ThaiSwiss SME Industrial Center Limited Pranburi, Prachuab Khirikhan Thailand For Swiss and Thai SMEs (SMEs = small and medium size enterprises) Initiated by The SwissThai Chamber of Commerce, Bangkok
Introduction The SwissThai Chamber of Commerce has developed a concept for Swiss SMEs (small and medium sized enterprises). It aims at facilitating the setting up of a production base and the entrance into South East Asia (Asean) with a minimal investment, and a correspondingly low risk. Manufacturers who compete successfully in the Swiss home market and some other countries may wish to take advantage of this unique opportunity. SwTCC (SwissThai Chamber of Commerce) encourages Swiss SMEs to set up a production unit now, in an entirely new market environment, and to develop this base profitably, step by step, for long term growth. Board and Members of the SwissThai Chamber of Commerce offer guidance and support to the SME-Investor. 1. Objectives Many SME-firms have no experience in operating in Asia. They may feel strongly about the need to tap new markets for ultimate growth, but hesitate to take such an unusual step. SwTCC understands this reluctance and would like to be of help, at least during the starting phase. The motivation to do so is to contribute to the economic development of Thailand, and to also strengthen the basis of the Swiss Business Community in Thailand. Switzerland is among the ten most important investor countries in Thailand. The Swiss Community in Thailand is larger than in any country in Asia. The Swiss economic success is built on stepping beyond our narrow borders. Strong economic ties with friendly Nations are a strong basis for business growth. An appreciation of cultural differences is a prerequisite for commerce in a global economy. 2. Markets: 3/5 of the world population live in Asia; 500 Million people live in the 10 ASEAN countries. Thailand is at present the largest market in ASEAN. The average net growth rate in the major Asean markets is around to 2 to 5 %. Global Companies eyeing Asia tend to invest in China as a first choice. The market potential are the main attraction. For many SMEs this is considered risky. Thailand is an alternative and will have to measure up in productivity to competition from China in many fields. Promoting SMEs and improving the business environment are declared objectives. Thailand is, therefore, a valid alternative to China. 3. THAI Government Economic Policy! The development of SMEs in rural areas is of primary importance to the Administration to create jobs. Occupational opportunities in agriculture are on a downward trend. Thailand has, according to Government Agencies, some 10 Million people who are considered poor, predominantly for lack of job opportunities. They live in rural areas. Many 1
have been forced to look for jobs in Bangkok, but would return home, if opportunities existed there.! To assist SMEs where they need it most.! SMEs are preferred training places to improve skills of workers. The Dual Vocational Training (partly work, and partly school), well known in Switzerland, is to complement the development of skill.! SMEs are considered a vital pillar of the Thai economy.! To attract SME-Investors from abroad with needed technology and transfer skills to local workers.! to gain access to new export markets. 3. ThaiSwiss SME-Industrial Center 1. The Developer of the Industrial site 2. The Manufacturer 3. The Distributor 4. BOI Promotion Incentives (BOI stands for Thai Board of Investment) 5. Industries eligible for BOI Promotion 6. The SwissThai Chamber of Commerce 7. Implementation 1. The Developer is a Limited Thai Company with a capital of Bht 25 000 000. 60 % will be owned by Thai Nationals, and 40 % by Swiss Investors. The following persons are the Promoters and Members of the Board: Wirach Piyapornphaiboon, Chairman, President of the Federation of Thai Industries of Prachuab Khirikhan, Pranburi Dr. Wanna Suchato, Director, Mahidol University, Bangkok Paisal Wichyangoon, Director, Pranburi Ambassador Bernard Freymond, Honorary Chairman Dr. Joerg Rappold, Director, Kuesnacht, Switzerland Rene Haeusler, Director, Zurich, Switzerland Thomas Grichting, Director, Luterbach, Switzerland Paul Somm, Managing Director, Pranburi The Developer provides the land, builds up an efficient and environmental friendly infrastructure as base for the SME-Industrial Center. 2
