Gproblems Bangkok has in terms of attracting investment.

MRTA SUBWAY City center transportation becomes more convenient By Jesse Hastings overnor Praphat Jongsanguan, head of the MRTA (Mass Rapid Transit Authority) freely admits that traffic and pollution are some of the biggest Gproblems Bangkok has in terms of attracting investment. When investors think of Bangkok, they are immediately put off because of these issues. Bangkok is a very interesting place to live but some people find it intolerable because it takes forever to get anywhere and the quality of life is poor with pollution and respiratory problems. However, Governor Praphat is confident that soon all that will be a thing of the past. Governor Praphat Jongsanguan, head of the MRTA, in a new subway station. After much anticipation, the Bangkok subway system, known as the Metro, looks forward to the grand opening of its initial routes scheduled for August 12, coinciding with the birthday of Her Royal Majesty Queen Sirikit. Ushering in a new era of public transportation, the subway is the most impressive modernization of Bangkok s infrastructure since the Skytrain. As the Master Plan stands now, all extensions of the subway will be finished in three-and-a-half to six years (see map). Stretching from the suburbs and reaching throughout the city, the subway will encourage investment by facilitating rapid transport, increasing the quality of life, and creating advertising and business opportunities. When the subway system is finished, Governor Praphat said, it has the potential to be a huge driving force for investment. The planned integration of the subway system with Skytrain and bus routes, as well as a connection to a proposed high-speed SRT line to the airport, will add further to the subway s potential to upgrade both Bangkok s quality of life and investment climate. Extension Lines of MRTA Blue Line ( will be given a priority ) Bang Sue-Tha Phra ( 13.1 km.) Hualamphong-Bang Khae ( 13.9 km.) Orange Line Bangkapi-Samsen ( 20.0 km.) Samsen-Bangbamru ( 4.0 km.) Violet Line Bang Sue-Bang Yai ( 20 km.) Bang Sue-Samsen ( 5.0 km.) Samsen-Rachaburana ( 15.0 km.) Red Line Rangsit-Bang Sue-Hua Lumphong-Wong Wian Yai-Mahachai ( 65 km. ) Talingchan-RAMA VI- Bang Su-Phayathai-Makkasan-Ladkrabang- Suvarnabhumi Airport ( 50 km ) Total 297 km. BOI Investment Review 8

Thailand to spend big on Railways A proposed 6-year, 400 billion baht (US$10.25 billion) project will expand much of Thailand s railways to two-track systems, doubling the capacity of the following routes by 2009: Route Line Distance (km.) North Rangsit Lopburi 104 Lopburi Sila Art (Uttaradit Province) 355 Sila Art Chiangmai 212 Total 671 Northeastern Baan Pa Chi Junction Mab Ka Bao 44 Mab Ka Bao Nakornratchasrima 130 Nakornratchasrima Ubonratchathani 310 Jira Junction Nong Khai 355 Total 839 South Talingchang Junction Nakornpathom 42 Nakornpathom Hua Hin 165 Hua Hin Suratthani 422 Suratthani Hat Yai 294 Total 923 East Lad Krabang Chachoengsao 35 Kaeng Koi Klong Sib Kao 108 Chachoengsao Chachoengsao Sri Racha 69 Sri Racha Laem Chabang 9 Total 221 Total 2,654 Bullet Train: The proposed Bullet Train will travel about 300 km/hr for a distance of 235 km, linking Bangkok residents to the airport and weekend recreation in Khao Yai National Park. Makkasan (Bangkok) Suvarnabhumi Airport Nakorn Nayok (Satellite City Project) Khao Yai National Park Nakorn Ratchasima High-Speed Train to China: Studies have already been completed for a proposal to build a high-speed railway to Yunnan Province in Southern China. The train will travel 100-250 km/ hr following the route: Denchai (Phrae Province) Chiang Rai Yunnan (South China) Suvarnabhumi Airport The High-tech Centerpiece of Thailand s Transportation Infrastructure By Paul Wedel T he most important piece of Thailand s improved transportation infrastructure will be Suvarnabhumi (pronounced soo wan na poom) Airport, now in the final phases of