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25 March, 2020
Thailand’s future is set to be more connected, technologically advanced and economically prosperous than ever. This being driven by one development in particular: the Eastern Economic Corridor (EEC).
Set to attract tens of billions of dollars of investment and completely change the face of the eastern seaboard, this project is critical to Thailand’s goal of becoming a high-income economy for the first time in the country’s history and represents a significant opportunity for both domestic and overseas investors.
Kudun & Partners is a leading corporate law firm based in Bangkok. We are often crucial advisors on billion dollar transactions involving both foreign and local investors in Thailand. Discover our complete guide to Thailand’s radical EEC project here.
What is the Eastern Economic Corridor?
The Eastern Economic Corridor (EEC) is a 1.5 trillion baht infrastructure development along Thailand’s eastern seaboard, which has become an established industrial region over the previous three decades of economic progress. Projects that make up the EEC span three provinces—Rayong, Chonburi and Chachoengsao—and aim to fulfil four main objectives:
- Expand and improve the region’s infrastructure
- Develop new hubs of business, industry and innovation
- Drive increased tourism to the eastern provinces
- Build new ‘smart’ cities
In fulfilling these goals, the Thai government hopes to create 100,000 manufacturing and service-sector jobs per year.
The EEC is central to the government’s aim of becoming a high-income nation for the first time, as enshrined in Thailand 4.0, the current economic policy. Thailand 4.0 targets ten S-Curve sectors—including aviation, logistics, automation and robotics—for growth and will help Thailand transition from its agrarian roots to a value-based economy.
Key projects
The Thai government has pinpointed five high-priority projects that form the initial phase of the EEC, focusing on regional connectivity and transport infrastructure, which will help propel subsequent developments and support stronger logistics. These are:
U-Tapao Airport
This existing airport in Rayong province is set to undergo a massive transformation to facilitate an increase in tourism throughout the eastern region. Capacity will increase from 800,000 passengers at present to 3 million with the construction of a second runway and passenger terminal.
High-Speed Rail Linked 3 Airport
With an expected cost of 224 billion baht, the High Speed Rail Linked 3 Airport is the highest value mass transit project in Thailand’s history. It will create the country’s second-ever high-speed rail line, after the Bangkok–Nakhon Ratchasima project, and connect three of its major airports: Don Mueang International Airport, Suvarnabhumi Airport, and U-Tapao International Airport.
Leam Chabang Seaport
Phase three of this port’s development will equip the Eastern Economic Corridor for increased international trade. The construction of a new deep seaport and the renovation of existing facilities will enable container throughput to rise from 7.7 million containers per year to 18.1 million.
Map Ta Phut Seaport
Located in Rayong province, this major petrochemical seaport is also undergoing a third phase of expansion, as it is currently operating at maximum capacity. Once complete, Map Ta Phut Industrial Port Phase III will allow 19 million tonnes of additional cargo to be accepted over the next 20 years.
Sattahip Commercial Seaport
Expected to be completed by 2022, the Sattahip Commercial Port Development Plan will transform the Sattahip Naval Base into a key enabler of increased tourism. Two ferry piers and a new passenger terminal will be constructed and the port will be connected to both national highways and high speed rail lines.
Incentives
The Eastern Economic Corridor Bill was approved by the National Legislative Assembly (NLA) in early 2018, allowing the government to grant crucial tax and non-tax investment privileges to overseas lenders on Board of Investment (BOI)-promoted projects. These include:
- Corporate income tax exemption for up to 13 years
- Exemption from import tariffs on parts, machinery and raw materials for use in research & development
- The lowest personal income tax rate in the ASEAN region at 17%
- A one-stop service centre for foreign investors
- Permission to own project land—otherwise restricted to 49.99% under the Foreign Business Act (FBA)
These measures, combined with increased political stability following the 2019 general election, has driven higher investor confidence and enabled 195.69 billion baht of investment in new or expanded operations in the first six months of the year. The government has also revised its projections for EEC investment upwards, targeting 20% growth to 430 billion baht by year-end. This will help offset the economic hit of the US-China trade war, which is causing a global trade slowdown.
For further information, please contact:
Troy Schooneman, Partner, Kudun & Partners
troy.s@kap.co.th
