Thailand : New Eastern Special Development Zone
by Panisa Suwanmatajarn and Jin Sukme
The Eastern Special Development Zone (“ESDZ”), previously well known as “Eastern Economic Corridor” or “EEC”, located at the eastern part of Thailand, currently covering areas of Chachoengsao, Chonburi, and Rayong Provinces. The development plan of ESDZ has been arranged under the scheme of Thailand 4.0 and that was extended from Eastern Seaboard Development Program which had successfully supported Thailand’s economy for over 30 years. The ESDZ is considered as the area having high potential economic development. If the ESDZ is developed in accordance with the sustainable development principal, especially by applying the high-technological and innovative approaches, the ESDZ will be utilized effectively and bring up huge businesses to the country and the investors themselves.
However, the current applicable rules and regulations do not facilitate and support such development plan and also there is no efficient and integrated management system and body to oversee such development. Each part of ESDZ’s development activities is separately overseen and controlled by different authorities. Moreover, the public utilities and infrastructures are lack of continuity and connectivity plan. Under such issues, the National Legislative Assembly had passed the draft Eastern Special Development Zone Act B.E. 2561 (A.D. 2018) (“ESDZ Act”) and that the ESDZ Act became effective on 15 May 2018 in order to manage and develop the ESDZ effectively and provide integrated governmental service systems to the investors who are interested in operating their businesses in the ESDZ.
The ESDZ Act establishes the Eastern Special Development Zone Policy Committee (“Policy Committee”) which its main duties are to indicate the policy for development of the ESDZ, approve the Special Economic Promotional Zone (“Promotional Zone”) and special-targeted industries and specify the benefits of investors in each of special-targeted industries operating in Promotional Zone. The ESDZ Act also establishes the Office of the Eastern Special Development Zone Policy Committee (“Office”) to implement the policy launched by the Policy Committee.
The Promotional Zone and its privileges will be announced by the Policy Committee in order to provide privileges to the investors who operate their special-target businesses within the Promotional Zone. The special-targeted businesses currently comprise of 10 areas of industry, i.e.
- Next Generation Automotive Industry
- Smart Electronics Industry
- Affluent, Medical and Wellness Tourism Industry
- Agriculture and Biotechnology Industry
- Food for the Future Industry
- Robotics Industry
- Aviation and Logistics Industry
- Biofuels and Biochemicals Industry
- Digital Industry
- Medical Hub Industry
The investors who are eligible to operate their special-targeted businesses in the Promotional Zone and obtain privileges shall have special knowledges in operating their businesses and be approved by the Secretary of the Office in accordance with the conditions specified by the Policy Committee. The privileges provided to such investors are, e.g. the investors shall have the right to own the land or apartment for commercial or residential purpose, the right to bring foreign workers to work and stay in Thailand over the ordinary period specified by the immigration law but subject to the conditions specified by the Policy Committee, the right to be granted tax exemption or deduction and/or the right to do financial transaction in a way that differs from those provided in the regulations in relation to exchange control. For some careers that require a specific license or reserve for Thai people only, the Policy Committee may permit foreigners to conduct such careers in the Promotional Zone in accordance with the conditions specified by the Policy Committee.
Basically, the investors have to contact many authorities and perform various requirements before operating their businesses which are time-consuming and incur additional costs. However, under the area of Promotional Zone, the ESDZ Act authorizes the Secretary of the Office to consider and approve wide range of matters covering 8 areas as follows:
- Land Excavation and Compaction Law
- Building Control Law
- Machine Registration Law
- Public Health Law
- Immigration Law
- Commercial Registration Law
- Factory Law
- Land Allocation Law
Moreover, the first 5 years of the ESDZ development plan will focus on providing infrastructures and public utilities in order to support the special-targeted industries. The Policy Committee has already approved to conduct several projects which would increase the proficiency of transportation system in ESDZ such as the improvement of U-Tapao Airport located near Pattaya Special Municipal Area and Rayong Province, the high-speed railway connecting to 3 major airports and the construction of new commercial port.
We hope that this development plan will enhance capacity of the major economic area of the country and magnetize the new investment from foreign investors.