A plot of land of approx. 75000 m2 has been purchased. The land is close to the town of Pranburi, at some 800 meters from the Petkasem Highway, connecting Bangkok with the South of Thailand. Pranburi is also served by the State Railways of Thailand. Electrowatt-Econo Engineering, a well-known Company of Swiss origin, designs and engineers the Project. The Industry Center will be built to the highest ecological standards. The Developer will lease Land, Factory Buildings and Office space to the Investors. 2. The Manufacturer should ideally be a Swiss SME with products and services suitable for the Thai and Asean markets, and for export overseas. The Manufacturer may wish to enter a Joint Venture with a Thai Partner. Ideally, the Swiss partner should then be responsible for production, the Thai partner for the distribution of the product. 3. The Distributor Most Investors will not be familiar with the markets in Thailand and the Asean countries. It is recommended to entrust the distribution of the product to a Distributor. There may be potential Distributors among Members of the SwissThai Chamber of Commerce. 4. BOI Promotion Pranburi is located in Investment Zone 3 and approved projects shall be granted:! Exemption of import duty on machinery.! Corporate income tax exemption for 8 years provided the project requires a capital investment of 10 Mill. Baht or approx. CHF 400000 and obtains ISO 9000 certification within 2 years after start-up. Without ISO 9000 certification the corporate tax exemption will be reduced by one year to 7 years.! Exemption of import duty on raw materials used in manufacturing for 5 years.! Permission to bring in a foreign expert. The minimum investment to be transferred into the country by an SME is Bht 1 Million (approx. CHF 40000) in production equipment in order to qualify for BOI promotion. Working capital is not included. 3
5. Eligible Industries (drawn from BOI list) The following industrial fields have priority:! Processing of agricultural products (food technology)! Manufacture of light agricultural machinery and hand tools! Scientific laboratories! Waste water treatment, industrial waste disposal! Manufacture of molds and dies and parts! Manufacture of jigs and fixtures! Manufacture of industrial machinery! Manufacture of sintered products! Manufacture of forged steel parts! Electrical components and cables! Repair of industrial machinery! Manufacture of textile products! Manufacture of products from leather or artificial leather! Manufacture of stationery or parts! Manufacture of sport equipment! Manufacture of ceramic products! Human resource development projects 6. The SwissThai Chamber of Commerce shall patronize the Thai Swiss SME-Industry Center, Pranburi, Prachuab Kirikhan. Here is what SwTCC can offer the Investor:! Give advice to the Swiss SME interested to invest.! Facilitate contact with potential business partners, Government Agencies etc. through competent Members of the SwissThai Chamber of Commerce.! Recommend reliable service companies from among the SwTCC Members (lawyers, management consultants, forwarding agents, architects, engineers, personnel recruiting, etc.)! Once the Investor is a Member of SwTCC, he will benefit from the representation of the Chamber with Authorities through the Foreign Chambers of Commerce in Thailand and through the Thai Board of Trade.! Promote co-operation among investors. 7. Implementation! The first factory units will be completed by November 2001.! Seilfabrik Ullmann AG, CH-9030 Abtwil, Switzerland, will start production towards the end of the year.! More Companies are considering joining the project. 4
! The present new Government of Thailand is aware of the project. Support from the Board of Investment (BOI), local Authorities, Bankers, and The Swiss Embassy is assured. General Information about Thailand: Size of the country: 513 115 sq. km. (12,5 times the size of Switzerland) Length of the Country: 1620 km. Width of the Country: max 800 km. Population: 63 Million Official Language: Thai Form of Government: Constitutional Monarchy Chief of State: King Adulyadej Bhumibol Head of Government: Prime Minister Climate: tropical with dry and rainy season. Major Trading Partners: Japan, USA, Singapore, Taiwan, Korea, EU Currency Baht: 1 CHF = Bht 26 Repatriation of imported capital and interest thereon possible, when applicable tax has been paid. Minimum daily wage CHF 7 per day. Working hours: generally from 8 to 5, 6 days a week. Government from 8.30 to 12.00 and 13.00 to 16.30 Monday to Friday Reviewed August 2001 5
THE STARTER FACTORY 6
Rates Land Lease Bht 180 per m2/year (CHF 7 per m2/year) Starter Factory Rent Office Space Rent Bht 1440 per m2/year CHF 55 per m2/year Bht 2000 per m2/year CHF 77 per m2/year Electricity Bht 2.50 per kwh Water Bht 2.00 per m3 Enquiries: Please direct all your enquiries to Mr. Paul Somm Project Manager and Board Member of SwTCC Correspondence in German or English is welcome to e-mail address: paulsomm2@yahoo.com or to fax 0066 32 631 204 Revised August 2001 7