construction. In a recent radio address Prime Minister Thaksin Shinawatra said the new airport will enable Thailand to become an aviation hub for the region - a development that will benefit a variety of important new investments. The airport, graciously named by His Majesty King Location near the airport will put... businesses within easy reach of the bright lights of downtown Bangkok as well as the industrial estates of the Eastern Seaboard. Bhumibol Adulyadej, is expected to open for commercial traffic by the end of September 2005. But more important than the opening date are the expanded facilities and advanced equipment that will move both passengers and cargo more efficiently on a greater scale than anywhere else in the region. Suvarnabhumi Airport will be able to handle 45 million passengers per year, compared to the 35 million passengers per year capacity of the present airport at Don Muang. Its twin runways (expandable to four) are Continued on Page 10 BOI Investment Review 9

designed for peak period loads of up to 76 aircraft take-offs and landings per hour. Provisions for future capacity increases will provide for up to 100 million passengers. The innovative steel and glass passenger terminal includes a roof trellis designed to shade the building against the tropical sun, reducing the cost of air conditioning. Seven floors and a basement give the terminal a total floor area of more than a half million square meters, among the largest in the world. On opening day, the airport will support cargo handling facilities for 3 million tons per year - capacity that can be doubled as demand grows. Easy links to highways north, south and west of the airport will offer rapid transport to the city center or to the tourist areas on the eastern coast as well as to nearby industrial estates. Within two years of start-up of the new airport, the government plans to complete a direct rail link to the center of Bangkok with connections to the skytrain and subway systems. The capacity and facilities of the new airport will reinforce Thailand s position as the center of aviation in the region. An open skies policy for cargo is designed to encourage investment by integrated air carriers and air cargo service providers, which will increase the attraction of Thailand to manufacturers of high value to weight products such as integrated circuits, hard disk drives, chips, fresh seafood, high fashion garments and pharmaceuticals. As a regional hub, the new airport will make Bangkok the logical center for trade shows, E-commerce fulfillment centers, conferences and wholesale markets. The facilities are also designed for the new extended range aircraft - the Boeing 777 and the Airbus 380 - thus enabling non-stop flights to the United States. These flights, coupled with a general increase in flights to Europe and within the region, will increase Thailand s attractiveness as a regional headquarters for multi-national corporations. Location near the airport will put such businesses within Suvarnabhumi Airport will juxtapose the classic and the modern. easy reach of the bright lights of downtown Bangkok as well as the industrial estates of the eastern seaboard. This will make the new facility highly attractive to informationbased concerns such as legal and financial services, consulting, advertising and entertainment. Prime Minister Thaksin future-oriented noted that design of the airport will not stop at the airport s gates, but extend to the undeveloped land around the airport to make the area even more appealing to these types of businesses. He indicated that his government is planning the development of the Suvarnabhumi Aerotropolis - focusing long term land use design on the needs of air-related services, high-value manufacturing and regional headquarters. The plan, covering the next 30 years, will provide for carefully designed development zones and construction of more transportation links to both the east and