for 2014-2015 under
the AEC Blueprint had been implemented. The priority for 2015
is to fast track the implementation of remaining measures aimed
at: addressing non-tariff barriers; realizing the customs single
window; and deepening services and investment liberalization.”
While risks and challenges remain, it is clear from the Survey
that Thailand continues to make progress in strengthening its
economy, and will benefit from the coming AEC.
February 2015
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INDUSTRY FOCUS
E&E Industry
The Kingdom of Thailand is renown throughout the world for its
highly productive automotive sector, its wide-ranging tourism
industry, and quality food production, just to mention a few notable
segments of the Thai economy. Yet the country has a dynamic
electronics and electrical appliances industry (hereafter referred
to as E&E) that manufactures and exports to markets around the
globe. Indeed, the sector has long been important to Thailand,
first as a manufacturer of “white goods,” then computers and
parts, and now integrated circuits, hard disk drives, and printed
circuit boards.
Constituting a nearly US$100 billion industry, Thailand’s E&E
sector has thrived and expanded continuously for almost three
decades. Throughout the years, the E&E industry not only has
played an increasingly significant role in the national economy
as a major export earner, but also has positioned Thailand as
the regional leader in Southeast Asia. Recognizing the need
for sustainable development of the E&E industry as a priority
for the Kingdom, the Thai government has launched proactive
investment policies and measures, which have resulted in capital
infusions from many multinational companies and caused the
industry to experience further prosperity.
When surveying the overall E&E sector, Thailand’s exports were
US$55 billion in 2014, 30% of total exports. It is an industry that
Thai officials vigorously promote, particularly as it contributes to
the country’s goal of becoming a knowledge-based economy,
and it has strong supply chain network. Thailand is ASEAN’s
largest production base for electrical appliances, and is the
world’s 2nd largest producer of air conditioning units and 4th
largest producer of refrigerators. In 2013, Thailand’s electrical
appliance exports were valued at US$22.6 billion, while exports
of electronics reached US$30.8 billion. Major export destinations
for Thailand’s electrical appliances include ASEAN, Japan,
European Union, US, and China.
With over 800 electrical appliance factories across the country,
the Kingdom has attracted numerous world-renowned foreign
and joint-venture companies from across the globe. Japanese
manufacturers constitute half of the industry: JVC, Sony, Orion,
Nikon, Pioneer, Panasonic, Canon, Sharp, Hitachi, Mitsubishi,
Toshiba, TDK, NEC, Stanley, Rohm, Alps Electric, Epson, Alpine,
Minebea, NHK, Seiko, Sanyo and Fujitsu, among many others
are represented in Thailand. Additional prominent international
firms include Tatung and Acer from Taiwan; LG and Samsung
from South Korea; Western Digital, Seagate, Hutchinson,
Honeywell, Carrier, Emerson and Spansion from the US; as well
as Europe’s Electrolux, Philips, Stiebel Eltron, Schneider, BHS,
ABB and Fasco. These companies have established facilities for
a diverse scope of purposes, from production and assembly to
testing and R&D.
In 2013, Thailand’s main electronics exports WEre hard disk
drives (HDD) and integrated circuits (IC), which accounted for
approximately US$11.79 billion and US$7.42 billion worth of
total electronics exports, respectively. Major HDD producers –
Western Digital, Seagate, Hitachi and Toshiba – have production
facilities in Thailand. Similarly, the country is recognized as a
leader in the IC and semiconductor industries, and boasts one of
the largest concentrations of assembly plants in Southeast Asia
for these products.
Looking at 2015, overall production of the E&E industry should
expand 1-2%, owing to an increase in exports of air conditioners
to ASEAN members, Thailand’s major trading market. Semi-
conductors and integrated circuits should escalate, resulting from
higher demand due to their use in communication systems, such
as smart phones, tablets, Bluetooth, touch screens, video games
(Sony PS4 and Microsoft Xbox), consumer electronics, and
other electronic devices designed specifically for the automotive
industry. Meanwhile, the production of hard disk drives (HDDs)
should be stable when compared with the previous year. The MPI
prediction for 2015 should grow 2-4%, stemming from economic
stimulus measures and expansion of the digital television
market, which could lead to a recovery of the country’s consumer
purchasing power in 2015. Moreover, electrical appliance exports
to ASEAN should increase in accordance with the region’s
economic growth and greater confidence on the part of ASEAN
consumers in products manufactured in Thailand.
