RESTRICTED
WORLD TRADE G/SCM/N/3/THA
L/7611/Add.6
ORGANIZATION 10July1995
(95-1902)
Original: English Committee onSubsidies andCountervailing Measures
SUBSIDIES
Notifications Pursuant toArticle XVI:1 oftheGATT 1994
andArticle 25oftheAgreement onSubsidies and
Countervailing Measures
THAILAND
Thefollowing updating notification, dated 30June1995, hasbeenreceived fromthePermanent
Mission ofThailand.
Inview ofthedecision taken bytheCONTRACTING PARTIES oftheGATT 1947 on
AvoidanceofProceduralandInstitutionalDuplication(L/7582,dated13December1994)thisnotification
isdeemed tobealsoanotification under Article XVI:1 oftheGATT 1947.
_______________
Inaccordance withArticle 25oftheAgreement onSubsidies andCountervailing Measures,
thePermanent Mission ofThailand totheWorld Trade Organization, would liketosubmit, herewith,
theNotification ofSubsidies under theAgreement onSubsidies andCountervailing Measures.G/SCM/N/3/THA
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Notification ofSubsidies Pursuant toArticle 25
oftheAgreement onSubsidies andCountervailing Measures
1. Industrial Credit Refinancing Scheme
1.1 Medium andlarge scale industries
(a) Nature andextent oftheprogramme
(i) Background andauthority
UndertheRoyalDecreeRegulatingtheAffairsoftheBankofThailandB.E.2485,Section12(4),
theBankofThailand isauthorized toprovide financial assistance topriority sectors andprojects through
refinancing schemes.
(ii) Incidence
Eachmanufacturer, withatotalfixedassetnotexceeding B200million, willbeallotted credit
linesforissuing promissory notes (P/N). TheBank ofThailand (BOT) willpurchase fromcommercial
banks andtheIndustrial Finance Corporation ofThailand (IFCT) P/Ndrawn bythose manufacturers
tofundtheirworking capital. Theamount ofrefinancing is50percentoftheP/N'sfacevalue with
amaturity period of120days. Theratecharged bytheBOTtocommercial banks ortheIFCT isset
at5percentp.a. Inturn, commercial banks cancharge issuers notmore than10percentp.a.of
thenotes'facevalue.
(iii) Amount ofpayment (total)
Thefollowing tablerepresents theamount ofBOT'spurchase ofP/N:
Year BOT'spurchase ofP/N(Bmillion)
1989 534
1990 547
1991 735
1992 934
1993 724
1994 1,042
(b) Effect oftheprogramme
Theobjective ofthescheme istoprovide financial support totheindustries essential torural
development, particularly those withthelabour intensive orhighly utilized localagricultural products.G/SCM/N/3/THA
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1.2 Small scale industry
(a) Nature andextent oftheprogramme
(i) Background andauthority
UndertheRoyalDecreeRegulatingtheAffairsoftheBankofThailandB.E.2485,Section12(4),
theBankofThailand isauthorized toprovide financial assistance topriority sectors andprojects through
refinancing schemes.
(ii) Incidence
Thesmall scale industries withnofixed assetofnomore thanB20million, areeligible for
thisscheme. TheBank ofThailand (BOT) willpurchase from commercial banks andtheIndustrial
Finance Corporation ofThailand (IFCT) promissory notes (P/N) drawn bymanufacturers foruseas
working capital. Theamount ofrefinancing is50percentoftheP/N'sfacevalue withamaturity
period of120days. TheBOTcharges commercial banks ortheIFCT 3percentp.a.fortherefinancing
amount while permitting them tocharge theircustomers notmore than10percentp.a.forthefull
amount oftheP/N.
(iii) Amount ofpayment (total)
Thetotalamount ofrefinancing byBOT areasfollows:
Year BOT'spurchase ofP/N(Bmillion)
1989 121
1990 134
1991 162
1992 230
1993 348
1994 368
(b) Effect oftheprogramme
Thisscheme isaimed atproviding lowcostfunds forsmall scale industries.
