THAILAND

INVESTMENT REVIEW
by The Thailand Board of Investment
October 2008 Volume 18 No. 10

Thailands Gem & Jewelry Industry

Thailands gem and jewelry industry is widely considered one of the greatest potential markets in the world. The Kingdom is not only endowed with dedicated and gifted artisans, but also gemstone resources.
NEWS BITES / BOI NET APPLICATIONS FOCUS ON: DEPARTMENT OF EXPORT PROMOTION AND BANGKOK GEMS & JEWELRY SHOW BOI ZONE BASED INCENTIVES FOR JEWELRY COMPANY SPOTLIGHT: GEORG JENSEN PANDORA FOCUS ON: INDUSTRIAL ESTATE - GEMOPOLIS BASEL FAIR 2009 BOI INVESTMENT MISSIONS INSIDE THE BOI THAILAND ECONOMY-AT-A-GLANCE P. 2

Sapphires have been discovered in Kanchanaburi, Chanthaburi, Si Saket, Ubon Ratchathani, Phrae, Phetchabun and Sukhothai. Chanthaburis districts of Pong Nam Ron, Bo Rai and Khao Saming have been known as producers of rubies in addition to the Nam Yuen district of Ubon Ratchathani. With its fine quality artisanship, ample supply of skilled workers, and natural resources, the industry possesses the key elements needed to continue to move forward and grow. In just the first four months of 2008, the total value of Thailands gem and jewelry exports was THB 78.66 billion (US $2.29 billion). As the countrys fourth largest source of export income, the gem and jewelry industry accounts for 4.13 percent of the countrys total export earnings, and by the end of this year, the earnings are expected to be over THB 200 billion (US $5.82 billion), a twenty percent increase from last years earnings.

P. 4 P. 5 P. 6 P. 7 P. 8 P. 9 P. 10 P. 11 P. 12

Continued on P. 3

THAILAND INVESTMENT REVIEW

October 2008

NEWS BITES
Thailand Could Become Biofuels Hub
Experts taking part in EcoInnovAsia 2008 believe Thailand has the potential to become a leading production hub for biofuels and bioplastics. Professor Ramani Narayan, of Michigan State University in the United States, explained, Thailand has advantages in rich biomass and renewable resources such as cassava and cane. EcoInnovAsia gathered the worlds leading experts and key players in biofuel and bioplastics to share new technologies and encourage investment in innovative businesses in Thailand.

BOI NET APPLICATIONS

(US$ = 34.51 THB)

2007

2007 (Jan-Sep)
(US$ = 34.00 THB)

2008 (Jan-Sep)
(US$ = 33.83 THB)

Number of projects

Value 14,500

Number of projects 604

Value 9,843

Number of projects 635

Value 5,294

Total Foreign Investment By Sector Agricultural Products Minerals / Ceramics Light Industries / Textiles Automotive / Metal Processing

845

46 27 59 228 153 129 203

257 795 258 4,431 2,279 2,877 3,602

31 17 47 152 126 87 144

232 566 191 1,550 1,945 2,138 3,220

45 24 57 164 110 81 154

261 498 255 1,394 2,020 919 1,197

Japan now Thailands largest export market

Thanks to tariff cuts under the Japan-Thailand Economic Partnership Agreement (JTEPA), Japan has surpassed the United States to become Thailands largest export destination. According to Makoto Shiota, Deputy-General for international regional policy of Japans Ministry of Economy, Trade, and Industry, bilateral trade between Thailand and Japan totaled US $28.96 billion through the first seven months of this year, an increase of 18% from the same period in 2007. This marked the first time the value of Thailands exports to Japan have been greater than their US-bound shipments. JTEPA took effect in November 2007 and covers a wide range of industries including automobiles, electronics, and chemicals.

Electrical / Electronics Chemicals / Paper Services By Country Japan Europe Taiwan United States Hong Kong Singapore By Zone Zone 1 Zone 2 Zone 3

330 139 44 38 24 80

4,302 2,140 170 2,475 169 985

237 98 29 28 15 61

2,446 986 118 1,397 159 904

245 109 37 26 19 58

2,019 1,218 186 221 153 1,098

298 415 132

1,290 11,370 1,840

223 279 102

947 7,224 1,671

202 317 116

876 434 1,326

Greater focus on R&D

In order to create competitive advantages for Thailand, the Board of Investment (BOI) has granted full incentives for research and development investment. The private sector is being strongly encouraged to produce more skilled human resources to support and utilize these R&D projects. Thailand is currently ranked third for R&D in Southeast Asia, trailing only Singapore and Malaysia. BOI Senior Executive Investment Adviser Hirunya Suchinai noted, I think local operators have had a greater awareness of the importance of R&D since facing tough competition in labor intensive industries from China and Vietnam. The [R&D] moves by those leading companies are also the key to enhancing their business competency.