A hard disk drive (HDD) is a data storage device used for storing
and retrieving digital information. Introduced by IBM in 1956,
HDDs became the dominant secondary storage device for
general-purpose computers by the early 1960s. Continuously
improved, HDDs have maintained this position into the modern
era of servers and personal computers. More than 200
companies produce HDD units, though Seagate, Toshiba and
Western Digital manufacture most current devices. Worldwide
disk storage revenues were US $32 billion in 2013, down 3%
from 2012.
HDD production in Thailand began in around 1983 after Seagate
February 2015
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Technology shifted its head-stack assembly (HSA), the most
labor-intensive segment in the HDD production process, out of
Singapore. It was relatively low-wage labor as well as a favorable
investment climate in the Kingdom that enticed HDD makers.
Back then, the imported content of HSA exports was close to
80%. Despite the presence of high tariffs, HDD manufacturers
were eligible for exemption schemes as their products were
principally for export.
Accordingly, since the early 1980s, production capacity expanded
considerably and new activities related to HDD manufacturing
were added, while numerous parts suppliers and other HDD
makers entered the market. In 1987, Seagate augmented its
operations as well as started high-volume production of Head-
Drive Assembly (HDA) in the Kingdom. Later, IBM formed a joint
venture with the Thai conglomerate, Saha Union, in 1991 and
commenced operations in 1995, followed by its own production
facility in 1997. By the end of 1990s, IBM affiliates in Thailand
accounted for approximately two-thirds of the company’s global
output of HDDs.
Expansion of the HDD sector continued in the 1990s so that
industrial clustering occurred often throughout the decade. Such
an expansion induced parts suppliers to set up their affiliates
nearby. Concentrated in the country’s central and northeastern
regions near Bangkok, Thailand’s HDD cluster today provides
companies the ideal combination of efficiency, cost-savings
and readily-available expertise. Furthermore, several Thai
government agencies and organizations support the growth
and development of the E&E industry. For instance, there is
the Electrical and Electronics Institute (EEI), Hard Disk Drive
Program, International Drive Equipment and Manufacturers
Association (IDEMA), Asian Institute of Technology (AIT),
Institute of Field Robotics (FIBO), National Electronics and
Computer Technology Center (NECTEC), and the Thailand
Science Park (TSP), which is operated by the National Science
and Technology Development Agency (NSTDA).
The Thailand Board of Investment (BOI) offers a wide range
of fiscal and non-tax incentives to investors keen on the E&E
industry. With the recent announcement of the Seven-Year
Investment Promotion Strategy (2015-2021), the BOI has
introduced new criteria and project classifications that apply to
the HDD sector. Let’s examine them individually.
This particular activity falls under category A2, however the areal
density of hard disk drives must not be less than 2,000 gigabits
per square inch. And secondly, the cost of refurbishment of used
machines is to be regarded as an investment and will be taken
into account in the calculation of corporate income tax exemption
cap. The original cost of used machines will not be regarded as
an investment. If these requirements are met, the project can
receive the following incentives:
• 8-year corporate income tax exemption, accounting for 100%
of investment (excluding cost of land and working capital);
• Exemption of import duty on machinery;
• Exemption of import duty on raw or essential materials used
in manufacturing export products for 1 year, which can be
extended as deemed it appropriate by the Board; and
• Other non-tax incentives.
Similarly, the manufacture of hard disk drives and/or parts
(excluding top covers, base plates or peripherals) must abide
by the guideline that the cost of refurbishment of used machines
shall be regarded as an investment and will be taken into account
in the calculation of corporate income tax exemption cap. The
original cost of used machines shall not be regarded as an
investment. Moreover, because it is considered as a Group A3
activity such projects shall receive the following incentives:
of investment (excluding cost of land and working capital)
unless specified in the list of activities eligible for investment
promotion that the activity shall be granted corporate income
tax exemption without being subject to a corporate income tax
exemption cap;
in manufacturing export products for 1 year which can be
Finally, there is the manufacture of top covers, base plates or
peripherals for hard disk drives. This is a Group A4 activity and
accordingly shall receive the following incentives:
of investment (excluding cost of land and working capital);
in manufacturing export products for 1 year, which can be
Considering the increase in global demand for high-technology
consumer electronics, including computers, flat panel displays,
February 2015
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Continued on P. 8
tablets, gaming consoles, and wireless devices, Thailand is
the ideal destination for the sector. Currently, the HDD and the
electronics segments of the E&E industry have contributed a
great deal to the Thai economy. There are more than 100,000
workers employed by the HDD industry and more than 300
billion baht worth in exports. However, there are challenges
that the country must confront in order to maintain its status
as the world’s number one HDD production base, for example,
competing with other developing countries, such as China and
Malaysia. In addition, Thailand is focused on enhancing its
R&D capacity regarding the use of advanced technologies in
HDD production and developing the requisite infrastructure for
supporting the growth of the HDD segment in the future.
