“The pandemic has pushed consumers worldwide to become more health conscious and focus on the nutritional benefits of foods. This global trend, which we are also seeing in Thailand, creates tremendous new opportunities for food innovations, food safety and organic foods.”
BOI’s Deputy Secretary-General
The COVID-19 pandemic has taken a heavy toll on most economies worldwide. Thailand is no exception. However, Thai food exports have become a bright spot, bucking the trend of the country’s overall sliding exports, with the demand for processed and canned foods having held up in these uncertain times.
This trend reflects the surge in global demand toward home cooking and ready-to-eat foods in the wake of restrictive measures to contain the pandemic. The resilient export of food and farm products also highlights Thailand’s commitment to R&D and advancements in the application of technology to meet the growing demand of consumers for nutritious and quality food products that serve the specific needs of each individual, while also meeting the expectations of the younger generation for reduced environmental footprints from the manufacturing sector.
In line with the “Thailand 4.0” strategic economic development plan, which is aimed at extensively developing the use of technology within Thai industries, the Thai government has designated the agri-food industry as a priority area. The plan aims to strengthen the food technology ecosystem to enhance the economic value and global positioning of Thailand’s farm and food industries.
The Thailand Board of Investment (BOI), the key government agency entrusted with promoting investment in the country’s strategic direction, is offering incentives in the form of exemptions on corporate income tax (CIT) and import duty on raw materials to both Thai and foreign investors, with a focus on enhancing R&D in food technology. The incentives cover a comprehensive range of activities, especially those related to investment in R&D and those adopting biotechnology, digital services, and robotics and automation which can further increase the competitiveness of the industry.
The BOI offers 8-year CIT exemption on the manufacture of functional and medical foods and food supplements, with additional CIT exemptions for companies that invest in upgrading their production through agri tech, food tech, digital technology, automation and robotics and plant factories to improve the efficiency of both production and quality testing activities.
Responding to the following questions, Ms. Sonklin Ploymee, the BOI’s Deputy Secretary General, explained the direction taken by Thai policymakers in promoting investment in the agri-food industry and possible additional incentives.
How significant is the agri-food industry’s contribution to the Thai economy?
The food industry has long driven Thailand’s economic development through the value it adds to the agricultural sector and industrial supply chain, covering 128,000 mainly micro enterprises, employing more than one million people representing about 3% of the country’s workforce and generating approximately 6% of the country’s gross domestic product.
As one of the targeted beneficiaries of the “Thailand 4.0” policy, the food industry will receive further incentives and support from the government aimed at enhancing its competitiveness by building on its strengths and potential. The Thai government has long promoted Thailand as the “Kitchen of the World” in recognition of the country’s strengths in the food industry, particularly the abundance of raw materials, large pool of skilled labour, and well-established and competitive supply chain.
Under the Thai government’s development plan for the agri- food industry, which is effective until 2028, the country has set the agri-food industry the target of generating 7% of GDP, with efforts focusing on R&D and productivity improvement.
What are Thailand’s greatest competitive advantages in agri-food technology?
Thailand has a year-round agricultural season and vibrant agri-food industry, producing the largest exports of cassava, canned tuna, canned pineapple, rice and sugar as well as a variety of other food products to the world.
The country’s food processing industry currently uses as much as 80% of local raw materials in its products. This enables entrepreneurs to operate with low costs, enhancing the competitiveness of the food processing industry in the global market.
Thailand’s long history in the agri-food industry has enabled the country to develop its productivity. Indeed, Thailand has the most competitive ecosystem for food technology among the ASEAN countries. Even so, there is still a need to focus on R&D in order to increase the value added to the processed food industry.
Thailand is also among the top ten most competitive countries in the food processing industry. According to Oxford Economics, Thailand’s food processing industry was ranked 9th worldwide in 2016, with the Thai government aiming to reach 3rd place by 2026. The Thai government’s commitment to promote biotechnology and R&D is seen as a key factor in increasing confidence in the country’s food processing industry.
Thailand’s food processing industry will also benefit from large investment in transportation, utilities and modern special economic zone infrastructure, which will make it the best-connected country in the ASEAN region. Thailand also enjoys a strategic location at the heart of the ASEAN market, whose combined population of 650 million is roughly half of China’s, making it a significant consumer market. Moreover, the China-Thailand Free Trade Agreement and Thailand’s membership in the ASEAN Free Trade Area have bolstered the country’s trade and economic growth.
In terms of human resources, Thailand has a highly skilled workforce, with solid institutional support and efficient recruiters to meet the workforce demands of investors.
What could emerge as Thailand’s most recommended products in the global market?
If we consider the present behaviour of consumers worldwide during the pandemic, there will be plenty of opportunities for Thailand’s food processing industry. People are forced to stay at home and cook at home, as they cannot go to restaurants and eateries as often as before. As a result, ready-to-eat food has high potential. Thailand can further apply technology and automation to roll out more innovations and raise productivity. Moreover, the pandemic has pushed consumers worldwide to become more health conscious and focus on the nutritional benefits of foods. This global trend, which we are also seeing in Thailand, creates tremendous new opportunities for food innovations, food safety and organic foods.
In this regard, innovations and technology are the areas where we are taking serious actions to move the development forward.
As a large and growing percentage of the world population consumes Halal food, for which the “Made-in-Thailand” brand is well-regarded, the country is well-positioned to harness the opportunity deriving from this consumer group.
Overall, Thailand has a diversified food industry with high capability to harness the potential of medical and functional foods and serve the increasing demands of its aging society.
What roles have the government and BOI played in enhancing technology in the agri-food industry?
The Thai government and the BOI have steadfastly supported technological capacity-building in the future food industry. We have promoted a wide range of measures to help entrepreneurs enhance their efficiency in the food supply chain, from upstream to downstream, and our efforts extend beyond manufacturing to the service sector in the agri-food industry.
R&D is a target activity of our promotional incentives. The BOI’s additional incentives will also be offered to entrepreneurs who invest in productivity, even if they do not increase production capacity. The BOI is also considering new incentives to further strengthen Thailand’s food positioning in the world market.
How do you foresee Thailand’s development of the food industry in the world market?
There is huge potential in the Thai food industry, primarily given the abundance of raw materials, pool of skilled labour, steadfast institutional support, and advanced infrastructure.
Government agencies, not only the BOI, have promoted productivity, quality, technology and R&D in the food industry. As I mentioned before, the food industry is at the top of the agenda of the Thai government’s efforts, given its importance to our population.
The Thai government has ensured strong institutional support is in place to promote capacity building in important areas such as the international standard for foods, innovations, marketing and support for small and medium- sized enterprises. With this direction, I am confident that Thailand is well-positioned to be the largest investment hub in Asia for the food industry and to have a larger share of the world food market.
Find out more: https://youtu.be/T2ZJWuiTFQE