Unit: US$ million Note: Investment projects with foreign equity participation from more than one country are reported in the figures for both countries.

Luxembourg exploring investment opportunities in Thailand

An official delegation from Luxembourg will visit Thailand next month to explore investment opportunities in satellites, investment banking, and steel. The 20-member delegation will include officials from Luxembourgs economics ministry and the private sector. From November 13-17, they are scheduled to meet Thai representatives from the public and private

sectors, including the Thai Chamber of Commerce, the Federation of Thai Industries, and Thai Board of Investment (BOI).

THAILAND INVESTMENT REVIEW

October 2008
Continued from P. 1

Jewelry accounted for 55 percent of Thailands total exports, followed by diamonds at 23 percent, gemstones and pearls at 18 percent, costume jewelry at four percent and synthetic gems at one percent. The largest export markets for Thai gems and jewelry are the United States, Israel, Belgium and Japan. In addition to this, it is believed that another 30-50 percent can be added to these export figures as a result of direct sales from merchants to tourists visiting the country. The time has come for Thailands gem and jewelry industry to take the next step; to upgrade its status from being a mere manufacturing base to becoming the worlds premier gem and jewelry trade center. Thailand has already started to take the necessary steps to move their gem and jewelry industry in the right direction. The Kingdom has set up the Research and Development Institute of Gems and Jewelry in cooperation with the Asian Science and Technology University. This Institute, which is ranked seventh in the world by the World Jewelry Confederation, employs experienced gemologists that are able to analyze, grade, and authenticate gemstones, trace country of origin, and provide an internationally recognized certification for exporters. It has also succeeded in the standardization of color comparison for seven gems, namely emeralds, topaz, garnets, tanzanite, and pink sapphires since the colors of gems are important to pricing, especially in U.S. and European markets. Although Thailand is moving forward, there is still room for this industry to develop further. According to Mr. Vichai Assarakorn, President of the Thai Gem and Jewelry Traders Association (TGJTA), Changes on import rules and regulations, support from the government, becoming a free port for gems and jewelry, continuous promotion, and proactive strategies are just a few ways Thailand can achieve its goals and create even more opportunities for the industry. Traditionally, people believed that all the raw materials must be Thai in order for the Kingdom to see worthwhile benefits. Yet by banning imports, Thailand has prevented itself from capitalizing on many valuable opportunities. To correct this, TGJTA is working together with the Thai government to look for ways to avoid the influx of unnecessary imports, possibly by stipulating a rule that will only allow raw materials that cannot be produced within the country to be imported. With the governments support, a tax waiver could be implemented, thus allowing the free flow of needed raw materials into the Kingdom like in Hong Kong and Dubai. In addition to a new set of tariff laws, Mr. Assarakorn confirmed that Thailand is also exploring the idea of providing a free port for gems and jewelry. A free port will not only attract new buyers but it will also provide many new opportunities for industry exchange.

The Board of Investment (BOI), the Ministry of Commerce (MOC), and the Department of Export Promotion (DEP) are just three of the government agencies that have a strong commitment to further develop Thailands gem and jewelry industry by fully supporting this industry and implementing a number of proactive strategies. In order to strengthen the gem and jewelry industry and move it in the direction we want, we need for the government agencies of Thailand to continually promote Thailand as a world class jewelry center for our industry to gain full worldwide recognition, urged Mr. Anusit Manityakul, General Manager of F&R Jewelry Co., Ltd. The BOI works to develop and promote the gem and jewelry industry in order to increase Thailands potential and international competitiveness by offering attractive incentives to investors. These incentives offered by the BOI allow companies with projects located inside a promoted gem and jewelry industrial estate or zone to be exempt from import duty on machinery, regardless of their zone. If the company is located in Zone 1, it has the privilege of being exempted from corporate income taxes for five years, seven years in Zone 2, and eight years in Zone 3. Also, companies that choose to relocate into one of the BOIs gem and jewelry industrial estates will be exempted from corporate income taxes for eight years as well. With these incentives, BOI hopes to further develop the gem and jewelry industrial estates and industrial zones with the hope that they will one day become centers for entrepreneurs in the Thai gem industry.