The Kingdom’s strategic location in Southeast Asia and high-
output manufacturing facilities has made it a premier production
base for the global E&E industry. Foreign companies are drawn
by the low-cost yet highly-skilled Thai labor force and government
initiatives that forge constructive partnerships between the
private sector and public research institutes. Despite the fact
that Thailand is a world leader in the production of HDDs, many
components like semiconductor devices, transistors, and diodes
are still imported, leaving an opening for more foreign direct
investment and further opportunity for local manufacture. With
strong growth in demand as well as with comprehensive support
from the government, Thailand finds itself on the path towards
becoming a real international hub of the E&E industry.
Seagate Technology
When one thinks about Thailand, certain postcard images come
to mind, but certainly not electronics. And yet, the Kingdom
functions as one of the largest assembly bases in the Asia-
Pacific region. It is a global leader in hard disk drive (HDD)
production and a leading manufacturer of integrated circuits (IC)
and semiconductors (SC). Actually, Thailand produces more
than 40% of the world’s HDD output, contributing significantly to
the Thai E&E industry’s US$55 billion in annual exports. Many
leading advanced electronics firms are present in the Kingdom
but one company stands out.
Seagate Technology is a global data storage company that was
established in 1979.At present, it is incorporated in Dublin, Ireland
and has its principal executive office in Cupertino, California,
USA. Seagate offers the industry’s broadest portfolio of hard disk
drives, solid state drives and solid state hybrid drives. In addition,
the company provides an extensive line of retail storage products
for consumers and small businesses, as well as cloud storage
systems and solutions, along with data recovery services for any
brand of hard drive and digital media type.
Since opening its operations in Thailand in 1983, Seagate has
invested more than US$2.5 billion in capital and it has built two
manufacturing facilities with over 16,000 employees. Seagate’s
Teparuk, Samut Prakan facility initiated operations in 1988.
This world-class facility employs state-of-the-art manufacturing
technology and machinery to produce head gimbal assembly
(HGA) and head stack assembly (HSA), R&D and Global
Financial Services. The facility occupies a land area of 18.1
acres with a built-up area of 800,000 square feet. Meanwhile,
the Korat campus began production in 1996. It is the largest
hard drive facility in the world. This facility produces slider, head
gimbal assembly (HGA), head stack assembly (HSA), and drive
assembly and R&D. The plant occupies a land area of 59.6
acres and has a built-up area of about 2,500,000 square feet.
Interestingly, neither campus is located in an industrial estate.
Not long ago the Thailand Investment Review team was afforded
the opportunity to interview Mr. Jeffrey Nygaard, Senior Vice
President of Global Head Operations. It was a fitting moment
to learn more about Seagate as a corporate organization, its
business activities in Thailand, and the company’s future plans.
Glancing at his resume, Mr. Nygaard has more than 20 years of
experience in design and operations. In 1994 he joined Seagate
and held a variety of managerial and executive positions in both
the US and Asia. Twelve years later, in August 2006, he returned
to the Kingdom as the Vice President and Country Manager for
Thailand operations. Then in June 2009, his role was expanded
to include operations in Penang, Malaysia. Later, in 2013, Mr.
Nygaard was promoted to the position he currently occupies.
Accordingly, he now has responsibilities for Seagate’s wafer
fabrication in the US and Ireland, in addition to the Slider and
HGSA manufacturing in Thailand, Malaysia, and China. The six
sites situated across three continents comprise about US$3.6
billion in capitalization and 19,000 employees.
