(Source: Thailand Investment Review, September 2019)
Thailand’s rich natural resources and favorable climate make a strong performer in global food production. In fact, Thailand ranks 12th in global food exports, which contributes approximately US $30 billion in 2018. This number is expected to increase by 10% in 2019, according to National Food Institute (NFI). The largest export markets in 2018 were to Asian countries. Neighboring Cambodia, Laos, Myanmar and Vietnam account for 15.1 percent of the total market. The next largest export markets are Japan (12.8 %), China (10.7 %), the US (10 %), Oceania (9.1 %), and Africa (9.1 %).
There is a huge investment opportunity to apply technology and innovation to improve labor efficiency and yield of the Agri-food sector. In fact, “One third of the Thai workforce participates in the agriculture and food industries, but these industries account for only 5.7 percent of GDP.” said Assistant Professor Dr. Akkharawit Kanjana-Opas, Deputy Secretary of National Science Technology and Innovation Policy Office (STI) and CEO of Food Innopolis, in an interview with BOI.
Room for sustainable growth
Can Thailand maintain its position as a leading nation in agricultural and food supply? Thailand has a number of key advantages for food industry development and investment that, if harnessed, could propel the country’s growth in these sectors. Thailand is ideally positioned to be a leader in food production due to its abundance of natural resources—including rice, palm oil, cassava, and sugar—and its location in the heart of Southeast Asia. Thailand’s membership in ASEAN and its positive relations with other Asian countries open a door to more than 640 million consumers. A complete transport infrastructure and services serves as economic gateways to the region. Thailand also boasts a skilled workforce that providing competitive advantage in terms of quality and cost.
It is essential for Thailand to leverage these valuable resources to produce value-added products that respond to mega trend and changing consumer behavior. R&D is a key to enhancing and maintaining competitive edge and developing the sustainability of the food industry. The government has designated the food industry as one of its targeted sectors, high-potential industries selected for investment and development promotion. To strengthen Thailand’s position as a global food supplier, the government created a food industrial park known as Food Innopolis to boost R&D and increase investment through science, technology and innovation.
Food Innopolis - One-Stop service within 24 hours
Food Innopolis is a global food innovation hub offering expertise in science, technology and innovation. It is located at Thailand Science Park, Pathumthani province, which is just 48 kilometers away from Bangkok. Food Innopolis is an innovation community center covering an area of more than 200 rai, and is fully equipped with excellent infrastructure, rental space for business purposes, and facilities for research, development and innovation. It is dedicated to meeting the needs of regional and global investors and facilitating their investment journey in the food industry in Thailand.
Apart from a food research center, it is providing consultation and coordination across organizations in order to enhance ease of doing business, especially for foreign investors. “Whatever challenge a company is facing, just come to us, and we will resolve it within 24 hours.” said Assistant Professor Dr. Akkharawit Kanjana-Opas. Services available through the park include assistance in securing qualified human resources and expert advice on the laws and regulations of the food and drug industry in Thailand.
Strong collaboration with universities, advanced research institutes and large food companies is a key factor in attracting foreign direct investment, according to Assistant Professor Dr. Akkharawit Kanjana-Opas. A large pool of professional workers between public and private institutes within food research and development generally makes the ventures more attractive to foreign investors.
There are currently 36 investors collaborating with Food Innopolis. One third of the investors are from the Japanese food industry, who recognize Thailand’s potential and the opportunities available in food sector and a complete service in high technology equipment offered by Food Innopolis.
Active collaboration - a strategy to move forward
Improving ease of doing business in Thailand is a key focus for the food industry. Food Innopolis is partnering with both public and private sector networks around the country to disseminate advanced innovation technology to SMEs and start-ups, which account for more than 90 percent of the sector. To this end, Food Innopolis has created seven more extension sites through partnerships with leading academic institutions, including Kasetsart University, Chulalongkorn University, Mahidol University, King Mongkut University of Technology Thonburi in Bangkok, Chiang Mai University, Khon Kaen University, and Prince of Songkhla University. Each of these extensions specializes in different area of research and innovation. For example, Kasetsart is specialized in food safety and functional ingredients while Prince of Songkhla is working to develop seafood and Halal foods.
To enhance the partnership, the Food Innovation and Regulation Network (FIRN) was founded in Bangkok through a collaboration between the Food and Drug Administration of Thailand, the Ministry of Public Health, and the Food Science and Technology Association of Thailand. FIRN functions as a central hub for communication and provides training for private sector companies, government agencies, start-ups and entrepreneurs interested in functional food.
How companies can recieve support
In keeping with government policy encouraging expansion in high valueadded food products, Food Innopolis is partnering with the Board of Investment (BOI), to promote investment in R&D for food production. Investors who promote food innovation business through leveraging useful resources of Food Innopolis can receive both tax and non-tax incentives. For example, investors can receive import duty exemptions on necessary machinery, up to eight years of exemption from corporate income tax without cap, and a 50% reduction of corporate income tax for an additional five years. BOI also offers a package to entice foreign nationals to develop R&D in the food industry in Thailand in order to support an exchange of knowledge between local, regional and international food industry experts. Foreign investors developing R&D labs and other related services in the food products sector can receive incentives including the ability to own land and to receive support with visa and work permits to facilitate living and working in Thailand.
Government policy regarding this food innovation industry, combined with BOI incentives to attract foreign investment, will improve ease of doing business in the food industry, expedite a linkage between manufacturing and innovation, and support the development of personnel resources.