the west. Dr. John Kasarda, professor at the Kenan-Flagler Business School and an authority on the aerotropolis model, has predicted a rapid growth in investment and employment spurred by the new airport. In a paper for the Thai government he recommended holding land in reserve for new and unexpected developments. Like the growth in air traffic, airport-related businesses will develop over a specific time horizon, in some cases building on their own synergies and expansion. If the full value of the Suvarnabhumi Aerotropolis is to be achieved, businesses and investments must therefore be given the space and time to achieve continuity, unimpeded by non-compatible uses and congestion. Whether it is a regional headquarters, a new computer plant, a logistics service or a new hotel, the Suvarnabhumi Airport will soon provide the speed, services and connectivity to make these investments pay off. BOI Investment Review 10

Maritime Transport Expansion T o accommodate the steady and rapid increase of Thailand s international seaborne trade over the past decade and into the future, the Port Authority of Thailand is implementing several major projects, particularly the expansion of Laem Chabang Port, Thailand s most important international port. Located on the Eastern Seaboard, the port has experienced a total TEU (Twenty-foot Equivalent Units) increase of 45% from 2000 to 2003. With the proposed addition of a second basin in 2007, the capacity of Laem Chabang would increase to almost 10.5 million TEU/year. The expansion phase of Laem Chabang Port will enable the country s shipping industry to remain competitive once the country kicks off its bilateral trade agreements with several major trading partners, stated the Acting Director-General of the Port Authority, Yongyos Palanitisena. Currently there are approximately 122 ports, wharves and jetties able to accommodate sea-going vessels engaging in international trade. Thailand s extensive By Kornluck Tantisaeree inland waterways also contribute greatly to transportation in the country. In efforts to improve port efficiency and to strengthen its bid to become a major logistics center for ASEAN and South Asian countries, the Port Authority is proposing to open a logistics company, an asset management company and a regional port company. The Port Authority also oversees four main ports to support regional linkages with neighboring countries: Chiang Khong and Chiang Saen in the north, Ranong in the southwest, and Songhkhla in the south. (see Major Thai Ports and Maritime Projects. ) Major Thai Ports and Maritime Projects Bangkok - Port capacity approximately 1.3 million TEU. Its bonded warehouse now offers several value-added services such as online inventory account reporting, more equipment for lifting and moving goods, and expansion of storage areas. Laem Chabang - One of Asia s leading ports and the most important commercial deep-sea port of Thailand. In 2003, TEU capacity was 3.04 million. After completion of its Phase 2 development (see article), which includes six new container terminals and a passenger terminal, it will have a total capacity of nearly 10.5 million TEU/year. The private sector will be invited to operate these terminals. Chiang Saen and Chiang Khong - Located in Chiang Rai province, these ports serve as Thailand s gateway to Southern China, especially with Yunnan Province. Trade with Yunnan through Chiang Saen Port increased from THB 1.1 billion in 2000 to THB 3.2 billion in 2002. Chiang Rai s ports service the Upper Mekong Subregion as part of the Quadrangle Economic Cooperation Project to link trade of Thailand, China, Laos and Myanmar. A second Chiang Saen Port is expected to be opened in 2006. Map Ta Phut - Located in Rayong Province, Map Ta Phut is primarily a petrochemical complex. Its Phase 2 development requires steel and petrochemical handling facilities which require private sector investment. Songkhla Port - The only international