To begin, Mr. Nygaard explained that a key asset of Seagate is its
human resources. The overwhelming majority of the company’s
team members are locally-hired Thais. Upon closer inspection,
90% of Seagate operators have high school diploma, while the
remaining 10% graduated with a bachelor degree or continued
on to the master degree level. Seagate technicians have a
two-year associate degree that qualifies them to work with the
sophisticated machinery used in production. The assembly
floor at Seagate is fully automated and therefore it is essential
that the skills and knowledge of the work force be upgraded on
a consistent basis through training. At the professional level, to
support Operations, R&D, and Global Finance Services, 73%
have bachelor degree, 26% hold a master degree, and 1% have
a PhD, primarily in the fields of physics and engineering.
COMPANY INTERVIEW
February 2015
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Continued from P. 7
Mr. Nygaard mentioned that a number of Thai employees are
given the chance to gain overseas experience through either
normal business travel or the Seagate exchange program.
This can last from three months to one year depending on the
qualifications of the job and involves the participation of some
16 to 20 staff per quarter. As Seagate is a vertically integrated
company and its supply chains are interrelated on a global scale,
it is vital that Thai team members understand the business
operations of Seagate not only on a national level, but also
worldwide. Consequently, the development of the company’s
Thai human resources occurs regularly by way of intra-firm
transfers or off-site training sessions.
Meanwhile, between six to seven expatriates work at
Seagate’s Thai facilities at any one time. Contrary to the
standard multinational model, these expat team members are
focused primarily on either technology transfer and support
or management and leadership development. With a very
employee-centric environment in place, the attrition rate is low.
It is obvious that for Mr. Nygaard a skilled work force is a major
reason for the success Seagate has attained in Thailand.
For the past 15 years, Seagate’s Thailand R&D center has
developed technical expertise in manufacturing processes, such
as high-precision assembly and fabrication processes, nano-
metrology, complex test and analysis. Manufacturing-related
R&D ownership transfers (i.e. complex process technology,
sophisticated automation and advanced metrology) have been
made from the US to Thailand in the past several years as
well. Further, over the past several years, there is an increasing
focus on product development. Without a doubt, Seagate has
significant R&D activities in Thailand and its R&D spending in
Thailand amounted to US$55.4 million for fiscal year 2014.
Likewise, Seagate collaborates closely with local universities
in R&D activities. Since 2003, the company has launched
engineering hubs with Khon Kaen University (KKU), Suranaree
University of Technology (SUT), and King Mongkut Institute of
Technology - Latkrabang (KMITL). The aim is to give graduate
students hands-on activities and experience with recording
technology as well as to supplement Seagate’s own personnel
development purposes. This partnership was boosted
significantly during 2007-2011 with the Thai government’s
support through the HDDI initiative of the National Science and
Technology Development Agency (NSTDA). As a result, R&D
ownership transfers have occurred from the US to Seagate’s
Thailand campuses in the areas of process technology, process
metrology, and automation technology.
Another outstanding feature of Seagate is its strong culture of
corporate social responsibility. During the Thailand floods in
2011-2012, the company sponsored US$1 million for its Thailand
floods relief and recovery fund. Being a environmentally friendly
company, Seagate has taken many steps to minimize the
environmental impact of its operations. Seagate is committed
to Corporate Social Responsibility efforts to raise the interest of
the young in science, technology, engineering and math (STEM)
education through hands-on learning opportunities for children.
As part of this focus, Seagate looks to inspire tomorrow’s digital
creators, consumers and innovators by catalyzing students’
interest in STEM education. The company also places an
importance on extending these learning experiences to the
disadvantaged as part of its outreach to surrounding communities.
Similarly, Mr. Nygaard highlighted how Seagate affords the
opportunity to its assembly workers of completing their high
school education by providing subsidized classes on-site during
off-hours. Additionally, Seagate has set aside US$3.5 million for
R&D projects and joint scholarships with top Thai universities as
well as sponsoring 10 company scholarships for higher education.
Corporate social responsibility is not just about helping one’s
neighbors or looking after the environment, but improving the
lives of the employees.
