Archive for December, 2014

infinitylevels

picture credit to E27.co

 

Thailand-based gaming studio Infinity Levels Studio has raised US$500,000 from InVent, the venture arm of Thai firm Intouch Holdings PCL.

Ranch Run is being made available in four markets: Australia, New Zealand, Thailand and Malaysia.In total, the iOS game app has generated more than 45,000 downloads, with most of the user base coming in from Thailand.

ranchrun

picture credit to E27.co

The game app will be made available globally in January 2015, alongside an Android launch.

Speaking to SiamStartup, Nikki Assavathorn, Co-founder and CEO, Infinity Levels Studio, said that:

We are very excited to have InVent as our investor as we believe they can help provide a business synergy with AIS, which now has 40 million users.  The INTOUCH partnership with Singtel could also accelerate our growth in the region.  We are currently looking to recruit more programmers and artists.

A venture-capital fund worth 25 billion Baht (roughly USD$ 757M)  will be set up to invest in SMEs with high potential in Thailand. The cabinet has already approved establishment of the SME fund and the first 500 million baht likely will be injected into it in February.

Finance Minister Sommai Phasee said: The fund will invest between 5% and 50% of the registered capital for firms in agriculture, industry, technology and value-added innovations. He said SMEs contributed to more than one-third of the country’s GDP, so the government wanted to provide capital to support their expansion.

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Because financing is so rare, this has prompted many Thai companies to first to set up a parent company, or holding company in Hong Kong or Singapore. Popular with foreigners, this also helps protect IP and establish common law jurisdiction for contract disputes and shareholder disputes in addition to venture capital.

Huge news as the Government of Thailand has agreed to set up a venture capital fund to help fund SME’s. As over 90% of the businesses in Thailand are small and medium sized enterprises (SME’s) – this should provide much needed capital in a country which previously had very few investment sources.

Banks traditionally do not loan out capital to any foreign owned enterprises. Also there is some collateral which is almost always provided in the form of a Chanote title. It is unheard of for financing against inventory however. If I am incorrect or you know of alternative funding sources in Thailand, please leave a comment below.

 

Here are the currently active VC firms in Thailand in the context of articles we have written:

$757M is a significant amount of capital for a country which has had stagnated GDP growth over the past few years.

It will be very interesting to see:

1. Who manages this fund?

2. How are allocations made?

3.  What are typical investment sizes or capital injections?

4. What are the terms of the investments?

5. If/when the government expects a return and at what ROI?

6. What is the horizon on this fund?

7. What legal entity is set up to manage this fund, and how do they become a shareholder in the portfolio company?

If anyone has information regarding the aforementioned VC fund – please get in touch and I will update this page.

 

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A presentation on the BOI criteria for the next 8 years was recently released on their website.

Here is a quick summary of changes/details:

  • The big winner is “knowledge based activities, with a focus on R&D and Design” – I suspect we shall see many applicants in this category
  • Zones have been done away with – but there are now SEZ – special economic zones, notably in the south.
  • Corporate income tax incentives are available for many different types of industries. The standard length is 8 years with other options to extend.
  • Import duties can be eliminated or alleviated if your project meets certain criteria.
  • The projects will only need a minimum of 1M Baht investment, which is a great sign and clears up misunderstanding where some people misunderstood guidelines.
  • There is an additional clause about hiring foreign workers, if done for a knowledge intensive position that has A1 incentives, minimum spending must be 1.5M per year on salaries.

Other Things of Note: {updated after BOI meeting}

  • agriculture and digital sector and crossovers between the two are highly attractive projects
  • the government is aiming to create a situation where innovation can also be used domestically, as a benefit to Thailand
  • Headquarters is still an attractive remedy for tax and work permit
  • the government is looking to have electronic 90 day checkins
  • The Bank of Thailand may be helping with Foreign exchange (FOREX).
  • ministry of comerce has promised to reduce time needed for liscense for BOI companies
  • Almost any country can claim a HQ if the HQ owns at least 25% of that subsidiary
  • The emphasis is now placed on type of location more than region – as regions are abolished
  • There are now incentives for “clusters” in the poorest 20 provinces in GDP per captia, the min. investment threshold for businesses in these areas is 500k baht and other additional incentives are provided
  • Software companies get 5 year tax exemption + an additional 3 years are possible
  • There was constant talk of cleaning up all corruption, and aims to be globally competitive

There is still a rather intensive process to obtaining a BOI license in Thailand. We are experts at obtaining that license and helping you create the business plan and get it into the right hands at the board of investment.

Please view the infographic below for full details on the process, and drop your information in the form below to receive more information.

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BOI approves “Seven-Year Investment Strategy” Special investment incentives offered for SMEs

The Board of Investment (BOI) has approved its “Seven-Year Investment Strategy” (2015-2021), with a focus on promoting investments that create value for Thailand and those that have a positive impact on society and the environment. Measures were also approved to upgrade Thai SMEs’ capability.
Mrs. Hirunya Suchinai, acting secretary general of the Thailand Board of Investment (BOI), revealed after the BOI Board meeting, chaired by Prime Minister Prayuth Chan-ocha, that the Board approved the Seven-Year Investment Strategy (2015-2021). The vision of the new strategy is to promote inbound value-added investments and Thai investments overseas to enhance the country’s competitiveness and overcome the so-called middle-income trap.

The new investment promotion policy will give priority to investments that are beneficial to and supportive of the country’s overall development strategy. These industries include high-tech and creative industries, service industries that support the development of a digital economy, and industries that utilize local resources. The BOI zoning system will be abolished under the new policy, although investment projects located in 20 lower-income provinces, as well as projects in industrial estates, will be offered special incentives.keep-calm-and-celebrate-7-years-7
The list of eligible activities still includes most activities which are significant to the supply chain and have the potential to be strengthened. In addition, the number of such activities has not been significantly reduced, as there are still more than 200. Corporate income tax privileges will be granted to 180 of them and the rest will receive non-tax incentives along with exemption on import duties on machinery and raw materials used for export products. The list of eligible activities will be announced on the BOI website said Mrs. Hirunya.

Eligible business activities are divided into two groups. Group A includes those that are important to support national economic restructuring. BOI offers corporate income tax exemption to encourage more investment and to enhance the country’s competitiveness. Group B consists of activities that do not employ high technology, but still are important to the value chain. BOI will offer non-tax incentives, as well as tax privileges related to machinery and raw materials.
The new policy will be effective for applications submitted from January 1, 2015.
Advantages for 38 SME activities

According to Mrs. Hirunya, the Board meeting also agreed on a policy to enhance SME capacity building in order to strengthen their competitiveness at the international level. 38 eligible activities from the Seven-Year Investment Strategy will be selected for SMEs to receive incentives. The measure will offer an additional two-year corporate income tax exemption to enhance their competitiveness and encourage investment. This policy will be effective from January 1, 2015 – December 31, 2017.

Special border areas investment promotion

Mrs. Hirunya added that the Board also agreed with the policy to promote investment in special border areas. Investment projects located in the five special economic development zones will receive an additional three-year corporate income tax exemption on top of basic incentives. These special zones include areas within the five provinces of Tak, Trad, Sa Kaeo, Songkhla and Mukdahan.

 

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