port on the Southeast coast with 150,000 TEU annually servicing transport to Malaysia. Its expansion plan includes modification of the three existing berths and construction of fourth and fifth container berths Phuket Port - With 86,000 TEU annually, it is currently the only international port on the west coast of the South. Its expansion plan covers construction of a passenger wharf and a container berth. Narathiwat - Located in the south, Narathiwat is planned to accommodate the AFTA Free Trade Zone and Export Processing Zone for halal food. Satoon on the Andaman Sea will serve the growing trade with countries west of Thailand and to handle break bulk cargo and containers. Ranong - Just opened in December 2003, its expansion plan forecasts completion within 2 years to accommodate increased trade in South Asia, the Middle East and Europe. Ranong will also provide links with Myanmar and other countries in the Indian Ocean. BOI Investment Review 11

Vietnam: A bright prospect for Thai investments Destination: Vietnam By Nattinee Netraumpai F rom March 24-27, Minister of Industry Phinij Jarusombat led a mission to Vietnam to explore the country s potential as a destination for Thai investment. The delegation met with senior government officials in Hanoi, Ho Chi Minh City and Dong Nai, as well as with Thai businesses already investing in Vietnam. With its close proximity, similar cultural and social characteristics, and rapidly-developing industrial-oriented economy, Vietnam is an opportune destination for Thai investors. Minister of Industry, Mr. Phinij Jarusombat with the Deputy Prime The Minister of Industry met with the Deputy Prime Minister of Vietnam, Mr. Nguyen Tan Dung on March 24, 2004. Minister of Vietnam, Mr. Nguyen Tan Dung, to discuss ways to increase governmental and economic cooperation, especially in the fields of agriculture, seafood, petroleum and seminars on investment opportunities in Vietnam in Hanoi, Investment (DPI) and other government offices gave electronics. Minister Phinij shared the Thai government s Ho Chi Minh City and Dong Nai. The seminar in Ho Chi Dual Track policy aimed at simultaneously increasing Minh City and the surrounding provinces was attended by foreign and domestic investments in Thailand. 120 participants. The two countries Ministers of Industry met in Hanoi Thai businessmen in Ho Chi Minh and the southern as well. Mr. Hoang Trung Hai expressed Vietnam s interest region of Vietnam reported that Vietnamese purchasing in encouraging collaboration with Thailand on technology power and interest in fashionable goods has heightened transfer and on engineering projects developing electricity considerably in recent years; therefore, Thailand is in a infrastructure as well as a natural gas and petroleum prime position to provide high-quality consumer goods for pipeline to Thailand, Laos and Vietnam. export to the Vietnamese market. Minister Phinij met with the Minister of Planning and Currently there are 117 Thai projects in Vietnam Investment, Mr. Vo Hong Phuc, as well as chairmen of the valued at US$641 million, mainly in agro-processing, People s Committees of Hanoi City, Ho Chi Minh City and tourism, real estate, consumer goods industries as well as Dong Nai. Vietnam s Department of Planning and auto and motorcycle assembly. Prime Investment Opportunities in Vietnam for Thai Businesses: Mr. Phinij Jarusombat at the Investment Opportunities in Ho Chi Minh City and Surrounding Provinces seminar on March 26, 2004. Agro-Industry, such as rubber processing, construction materials, animal feed, seafood Chemical and petrochemical industries Machinery Manufacturing, such as textile production Fashion and consumer goods Health services Hotels and Tourism Software development and ICT products and services HRD, education and training BOI Investment Review 12