THAILAND INVESTMENT REVIEW

October 2008

Department of Export Promotion and Bangkok Gems & Jewelry Show

Thailands gem and jewelry industry has a very helpful ally in the form of the Department of Export Promotion (DEP), an office overseen by the Ministry of Commerce (MOC). Like it does for many Thai industries, the DEP acts on behalf of the Thai gem and jewelry industry to promote their products in overseas markets. Furthermore, the DEP plays an invaluable role in coordinating communication between foreign buyers and Thai jewelers, acting as a matchmaking service in many business deals. The efforts of the DEP have helped to propel Thailand to the forefront of the gem and jewelry industry.
4
One of the most important contributions of the DEP to the gem and jewelry industry is their sending of trade missions to the different colored stone and precious metal producing countries. Thailand is no longer able to produce its own raw materials in large supply, yet the countrys gem and jewelry industry has still expanded significantly in the past twenty years by taking advantage of the extensive trade network that has been developed by the DEP and other Thai organizations. The DEPs trade missions to Africa and elsewhere assist Thai jewelers in sourcing competitively priced gemstones and raw materials from the best possible exporters. After these materials are shipped in from all over the world, Thailands renowned skills in production and design can be put to use. With assistance from the DEP, Thailand now serves as a hub for the finest gems and jewelry in the world. Thailands gem and jewelry industry has emerged as a major international player in the production, processing, and trade of the products. The DEP has done a lot to ensure that foreign jewelers recognize the superior quality of Thai craftsmanship in the areas of cutting and polishing colored stones and diamonds and setting these beautiful stones into stunning jewelry. One way in which the DEP has been active in showcasing Thailands jewelers is by co-hosting the semiannual Bangkok Gems and Jewelry Fair along with the Thailand Gem and Jewelry Traders Association (TGJTA). The event has steadily grown into the worlds fifth largest jewelry trade show, but the DEP is always looking for ways to improve the show and further benefit the Thai gem and jewelry industry. This year, the 42nd Bangkok Gems and Jewelry Fair was held from 11-15 September 2008 at the Impact International Convention and Exhibition Center. The event aimed to enhance Thailands reputation as the worlds gem and jewelry hub as well as promote trade and business partnerships and industry exchange. It was also a way for Thai entrepreneurs to display their products to international markets such as India, Russia, China, and a number of countries in the Middle East. This event is the best place to explore Thailands distinctiveness. Its a superb location to see the latest and unique collections, find couture designers and producers in a venue alive with multimedia presentations, dazzling fashion shows, design awards, and other special events, Mr. Somchai Phornchindarak, CEO of the Bangkok Gems and Jewelry Fair exclaimed. Highlights of the fair included the opening ceremony, extensive seminars, the Design Pavilion, the Online Sourcing Project (OSP), and the Buyer Promotion Program. This year, the Bangkok Gems and Jewelry Fair organizers were committed to making the event even more dazzling than before. During the opening ceremony, H.E. Mr. Chaiya Sasomsub, the Minister of Commerce, presided over the ceremony as chairman while top Thai models glided along the catwalk wearing exquisite and glitzy jewelry creations. Once the event was up and running, every day offered extensive seminar programs regarding gems and jewelry, which were conducted to help entrepreneurs acquire valuable information to prepare them for dealing with the challenges facing this industry. In addition to the seminar programs, people could discover the incredible versatility of Thai jewelry as well as view stunning international jewelry by visiting the Design Pavilion. The Design Pavilion exhibited more than 200 Thai and international designers, all of whom have won jewelry contests throughout the world. Businesses and individual buyers also had the opportunity to participate in the Online Sourcing Project (OSP), a project of the Thailand Gems and Jewelry Traders Association (TGJTA) that acts as a matching service for buyers searching for Thai gems and jewelry. This service will continue to be offered even after the fair has concluded. Along the same lines as the OSP, the Buyer Promotion Program is a project the TGJTA put together in order to stimulate sales and attract more new buyers. Regarding this project, TGJTA will subsidize 50 percent of the buyers accommodation fees if they are able to meet certain conditions set up by the TGJTA.