Earlier this month, Seagate made headlines for its announcement
regarding an investment of Bt15.3 billion over five years to
expand its manufacturing and development facility in Nakhon
Ratchasima province, also known as the Korat campus – already
its largest hard drive manufacturing plant in the world. “The
expansion is to accommodate the new wave of technology for
making cloud-based storage equipment, ranging from storage
components to computing systems,” Mr. Nygaard announced
to the Bangkok Post. The new building will open in 2016 and
become fully operational by 2020, thereby creating 2,500 jobs.
Seagate’s expanded Korat campus will focus on data-storage
components, finished products and R&D.
To illustrate the importance of Seagate to the Thai economy, Ms.
Ajarin Pattanapanchai, senior executive adviser to the Board of
Investment, affirmed that over the past eight years, the BOI had
incentivised Seagate to make hard-disk drives and components.
“Under the long-term investment policy to promote the electronics
industry in Thailand, we have approved eight projects of Seagate
Technology that together have the value of Bt55.6 billion. This
investment is one of them,” she was quoted by The Nation.
In a recent article published by the Bangkok Post, Mr. Nygaard
declared that the prospects of data storage looked very
promising, as it is a strong growth industry. He cited demand for
video content, social media, big data analytics and cloud-based
services. Data storage will continue to expand at 26% per year
through 2020, when the data storage market is expected to
be three or four times its current size and about 60% of it will
be in the cloud. More big data is to come as demand keeps
increasing from governments and the private sector, especially
manufacturing, retail, media, banking, real estate and science.
Asia is the largest revenue source for the industry.
When asked to identify some of the principal trends in the
industry, Mr. Nygaard was quick to highlight the following:
Interconnectedness of people, Video, and Big Data. Seagate is
at the forefront in advancing these technologies but the market
contains other heavy hitters so the contest to remain in the
lead is intense. Regarding the HDD sector, there is plenty of
competition in Thailand but this environment acts as a catalyst
for better productivity, greater efficiency, product innovation, and
enhanced creativity in problem-solving.
Seagate is committed to Thailand. It was reported by The Nation
that the company will continue to invest in the Kingdom for three
reasons – it has strong teams, both technical and operating, Asia
is a high-growth market for data storage, and the cost structure
for professionals, both engineers and technicians, is still good.
Plus, the four largest manufacturing bases in Asia for Seagate
are in Thailand, China, Malaysia and Singapore. Taken as a
whole, Asia contributes more than 40% of the company’s total
revenue. In fact, Seagate exported Bt110 billion worth of hard
drives in 2014.
Turning to the matter of the Board of Investment (BOI), Seagate’s
Senior Vice President of Global Head Operations remarked
that there has been productive and substantive interaction and
collaboration between the two organizations over the span
of three decades. As examples, he indicated BOI’s active
February 2015
Page 8

PWC CEO Survey
“It’s not simply economic fundamentals that worry CEOs. Over-
regulation is cited by 78% as a concern. And these concerns are
not limited to industry-specific regulations but go much broader
into areas like trade and employment” writes Dennis M. Nally,
chairman, PricewaterhouseCoopers International Limited in the
PWC 18th Annual CEO Survey entitled A marketplace without
boundaries? Responding to disruption. The Survey interview
1,322 CEOs in 77 countries.
At the outset, the Survey points to the essential need for business
leaders to understand technology, or more specifically how
technology is affecting their business, requiring them to identify
company strengths even as the business environment rapidly
changes. A clear signal for optimism is that 61% of the CEOs
surveyed see more opportunities than they did three years
ago, and 39% are very confident of growth. This is balanced
against the fact that only 37% are optimistic about global growth
prospects, compared to 44% last year. “Of course, digital change
throws up as many opportunities as risks. We think that’s why
there’s an underlying sense of optimism for many CEOs, despite
the picture they’re painting this year of an increasingly fluid and
disrupted business environment.”
The top three key threats identified by CEOs in the Survey are first,
as noted above, over regulation, at 78% which is a 6% increase
over last year. Second is the availability of key skills at 73%, and
sharing third place at 72% is both Government response to fiscal
deficit and debt burden, and Geopolitical uncertainty. CEOs have
identified regulatory change as the number one disruptor within
their industries over the next five years, followed by increased
competition and changes in customer behavior.
Many business leaders are rethinking their approach to customers
and markets, with 54% saying that they have entered a new
sector or sub-sector in the past three years and 56% considering
it likely to compete in new industries over the next three years.