Singaporean investors eager to invest Destination: Singapore The BOI s mission to Singapore from April 4-6, led by Dr. Atchaka Brimble, Acting Senior Executive Advisor, created quite a bit of interest among Singaporeans to invest in Thailand. The delegation fielded questions from an enthusiastic crowd of approximately 500 people during its investment seminar at Suntec City Convention Center on April 5. In addition, the BOI mission met with the Economic Development Board (EDB) and International Enterprise Singapore (IE Singapore), a government agency providing business advisory and matchmaking services to Singaporean Board of Investment Activities businesses. Discussions with Singaporean banks DBS, United Overseas Bank, and IE Singapore focused on how best to accommodate the specific needs of Singaporean companies investing in Thailand. IE Singapore, with whom the BOI has had an Memo of Understanding (MOU) since August 2003, referred approximately 15 companies to the BOI for one-on-one meetings. As a whole, Singaporean investors showed interest in a wide range of industries, including automotive, agro-industry, gift, franchising, jewelry and textiles, as well as logistics, education and other service sectors. Projects receiving promotion certificates: 2002 to 2004 (Jan-Mar) 2002 Number of Value of Projects Investment (mil. Baht) 2003 Number of Value of Projects Investment (mil. Baht) 2004 (Jan-Mar) Number of Value of Projects Investment (mil. Baht) TOTAL797 221,900 642 190,800 153 54,341 By Sector Agricultural products 173 49,200 121 21,900 14 5,123 Minerals & Ceramics 11 3,400 12 2,300 5 3,935 Light industry 78 14,600 54 5,700 10 2,020 Chemicals & paper 91 40,300 168 58,100 52 11,216 Metal processing 178 31,800 127 40,600 34 7,851 Electronics & electrical 161 31,200 100 35,600 20 18,252 Services 105 43,200 135 64,600 18 59,429 By Country Japan 246 66,154 236 80,099 77 18,588 United States 37 11,061 33 24,136 8 2,969 East Asian NICs Taiwan 40 3,010 43 12,902 13 2,044 Hong Kong 10 1,824 10 2,401 7 951 Korea 30 2,990 36 1,752 14 3,646 Singapore 42 13,041 41 9,276 12 3,466 Europe United Kingdom 18 10,822 62 16,016 4 18,068 Germany 13 1,406 13 4,956 2 110 Switzerland 14 5,852 12 5,743 2 507 France 9446 7 638 5 302 Netherlands 91,424 6 2,030 2 1,401 By Zone 1. Bangkok & vicinity 164 43,600 13977,300 36 7,141 2. 10 provinces around Zone 1 368 93,300 349 104,700 90 41,668 3. Rest of country 265 85,000 22946,800 27 5531.5 Notes: Projects receiving promotion certificates must have already registered a company and paid up a percentage of registered capital. The data in the section by country does not add up to the total as projects with more than one foreign shareholder are counted twice. Country statistics are generated by the International Affairs Division of the BOI. BOI Investment Review 13

Inside the BOI: April 2004 Minister of Industry Phinij Jarusombat visiting MS Busbody Co., Ltd., an automotive assembler in Ratchaburi Province on April 3, 2004. Mr. Phinij Jarusombat and BOI Secretary General Somphong Wanapha on April 3, 2004 visiting DM Chaipongse Corporation Ltd., an automotive parts manufacturer in Suphanburi Province. The Minister of Industry and the BOI Secretary General touring DM Chaipongse Corporation Ltd. Mr. Somphong Wanapha at the Opening Ceremony of a manufacturing facility of Global Architectural Co., Ltd. in Chonburi Province on April 19, 2004. BOI Secretary General Mr. Somphong Wanapha delivering a speech on BOI policies to government officials from the U.S. State of Washington on April 22, 2004. On April 20, 2004, BOI Secretary General Somphong Wanapha speaking to the Commercial Counselors of the European Union on investment opportunities in Thailand. BOI Investment Review 14