FOCUS ON

THAILAND INVESTMENT REVIEW

October 2008 With all of this going on, it is easy to see why the Bangkok Gems and Jewelry Fair is regarded as one of the top five jewelry expos in the world. Our fair provides a stage for manufacturers to showcase their first-rate products and superior craftsmanship to the world. It is a good opportunity for the gem and jewelry industry to attract more and more investors into the Kingdom, making Thailand a sparkling gem in the world arena, Mr. Phornchindarak concluded. In the future, the Bangkok Gem and Jewelry Fair should continue to prosper thanks to recent DEP efforts to take advantage of the longstanding alliance between the Thai fair and the Hong Kong International Jewelry Fair. The two countries are now attempting to coordinate their fairs so that they are held on consecutive weeks. This should greatly reduce the travel burden and costs for the fairs international visitors by allowing them to take part in two of the industrys top trade shows during a single journey to Asia. Both fairs hope that this will increase their respective attendance, as many people have had to choose between one of the two fairs in the past. Additionally, the Bangkok Gem and Jewelry Fair and the Hong Kong International Jewelry Fair are proposing to combine their public relations efforts. This will reduce their advertising costs and allow each fair to reach a greater number of potential visitors. Simply put, this alliance is a win-win situation for everyone involved. The DEP has also played a significant role in encouraging innovation within the Thai gem and jewelry industry. As part of the Bangkok Gem and Jewelry Fair, the DEP sponsors jewelry design contests. They give out awards to the best jewelers and the most creative and innovative designers. These contests routinely produce some of the most breathtaking creations, highlighting the artistic flair of Thailands best and brightest. It is not surprising then, that the worlds jewelry traders view Thailand as an incomparable source of innovative designs. Outside of Thailand, the DEP continues its support of Thailands gem and jewelry industry. Through their numerous overseas trade offices, located both in well-established markets and those that are just emerging, the DEP promotes Thai jewelry and seeks out potential trade partners for the industry. They also assist Thai companies to participate in trade shows abroad. For example, at BaselWorld, the gem and jewelry industrys largest trade show, the DEP is sponsoring a Thai food tent that should greatly increase traffic around Thailands national pavilion. Jewelry is now one of Thailands largest national exports, and that trend does not appear to be slowing as jewelry exports have increased 10% in the past year. It is obvious that the DEP has been vital in allowing the Thai gem and jewelry industry to flourish, providing so many services to Thai jewelry companies completely free of charge. Clearly, Thai jewelers have a friend in the Department of Export Promotion.

BOI Zone Based Incentives for Jewelry

Promotion of jewelry is according to zones or special
industrial estates around Thailand. Projects located inside a promoted gem and jewelry industrial estate or zone one are exempt from import duty on machinery, regardless of zone. If located in Zone 1, corporate income tax exemption is for five years. If located in Zone 2, corporate income tax exemption is for seven years. If located in Zone 3, corporate income tax is exempt for eight years. Other privileges are granted according to the Board of Investment as needed Projects located outside a promoted gem and jewelry industrial estate or zone offer other privileges as designated by BOI.

THAILAND INVESTMENT REVIEW

October 2008

COMPANY SPOTLIGHT

Over

a century ago, Georg Jensen began offering their luxury brand to the world when Mr. Jensen himself, a silversmith and sculptor, started a modest workshop in Copenhagen, Denmark, where the quality of his work was instantly recognized. Proud of their Danish roots and committed to their history of quality and craftsmanship, Georg Jensen worked around the clock in order to fulfill the companys mission of delighting and surprising customers worldwide by delivering unique products of superior quality and design, underpinned by unrivalled customer service.

In order for the company to keep up with the ever growing demands of their customers, Georg Jensens Chiang Mai plant is adding more and more production capability and has had to continuously increase their amount of employees, which is now nearing the 600 mark. Fortunately, Georg Jensen is highly involved in the education of local goldsmiths and each year they give a handful of students the opportunity to get hands-on practice at their factory. This measure really pays off in the long run, Mr. Nielsen stated. It helps to give us a good reputation and allows us to not have to advertise for employees. Outsourcing an increasing amount of production has become necessary for Georg Jensen in order for the company to achieve their goal of becoming one of the top-ten jewelers in the world within the next five years and to fully see their vision of being a leading, trend-setting, international luxury goods brand, anchored in jewelry and watches. Mr. Nielsen believes that this aim not only calls for highly sought after products within several price ranges, but also cost effective production. The company has deliberately set-up a Danish/ Thai management group at the Chiang Mai facility in order to ensure that the best of both worlds are combined to achieve the best results. As employees and production increase, so does the size of Georg Jensens facility in Chiang Mai. With the help of the Board of Investment (BOI), just this year the company was allowed to expand their Thailand operations further by opening two new buildings: a bonded free zone warehouse that acts as their distribution center for all of Asia Pacific and a new production center. Looking to the future, Georg Jensen, with support from the BOI, is exploring the idea of setting up a program just North of Chiang Mai to educate more people on the jewelry business. Georg Jensen has suggested the idea of using their own managers and executives as the educators at the new facility, thereby increasing their access to new, potential employees.