This applies to large corporations as well as smaller firms with
revenue up to $100 million, with 51% entering new sectors or
sub-sectors in the past three years.
“No matter how CEOs choose to rethink their capabilities, there
are three factors they’ve told us are vital for success:
1.Creatingnewvalueinnewwaysthroughdigitaltransformation
2. Developing diverse and dynamic partnerships
3. Finding different ways of thinking and working.”
When asked about the extent digital technologies are creating
value for their organization, 88% indicated a positive effect on
operational efficiency and on other cost structures. Of course,
with benefits come risks, cyber security has seen the biggest
jump in the list of concerns expressed. Concern about the
speed of technological change saw the second biggest jump in
concerns expressed.
According to the Survey, CEOs are also looking to develop new
partnerships and alliances. ”Fifty-one percent plan to enter into
new strategic alliances or joint ventures over the next year –
the highest percentage since we began asking the question in
2010.” Interestingly, 54% of those questions cite access to new
technologies as a reason for partnering.
A thorough read of the PWC Survey and one can easily
understand the drive of Thailand’s government to put in place the
framework for a digital economy.
Source: PWC as of February 2014
Source: PWC as of February 2014
consultation with Seagate concerning policies involving the HDD
sector, BOI’s mechanics, particularly its one-stop services for
staff, and the BOI’s assistance in navigating the connections to
the Thai government. “The BOI is trying to promote industries
in the country that promote the types of businesses that the
government and the people of Thailand want in the country”,
observed Mr. Nygaard.
Furthermore, with the ASEAN Economic Community (AEC) on
the horizon, Mr. Nygaard commented that elements of the AEC
that enable the movement of goods and people across ASEAN
is likely a good things but we need to understand the specifics
of AEC regulations. The company has a strong logistical team
that is ready to move and it is confident to retain the best and
the brightest of its team members in order to take Seagate to the
next level.
February 2015
Page 9

Bangkok, A Visitors Choice
Destination
MasterCard’s 2014 Global Destination Cities
Index, now in its fourth year, notes that the
expansion of air travel in 2013 was dramatic,
with some three billion passengers flying
commercial flights around the globe. To illustrate
the importance of this, the survey notes that
“the growth rates of international visitor arrivals
and their cross-border spending in the 132
destination cities covered by the MasterCard
Global Destination Cities Index exceeded world
real GDP growth over the 2009 to 2014 period
(2014 based on forecast estimates).”
This year Bangkok has been ranked number 2,
London comes in first. The survey notes the two
cities have been in a tight race for the number
one slot and this appears to continue to be the
case. Paris, Singapore and Dubai complete the
top five destinations. Bangkok is also ranked
fifth in terms of international tourist spending,
with spending at US$13.04 billion in 2014.
“Bangkok, ranked second in the world, is in the
top rank in the region with 16.43 million international visitors.”
And, it is second in the region in terms of tourist spending. The
survey also notes that Bangkok “has a very diversified network of
feeder cities and origin countries, which explains Bangkok’s well
known resilience as a tourism hotspot.”
The survey underlines the link between opening or upgrading an
airport and an increase in the volume of air travel. It should be
noted here that Thailand has completed its upgrade of Phuket
Airport, which was done ahead of schedule, and next year will
begin construction on an additional runway at Suvarnabhumi
airport, as part of the overall airport expansion program in
Thailand.
The survey also provides an “air hub index”, measuring a
destination city’s air connectivity with the rest of world, and the
strength of each of the connections. Bangkok ranks number 11
in this index, and the 7th fastest growing destination city by “air-
hub index.”
Given the restoration of stability in Bangkok and the return to
economic growth, as well as a government effort to increase
tourist arrivals this year, Thailand has not only remained
competitive, but has even brighter days on the horizon.
February 2015
Page 10

Mrs. Hirunya Suchinai,Acting Secretary General of BOI, delivered
welcoming remarks at Thailand’s Investment Opportunities on
Alternative Energy. The event was organized by the ASEAN-
Korea Center (AKC) and Thailand Board of Investment
(BOI) on 22 January 2015 at Centara Grand, Central World.
Mr.Pornchai Patiparnprechavut, Deputy Secretary General of
the Energy Regulatory Commission (ERC), H.E. Hae Moon
Chung, Secretary General of the AKC, and H.E. Jeon Jae Man,
Ambassador of the Republic of Korea to Thailand, also joined in
this event. (from the left).
