To help Thai enterprises operating abroad, the Board of Investment (BoI) is considering granting tax incentives, particularly tax breaks, on repatriated earnings, says executive investment adviser Vittaya Praisuwan.

"To help local businesses expand abroad is one of the BoI's aims this year, so they can gain a bigger slice of foreign markets and counter any economic slowdown at home," he said last week.

Investors should explore business opportunities abroad, because there are advantages like lower production costs in terms of raw materials and labour, as well as export privileges to third-party countries.

So far, some firms have set up foreign operations mainly in Laos, Cambodia, Burma and Vietnam. The government wants local investors to widen their horizons.

The BoI said statistics for foreign direct investment (FDI) showed only 40 per cent was by investors from developing countries, while the remainder was from developed nations.

However, foreign investment from Thailand accounted for less than 1 per cent of total FDI.

As a consequence, the government is considering tax privileges to encourage Thai investors to set up offshore operations, Vittaya said.

"Incentives like tax breaks on repatriated earnings should encourage more entrepreneurs to invest abroad," he said.

Currently, repatriated earnings are taxed at 30 per cent.

The BoI will put the plan to its committee, which will then submit it for Cabinet approval.

A decision should be announced within three months.

Previously, the government's focus was on neighbouring countries for investment promotion. But this year, it is looking farther afield to other developing countries, in Asia, Africa and Eastern Europe, he said.

The board will conduct a road show to promote the establishment of offshore companies this year. So far, targeted markets include Bangladesh, Pakistan, Sudan, Kazakhstan, Russia, Kenya and South Africa.

Businesses of great potential include processed agriculture, automobiles, electronics and electronic appliances, construction, garments, furniture and value-added services like consultancy, design and management services.

Vittaya said the BoI was focusing more on promoting foreign operations to help boost foreign-currency reserves.

Recent Bank of Thailand data show Thailand has foreign reserves of US$66.5 billion (Bt2.38 trillion).

Asked about problems Thai firms face when going international, Vittaya suggested they should first gather all of the information available on their target markets.

He advised businessmen to screen prospective partners carefully and establish good relations with local operators.

Petchanet Pratruangkrai

The Nation