Their hard work paid off and one hundred years later in 2004, Georg Jensen embarked on the transition from being a Danish design company to becoming a high-profile player in the luxury goods market by expanding their operations and opening a new factory. With the companys strategic planning and 100 years of experience based on a unique design language, craftsmanship, and superior quality, Georg Jensen quickly became a high profile player in the luxury goods market, competing with other world renowned jewelry designers such as Tiffany and Co., Gucci, and Bvlgari. Today, Georg Jensen has nearly 110 shops worldwide and offers quite an assortment of products, including diamond and precious stone jewelry, platinum, gold and silver jewelry, watches, stainless steel and silver cutlery, hollowware, gift articles for the home and office, and seasonal decorations. When the idea of expanding their production facilities outside of Denmark first came about, the Board of Directors considered three countries, namely Thailand, India, and Mexico; in the end, Chiang Mai, Thailand was their choice. Mr. Lars Nielsen, the Chiang Mai Factory Manager, shared with us Georg Jensens reasoning behind this decision: We chose Thailand, and Chiang Mai in particular, because of the long local tradition of making silverware as well as its central location within the growing Asian market. The factory in Chiang Mai has been strategically placed as part of Georg Jensens main focused factory supply chain strategy, positioned as a competence center in silver production with our other three factories focusing on different competence areas, he added.

Continued on P. 10

THAILAND INVESTMENT REVIEW

October 2008

COMPANY SPOTLIGHT
exceptionally easy, noted Mr. Per Enevoldsen, Managing Director for Pandora Production Co., Ltd. In addition to ensuring that the company would have complete control of their own designs, the move to Thailand allowed Pandora to take advantage of the countrys sound business environment and employ the Thai jewelry industrys topnotch workforce. With their decision to relocate to Thailand, top Danish designers were brought in to further train Thailands skilled local gem cutters and setters, helping Pandora experience tremendous growth. In due course, Lone Frandsen and Lisbeth Larsen, both Danish jewelry designers, were invited to join Pandoras team in Thailand; eventually leading to the creation of Pandoras defining style. There is a proud design tradition in Denmark that is captured through our (Pandora) jewelry. Each piece showcases a wealth of feminine detailing while maintaining the classic simplicity that is dominant in Danish design so Pandoras designs are held to extremely high standards, Mr. Enevoldsen, stated. With Pandoras use of Thailands world renowned craftsmanship in gem cutting, polishing, and setting, our company is ensured consistency in quality and reliability in the production of each and every piece of jewelry and is further enhanced by our after-sales service, Mr. Enevoldsen added. Today, Pandoras products can be found in more than 8,000 worldwide retail locations. The company has a team of 35 at their head office in Copenhagen, a team of over 100 employees servicing North America, Pandoras largest market, and 1,000 workers at Pandora Productions, its factory in Thailand. Although Pandora, in particular Pandora Production Co., Ltd., is doing what it can to continue down its growing path and achieve its future goals, the company believes their industry could use more support from the Thai government. The production facility has worked closely with the Board of Investment (BOI) since 2003 and overall, they have been quite satisfied with the help the BOI has provided such as the tax and non-tax incentives. The company is also able to own 100 percent of their land and total foreign ownership is permitted. In addition to the tax incentives offered by the BOI, Pandora was very pleased with BOIs One-Stop Service Center for Visas and Work Permits, which enables foreign staff of BOIpromoted companies to obtain work permits and long-term visas within 3 hours or less.

Although Pandora was officially established in 1982

by goldsmith Per Enevoldsen and his wife just outside of Copenhagen, Denmark, the companys roots go back much further to the 1950s, when Per Enevoldsens father, Algot Enevoldsen, designed and manufactured jewelry locally. Thailands famed jewelry craftsmen played a pivotal role in Pandoras ascension to the forefront of the jewelry industry. Meeting world standards of quality in cutting and setting gems and jewelry is one of the major reasons Thailands gems and jewelry industry, Pandora in particular, has seen much success. In the early 1980s, Mr. and Mrs. Enevoldsen traveled to Thailand frequently in search of jewelry for importing back into Denmark. Thai jewelry was a rarity in Europe at the time, and demand for Pandoras unique products was high. As their sales continued to grow, the companys focus shifted to the wholesale business. After several highly successful years as wholesalers, the company discontinued its retail activities and eventually opened their own factory in Thailand. At that point, our company had been working with Thailand for around 27 years so we knew the conditions there very well, making our decision to set up operations in the country

Continued on P. 10

THAILAND INVESTMENT REVIEW

October 2008

FOCUS ON

Industrial Estate Gemopolis

Gemopolis
is a specialized industrial estate located in Bangkok, Thailand which combines the concept of one-stop manufacturing (OSM) and one-stop trading for gems and jewelry. It is a place where the complete supply-chain of the gem and jewelry industry can be found within a single compound. Situated in the strategic commercial zone of Bangkok called Suvarnabhumi, Gemopolis is only a five-minute drive to Bangkoks new Suvarnabhumi International Airport.