Mr. Boonyuen Khamhong, Vice Governor of Nakhon Ratchasima,
together with Ms. Ajarin Pattanapanchai, BOI Senior Executive
Investment Advisor, presided over the seminar “New Investment
Promotion Strategies: Towards Sustainable Growth” on 21
January 2015 at the Dusit Princess Hotel, Nakhon Ratchasima,
to announce the new BOI investment promotion strategies to
investors in the Northeastern Region.
Ms. Ajarin Pattanapanchai, BOI Senior Executive Investment
Advisor, accompanied by BOI executives, presided over the
seminar “New Investment Promotion Strategies: Towards
Sustainable Growth” on 23 January 2015 at BITEC Bangna
to announce the new BOI investment promotion strategies to
Chinese and Taiwanese investors.
Ms. Ajarin Pattanapanchai, BOI Senior Executive Investment
Advisor, together with representatives from the National Science
and Technology Development Agency (NSTDA), presented
Thailand innovation in nanotechnology and attended The
14th International Nanotechnology Exhibition & Conference-
NANOTECH 2015 at Tokyo Big Sight, Tokyo, on 30 January
2015.
BOI’S MISSIONS AND EVENTS
Mr. Chanin Khaochan, Acting Executive Director of Investment
Promotion Bureau 2, accompanied by Mrs. Orapin Swadpanich,
BOI Taipei Director, led an investment mission to Taiwan from
26 – 29 January 2015 where they met with potential investors in
the machinery industry.
Mrs. Supisara Chomparn, Senior Professional Investment
Promotion Officer, together with Mr. Apipong Khunakornbodintr,
BOI Beijing Director, led an investment mission to Tianjin, China,
from 25 – 30 January 2015. The mission included an investment
promotion seminar and company visits.
February 2015
Page 11

THAILAND ECONOMY-AT-A-GLANCE
Source: Stock Exchange of Thailand
Source: Bank of Thailand
SET Monthly Closing Values
International Reserves / Short-term Debt (%)
Exchange Rate Trends
Industrial Capacity Utilization (%)
Head Office, Office of the Board of Investment 555 Vibhavadi-Rangsit Road, Chatuchak, Bangkok 10900, Thailand
Tel: +66 (0) 2553 8111 Fax: +66 (0) 2553 8316 Website: www.boi.go.th E-mail: head@boi.go.th
BEIJING
Thailand Board of Investment,
Beijing Office
Royal Thai Embassy
No.40 Guang Hua Road,
Beijing, 100600, P.R.China
Tel: (86-10) 6532-4510
Fax: (86-10) 6532-1620
E-mail: beijing@boi.go.th
FRANKFURT
Frankfurt Office
Bethmannstr. 58, 5.OG
60311 Frankfurt am Main
Federal Republic of Germany
Tel: (49 69) 92 91 230
Fax: (49 69) 92 91 2320
E-mail: fra@boi.go.th
GUANGZHOU
Guangzhou Office
Royal Thai Consulate-General
Guangzhou
No.36 Youhe Road, Haizhu
District, Guangzhou, P.R.C
510310
Tel: +8620 8385 8988
Ext. 220-225
+8620 8387 7770 (Direct Line)
Fax: +8620 8387 2700
E-mail: guangzhou@boi.go.th
LOS ANGELES
Los Angeles Office
611 North Larchmont Boulevard,
3rd Floor, Los Angeles, CA
90004 USA
Tel: (1-323) 960 1199
Fax: (1-323) 960 1190
E-mail: boila@boi.go.th
MUMBAI
Mumbai Office
Royal Thai Consulate-General,
1st Floor, Dalalmal House,
Jamnalal Bajaj Marg,
Nariman Point, Mumbai
400 021 Republic of India
Tel: (9122) 2204 1589-90
Fax: (9122) 2282 1071
E-mail: mumbai@boi.go.th
NEW YORK
New York Office
7 World Trade Center,
34th Floor, Suite F, 250
Greenwich Street,
New York, NY 10007
Tel: (1-212) 422 9009
Fax: (1-212) 422 9119
E-mail: nyc@boi.go.th
OSAKA
Osaka Office
Royal Thai Consulate-General,
Osaka, Bangkok Bank Bldg.