Thailand s economy at a glance 1998 1999 2000 2001 2002 2003 2004e A: Economic growth (1) GDP at current prices (US$ billion) 111.8 122.5 122.6 115.4 126.9148.5 n.a. GDP at constant 1988 prices (US$ billion)66.5 75.974.969.1 75.4 86.4 n.a. n.a. Growth rates (%) Overall (%) -10.5 4.4 4.8 2.1 5.4 6.2 n.a. Agriculture (%) -1.5 2.3 7.2 3.5 3.0 6.8 n.a. Manufacturing (%) -10.911.9 6.1 1.4 6.8 10.2 n.a. Construction (%) -38.3-6.8-9.5 0.3 5.7 3.4 n.a. Services and others (%) -9.4 0.8 4.1 2.5 4.9 4.3 n.a. GDP per capita (US$) 1,827 1,982 1,965 1,835 1,998 2,197 n.a. B: Price indicators (6) Consumer Prices (% change) Feb Whole Kingdom 8.1 0.3 1.6 1.6 0.7 1.8 0.7 Bangkok Metropolis 7.8 0.4 1.5 1.7 0.5 1.6 0.7 C: External account (2) Jan-Feb Exports(F.O.B.) (US$ billion) 52.956.8 67.963.1 66.1 78.4 21.3 (% change) -6.8 7.4 19.5-7.1 4.8 18.6 22.3 Imports(C.I.F.) (US$ billion) 40.7 47.5 62.4 60.6 63.4 74.2 20.3 (% change) -33.8 16.931.3-3.0 4.6 17.1 28.2 Trade balance (US$ billion) 12.2 9.3 5.5 2.5 2.7 4.2 0.51 Current account balance (US$ billion) 14.3 12.5 9.3 6.2 7.0 8.0 1.1 (% of GDP) 12.7 10.2 7.6 5.4 5.5 5.6 n.a. Net capital movements (US$ billion) -9.7-7.9-10.3-4.6-4.2-8.4-0.8 Balance of paymants (US$ billion) 1.7 4.6-1.6 1.3 4.2 0.1 0.67 (% of GDP) 1.5 3.8-1.3 1.1 3.3 6.7 n.a. Official reserves (US$ billion) 29.5 34.8 32.7 33.0 38.9 42.1 42.9 Total debt service ratio(%) 21.4 19.4 15.4 20.8 19.6 15.8 n.a. Public (%) 3.3 4.0 4.0 8.1 7.97.6 n.a. Private (%) 18.1 15.4 11.4 12.7 11.7 8.2 n.a. D: Money and banking (2) Feb Money supply (M2) (US$ billion) 114.9128.3 125.3 117.9125.2 142.1 151.2 (% change in baht terms) 9.5 2.1 3.7 4.2 2.6 4.9 6.4 Commercial bank loans (% change) -9.7-4.1-10.0-5.8 7.5 3.6 3.4 Commercial bank deposits (% change) 8.8-0.5 5.3 4.0 2.5 4.4 4.9 Interest rates (end of period) Prime rate Jan Key Minimum Overdraft Rates (MOR) 12.00-12.75 8.50-8.75 8.00-8.75 7.50-8.00 6.50-7.50 5.75-6.00 5.75-6.00 Minimum Loan Rates (MLR) 11.50-12.00 8.25-8.50 7.50-8.25 7.00-7.50 6.50-7.00 5.50-5.75 5.50-5.75 Savings Deposits 4.50 3.00 2.50 1.75 1.50 0.75 0.75 E: Public Sector (2) Jan-Feb Government Revenue (US$ billion) 21.0 20.8 17.1 17.0 17.6 25.5 3.97 Government expenditure (US$ billion) 22.5 21.921.2 19.5 20.1 25.1 4 Fiscal balance (US$ billion) -1.5-1.1-4.1-2.5-2.5 0.4 0.004 (% of GDP) -1.3-0.9-3.3-2.2-2.0 0.3 n.a. F: Exchange rate (2) Feb (baht per US$) 41.4 37.8 40.2 44.5 43 41.5 39.1 e = estimate (1) National Economic and Social Development Board (2) Bank of Thailand (3) Board of Investment (4) Stock Exchange of Thailand (5) National Statistical Office (6) Bureau of Trade and Economic Indices BOI Investment Review 15

BOI Working Group Dr. Atchaka Brimble Mr. Vittaya Praisuwan Mr. Chokedee Kaewsang Ms. Booskorn Vutivijarn Mr. Narit Therdsteerasakdi The BOI Investment Review Kenan Institute Asia Editorial Team Don Linder, Editor-in-Chief Paul Wedel Renee Santo Kornluck Tantisaeree Marc DaSilva Jesse Hastings Printing Saladaeng Printing Co., Ltd. The BOI Investment Review is printed every month by the Kenan Institute Asia on behalf of the Thailand Board of Investment. Head Office, Office of the Board of Investment 555 Vibhavadi-Rangsit Road, Chatuchak, Bangkok 10900, Thailand Telephone: (66) 2537-8111, (66) 2537 8555; Facsimile: (66) 2537-8177 BOl Information Center (66) 2936 4555 www.boi.go.th E-mail: head@boi.go.th New York Paris Frankfurt Tokyo Shanghai Thailand Board of Investment Thailand Board of Investment Thailand Board of Investment Thailand Board of Investment Royal Thai 61 Broadway, Suite 2810 New York Ambassade Royale de Thailande Bethmannstr. 58, 5. OG 8th Floor, Fukuda West Building Consulate-General, 2nd Fl. N.Y. 10008 U.S.A. 8, rue Greuze, 75116 Paris, France 60311 Frankfurt am Main 2.11-3, Akasada, Minato-ku Zhong Shan Dong Vi Lu, Tel: (212) 422 9009 Tel: (33 1) 56 90 26 00, Federal Republic of Germany Tokyo 107-0052, Japan Shanghai, PR China, 200002 Fax: (212)422 9119 (331) 56 90 26 01 Tel: (49 69) 92 91 230 Tel: (81 3) 3582-1806 Tel: (86.21) 632 19621 E.mail: ny@boi.go.th Fax: (33 1)56902602 Fax: (49 69) 9291 2320 Fax: (81 3) 3589-51 76 Fax: (86)-21 623 19383 E-mail: par@boi.go.th E-mail: fra@boi.go.th E-mail: tyo@boi.go.th E-mail: shanghai@boi.go.th BOI Investment Review 16