support and nurture in Thailand, all the key government agencies are behind us, including the Thailand Board of Investment (BOI), the Industrial Estate Authority of Thailand (IEAT), and the Customs Department. As such, whatever their size, small or large, investors here receive the full incentives that you would normally receive only by locating far from Bangkok in Zone 3, he continued. Currently, Gemopolis is working to further expand their operations. Their entire 340 acres (approx. 800 rai) have been earmarked for several future phases of development, something the company hopes will allow them to accomplish their overall strategic initiatives. With the first and second phases complete, Gemopolis is beginning the work for phase three, the Metropolis concept. As a result, Gemopolis has recently launched Gemopolis Mall Three, an innovative project that will allow for new dimensions of investment. In phase three, investors will be able to start their business with only US $87,746.70 (THB approximately three million). Gemopolis Mall Three consists of two seven-story buildings with a number of different uses. The first six stories of both buildings are designed like a factory condominium in order to provide various sizes of spaces to serve different kinds of businesses. The area can be arranged for trading and services such as gems and jewelry showrooms, retail shops, logistics services, and so on.

By 2007, there were over 90 companies from nearly 30 countries from around the world that had established factories and offices within the developed 70 acres of Gemopoliss Free Zone industrial estate. Being a Free Zone allows for trading and even promotional activity. For traders, Gemopolis is the perfect stopover place with its duty-free bonded warehouse, trustworthy market place, and agile service facilities. The Free Zone also allows manufacturers to own 100 percent of their land and factory space without a local partner, easily hire expat technicians to work in Thailand, be exempt from import duty and VAT for raw materials, machinery and equipment, office furniture and accessories, finished products and merchandises, and obtain many other free-tax privileges for five to eight years. Mr. Suttipong Damrongsakul, Deputy Managing Director of I.G.S. Public Co., Ltd, the company that owns Gemopolis, happily announced, This is very good news for everybody. Because of our exclusivity in both the gems and jewelry industry and the luxury goods industry, and the Thai governments identification of these industries as ones to

Moreover, the seventh floor of each building is well suited to meet investor requirements since the production line can be managed completely within one floor. Available space starts from 60 square meters and goes up to 6,000 square meters, with a long pedestrian mall connecting phases one through three. In order for Gemopolis to make this dream become a reality, they will be looking for investment contributions from joint ventures around the globe, as well as hotels, houses, condominiums, shopping malls, exhibition centers, hospitals, and so forth in addition to full support from the Thai government. The far-sighted vision of the government has prompted it to extend special promotional and investment incentives to this project. I am confident that Gemopolis expansion will live up to this demonstration of confidence from the government, and contribute positively towards Thailands efforts to reach the projected US $2.92 billion (THB 100 billion) export target for the gems and jewelry industry within the next five years, Mr. Boonyong Assarasakorn, CEO of I.G.S. Public Co., Ltd. announced.

THAILAND INVESTMENT REVIEW

October 2008

flow of traffic to view their displays as people come to sample some delicious Tom Yum Koong and mangoes and sticky rice. In addition to the food tent, the DEP and the Thailand Gem and Jewelry Trade Association (TGJTA) are putting forth every possible effort to make sure that visitors to BaselWorld are well aware of Thailands presence. They have arranged for advertisements for the Thai pavilion to be announced on the shuttle buses that run between Basel Exhibition Centers various halls. Furthermore, they are printing posters that will be prominently displayed all around Basel. With so much positive publicity for Thailand, BaselWorld 2009 is sure to be an event that Thai jewelers remember for a long, long time. The Thai gem and jewelry industry owes a special thanks to Mr. Nandor von der Luehe. In addition to being the President of the Joint Foreign Chambers of Commerce in Thailand (JFCCT), Mr. von der Luehe is a Swiss national with strong ties to the jewelry industry. He played a crucial role in orchestrating Thailands initial appearance at BaselWorld in 2005 and now serves as the link between the shows management and the Thai exhibitors. Mr. von der Luehe also acts as an active facilitator to engage as many buyers and sellers as possible, thus ensuring that Thailands jewelers make the most of BaselWorlds unique networking environment. If you are interested in participating in BaselWorld 2009, please contact Mr. von der Luehe at thailand@baselworld. com.