7th Floor , 1-9-16 Kyutaro-
Machi, Chuo-Ku, Osaka
541-0056 Japan
Tel: (81-6) 6271-1395
Fax: (81-6) 6271-1394
E-mail: osaka@boi.go.th
PARIS
Paris Office
Ambassade Royale de
Thailande, 8, Rue Greuze
75116 Paris, France
Tel: (33 1) 5690 2600
(33 1) 5690 2601
Fax: (33 1) 5690 2602
E-mail: par@boi.go.th
SEOUL
Seoul Office
#1804, 18th Floor, Koryo
Daeyeongak Center,
97 Toegye-ro, Jung-gu, Seoul,
100-706, Korea
Tel: (822) 319-9998
Fax: (822) 319-9997
E-mail: seoul@boi.go.th
SHANGHAI
Shanghai Office
15 F., Crystal Century Tower,
567 Weihai Road, Shanghai,
200041, P.R.China
Tel: (86-21) 6288-9728,
(86-21) 6288-9729
Fax: (86-21) 6288-9730
E-mail: shanghai@boi.go.th
STOCKHOLM
Stockholm Office
Stureplan 4C 4th Floor
114 35 Stockholm, Sweden
Tel: +46 (0)8 463 1158
+46 (0)8 463 1172
+46 (0)8 463 1174 to 75
Fax: +46 (0)8 463 1160
E-mail: stockholm@boi.go.th
SYDNEY
Sydney Office
234 George Street, Sydney,
Suite 101, Level 1,
New South Wales 2000,
Australia
Tel: +61-2-9252-4884
Fax: +61-2-9252-4882
E-mail: sydney@boi.go.th
TAIPEI
Taipei Office
Taipei World Trade Center
3rd Floor, Room 3E39-40,
No.5, Xin-Yi Road, Sec.5
Taipei 110, Taiwan, R.O.C.
Tel: (886) 2-23456663
Fax: (886) 2-23459223
E-mail: taipei@boi.go.th
TOKYO
Tokyo Office
Royal Thai Embassy
8th Fl., Fukuda Building West,
2-11-3 Akasaka, Minato-ku,
Tokyo 107-0052 Japan
Tel: (81 3) 3582 1806
Fax: (81 3) 3589 5176
E-mail: tyo@boi.go.th
Facts about Thailand
Population (2010) 66 million
ASEAN Population 625 million
Literacy Rate 96%
Minimum Wage 300 Baht/day
GDP (2013) US$ 387 billion
GDP per Capita (2013) US$5,673
GDP Growth (2013) 2.9%
GDP Growth (2014, projected) 0.7%
Export Growth (2013) -0.2%
Export Growth (2014, projected) 0.0%
Trade Balance (2013) US$ 6.7 billion
Current Account Balance (2013) US$ -2.5 billion
International Reserves (2013) US$ 167.23 billion
Capacity Utilization (2013) 64.36%
Manufacturing Production Index (2013) 175.80
Core Inflation (2014, projected) 1.9-2.9
Headline Inflation (2014, projected) 1.9-2.9
Consumer Price Index (Nov 2014) 107.19
(2011=100)
Corporate Income Tax 10-20%
Withholding Tax 0-15%
Value Added Tax 7%
Nov Average Exchange Rates
US$1 = 32.78 baht
€1 = 40.89 baht
£1 = 51.47 baht
100 ¥ = 28.25 baht
CNY1 = 5.36 baht
Top 10 Exports 2014 (Jan-Oct)
Product Share
Value
(US$ bn)
1 Motor cars, parts and accessories 10.81 20.61
2 Automatic data processing machines
and parts thereof
7.93 15.12
3 Refine fuels 5.01 9.55
4 Precious stones and jewellery 4.45 8.48
5 Polymers of ethylene, propylene, etc
in primary forms
4.29 8.17
6 Chemical products 3.84 7.33
7 Rubber products 3.55 6.77
8 Electronic integrated circuits 3.25 6.19
9 Machinery and parts thereof 3.16 6.02
10 Rubber 2.67 5.10
Total 190.62
Source: Ministry of Commerce
Source: Bank of Thailand
Source: Bank of Thailand BOI
February 2015
Page 12

Thailand Investment Review, February 2015

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