Thai jewelry companies will have a terrific opportunity to

display their wares at the upcoming BaselWorld Watch and Jewelry Show (www.baselworld.com). Thailand, which has been participating in BaselWorld since 2005, will have a very strong presence at this years event, to be held from March 26 to April 2, 2009 in the city of Basel, Switzerland. Every spring, over 2000 watch, jewelry, and precious stone companies from 45 countries flock to BaselWorld, unrivalled as the industrys largest and most prestigious trade show in the world. Thailands delegation of jewelers now represents the shows second largest foreign contingent in the Hall of Universe, the exhibition hall designated for the various national pavilions. The Thai contingent annually consists of the finest jewelry companies Thailand has to offer. The core group of companies who enthusiastically take part in BaselWorld every year is complemented by companies who are participating for the first time, who usually make up about 25% of the group. The main appeal for Thai companies going to BaselWorld is not necessarily the opportunity to sell their merchandise to the trade shows many visitors. Far more important for them is to take advantage of the unique business and networking atmosphere that BaselWorld is so well renowned for. BaselWorld attracts in excess of 100,000 visitors each year, as retailers and wholesalers from around the world are exposed to the latest industry trends and innovations, thus opportunities to meet potential business partners are abundant. Another important reason many companies choose to participate in BaselWorld is to enhance their reputation within the international jewelry community. More than 2,900 journalists from all over the world make the journey to BaselWorld in 2009, so there are countless outlets through which Thai jewelers are able to promote their brands. Getting ready for such an event requires a lot of preparation work, but the long-term benefits are usually well worth the companies effort and patience. This year, Thailands delegation of jewelers should receive an added boost from the Thai food tent that will be set up in front of the Hall of Universe. The food tent is part of a robust advertising campaign by the Department of Export Promotion (DEP) intended to highlight Thailands unique culture and tastes. With Thai food being at an all time high in terms of international popularity, Thai jewelers can count on a steady

THAILAND INVESTMENT REVIEW

October 2008

BOI INVESTMENT MISSION

The Board of Investment (BOI), Advisor Ms. Sisirak Busayarat led a mission to Kujarat and Mumbai India, from 24-30 August 2008, where she met with major manufacturers in chemical products to discuss investment opportunities in Thailand.

BOI, led by Deputy Secretary General Chitaworn Worasak, set up an investment promotion campaign inviting Thai entrepreneurs to participate in an overseas business trip to study the potential of doing business in China. The trip attracted business people looking for new investment opportunities in manufacturing automobiles & parts, machinery, electronics components, and ICT. The mission traveled to Guangzhou and Shenzhen City, Guangdong, China, from 15-20 September 2008.

1 0

Georg Jensen Continued from

P. 6

Pandora Continued from

P. 7

Georg Jensen is also working with the BOI on several other prospective ideas such as offering additional tax breaks to jewelers in Thailand and speeding up the process for BOI approvals. We (Georg Jensen) have been working with the BOI since 1999 and now consider them family. We thoroughly enjoy working with them and look forward to opening new doors and furthering the support of Thailands gems and jewelry industry in the near future, concluded Mr. Nielsen.

The One-Stop Shop has been very useful for us here at Pandora. Since we choose to employ Danish designers in order to captivate a truly Danish design in our jewelry, this service has made it very easy and convenient for our expats to come here and work, Mr. Enevoldsen stated. Just this year, Pandora took another giant step forward and agreed to have Axcel, Denmarks largest private equity fund, purchase 60 percent of its shares. This acquisition allows Pandora to benefit from Axcels wealth of experience in growing and managing leading brands in jewelry and other consumer goods. With Axcels help, the company is hoping to have more than 500 exclusive Pandora stores in operation by 2010, quite an impressive goal for a company that had the simple beginnings of importing Thai jewelry into Denmark less than 30 years ago.

THAILAND INVESTMENT REVIEW

October 2008

INSIDE THE BOI

A group of American students from Moutbatten Institute, in partnership with the Bangkok Campus of Naresuan University met with Mr.Sakchai Luangsathitkul and BOI staff to learn about Thailands investment policy and the current investment enviornment.

Mr. Zhang Jiangfan, Shaanxi Governor, met with Mr. Sakchai Luangsathitkul and BOI staff to consult on event organization for Shaanxi-Thailand Week, which will be held on Thursday 20, November 2008, in Thailand, and also to invite BOI to participate in the fair.

BOI, led by Deputy Secretary General Ajarin Pattanapanchai, met with a delegation from the Queensland Thai Business Partnership (QTBP), led by H.E. Bandhit Sotipalalit, Ambassador of Thailand to Australia to discuss current trade, investment, and networking opportunities in Thailand.

BOI signed a memorandum of understanding with Oxford Business Group (OBG), for the production of The Report: Thailand 2009. Pictured left to right: Mr. Andrew Jeffreys-Editor in Chief, Oxford Business Group (OBG), Mr. Satit Chanjavanakul-former Secretary General of BOI, Kimberly Hartman - Country Director of OBG,

1 1

Fact About Jewelry in Thailand

Ranked #6 among foreign exchange earnings Estimated 7-10% growth in 2008 Jewelry exports of US $5.08 billion in 2007

THAILAND INVESTMENT REVIEW

October 2008

THAILAND ECONOMY-AT-A-GLANCE
Facts about Thailand
Population (2007) ASEAN Population Literacy Rate Minimum Wage (1 Jun. 08, Bangkok) GDP (2007) GDP per Capita (2007) GDP Growth (2007) GDP Growth (2008) Export Growth (2007) 65 million 570 million 96% 203 Baht/day US $245.5 billion US $3,720 4.8% 4.5-5.5% 18.10%

Exchange Rate Trends

Source: Bank of Thailand

Trade Balance (2007) US $12 billion Current Account Balance (2007) US $14.9 billion International Reserves (2007) US $87.4 billion Capacity Utilization (2007) 74.58% Manufacturing Production Index (2007) 180.67 Consumer Price Index (September 2008) 124.50 (2002 = 100) Corporate Income Tax Withholding Tax Value Added Tax September Average Exchange Rates US$ 1 1 1 100 = = = = 34.24 Baht 49.27 Baht 61.63 Baht 32.12 Baht 10-30% 10-15% 7%

SET Monthly Closing Values

Source: Stock Exchange of Thailand

Industrial Capacity Utilization (%)

Top 10 Exports 2008 (Jan-Aug)

Product
1. Automatic data processing machines and accessories 2. Motor cars, parts and accessories 3. Refine fuels 4. Precious stones and jewellery 5. Rubber 6. Rice 7. Electronic integrated circuits 8. Polymers of ethylene, propylene, etc 9. Iron and steel and their products 10. Rubber products
Source: Ministry of Commerce Source: Bank of Thailand

Proportion%

(y-o-y)
10.27 7.99 4.93 4.13 3.97 3.88 3.75 3.38 2.90 2.57

Value (US$ bn)

12.33 9.60 5.92 4.96 4.77 4.66 4.50 4.06 3.49 3.08

Source: Bank of Thailand

International Reserves / Short-term Debt (%)

Head Office, Office of the Board of Investment

NEW YORK Thailand Board of Investment New York Office 61 Broadway, Suite 2810 New York, N.Y. 10006, U.S.A. Tel: +1 (0) 212 422 9009 Fax: +1 (0) 212 422 9119 E-mail: nyc@boi.go.th LOS ANGELES Thailand Board of Investment Los Angeles Office 611 North Larchmont Boulevard, 3rd Floor, Los Angeles CA 90004, U.S.A. Tel: +1 (0) 323 960 1199 Fax: +1 (0) 323 960 1190 E-mail: boila@sbcglobal.net

555 Vibhavadi-Rangsit Road, Chatuchak Bangkok 10900, Thailand. Tel: +66 (0) 2537 8111, +66 (0) 2537 8555 Fax: +66 (0) 2537 8177 Website: www.boi.go.th E-mail: head@boi.go.th
PARIS Thailand Board of Investment Paris Office Ambassade Royale de Thalande 8, Rue Greuze, 75116 Paris, France Tel: +33 (0) 1 5690 2600 Fax: +33 (0) 1 5690 2602 E-mail: par@boi.go.th SHANGHAI Thailand Board of Investment Shanghai Office Royal Thai Consulate-General 15F, Crystal Century Tower 567 Weihai Road, Shanghai 200041, P.R.C. Tel: (86-21) 62889728, (86-21) 62889729 Fax: (86-21) 62889730 E-mail: shanghai@boi.go.th FRANKFURT Thailand Board of Investment Frankfurt Office Royal Thai Embassy Bethmannstr. 58, 5.OG 60311 Frankfurt am Main, Germany Tel: +49 (0) 69 9291 230 Fax: +49 (0) 69 9291 2320 E-mail: fra@boi.go.th TOKYO Office of Economic and Investment Affairs Royal Thai Embassy 8th Floor, Fukuda Building West, 2-11-3 Akasaka, Minato-ku, Tokyo 107-0052 Japan Tel: +81 (0) 3 3582 1806 Fax: +81 (0) 3 3589 5176 E-mail: thaiboitokyo@gol.com, tyo@boi.go.th OSAKA Thailand Board of Investment Osaka Office Royal Thai Consulate-General Bangkok Bank Bldg, 7th Floor 1-9-16 Kyutaro Machi, Chuo-Ku, Osaka 541-0056, Japan Tel: +81 (0) 6 6271 1395 Fax: +81 (0) 6 6271 1394 E-mail: osaka@boi.go.th