2. Livestock Raising andAqua-Culture Credit
(a) Nature andextent oftheprogramme
(i) Background andauthority
UndertheRoyalDecreeRegulatingtheAffairsoftheBankofThailandB.E.2485,Section12(4),
theBankofThailand isauthorized toprovide financial assistance topriority sectors andprojects through
refinancing schemes.G/SCM/N/3/THA
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(ii) Incidence
TheBank ofThailand (BOT) willpurchase fromcommercial banks promissory notes (P/Ns)
drawn byfarmowners tofinance theiroperating costs. Theamount ofrefinancing is50percentof
thefacevalue oftheP/N. However, maturity ofP/Ndepends onthetypes andproducts ofthefarm,
butnotmore than5years. TheBOT charges commercial banks 5percentp.a.fortherefinancing
amount while permitting commercial banks tocharge issuers forthefullamount ofP/Nnotmore than
10percentp.a.
(iii) Amount ofpayment (total)
Thetotalamount ofBOT'spurchase ofP/Nfrom farmowners areasfollows:
Year BOT'spurchase ofP/N(Bmillion)
1989 823
1990 1,000
1991 1,089
1992 1,297
1993 1,134
1994 1,047
ItisThailand 'sunderstanding thatasubsidy provided toagricultural producers issubject
tocommitment asspecified intheAgreement onAgriculture only.
(b) Effect oftheprogramme
Thisscheme isaimed atproviding lowcostfunds forcommercial livestock raising andaqua-
culture.
3. Rural Development Credit Refinancing Scheme
(a) Nature andextend oftheprogramme
(i) Background andauthority
UndertheRoyalDecreeRegulatingtheAffairsoftheBankofThailandB.E.2485,Section12(4),
theBankofThailand isauthorized toprovide financial assistance topriority sectors andprojects through
refinancing schemes.
(ii) Incidence
TheBank ofThailand (BOT) willpurchase from commercial banks intheamount of50per
centoftheP/N'sfacevalue drawn byproject operator orproject participants (farmer orworkers).
Theloanmustbeblended withcommercial banks credit insupporting eachruralproject. Themaximum
period forproject support is5years. Generally, theBOT charges commercial banks notmore thanG/SCM/N/3/THA
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3percentp.a.while commercial banks charge project operator orproject participants forthefullamount
ofP/Nnotmore than10percentp.a.
(iii) Amount ofpayment (total)
Thetotalcredit lineavailable forthisprogramme isB2,000 million. During 1989-1994, the
BOT provided credit asfollows:
Year BOT'spurchase ofP/N(Bmillion)
1989 77
1990 79
1991 56
1992 31
1993 151
1994 103
ItisThailand 'sunderstanding thatasubsidy provided toagricultural producers issubject
tocommitment asspecified intheAgreement onAgriculture only.
(b) Effect oftheprogramme
Theobjective oftheprogramme istoencourage agricultural orindustrial investment inrural
areas forbetter income distribution.
4. Incentives topromoted industries under theBoard ofInvestment (BOI) 'sprivileges onzone3
programmes
(a) Nature andextent oftheprogramme
(i) Background andauthority
UndertheRoyalDecreeRegulatingtheAffairsoftheBankofThailandB.E.2485,Section12(4),
theBankofThailand isauthorized toprovide financial assistance topriority sectors andprojects through
refinancing schemes.
(ii) Incidence
Theestablishments eligible forassistance under thisscheme mustbenewinvestment projects
orzonerelocation, eachwithcapital funds notmorethanB200million (excluding landcostandworking
capital). Additionally, theymust havebeengranted investment promotional benefits ortheBOI's
privileges andlocated outside Bangkok and15nearby provinces.
TheBank ofThailand (BOT) purchases fromcommercial banks ortheIFCT, P/Ns drawn by
entrepreneurs forfunding theacquisition offixed assets (excluding landcost) andworking capital.
Theamount ofrefinancing issetat40percentoftheP/N'sfacevalue. Term ofnotes mustnotexceedG/SCM/N/3/THA
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120daysforborrowing tobeusedasworking capital and5years forinvestment infixed assets. The
BOTcharges commercial banks andtheIFCT 3percentp.a.while commercial banks andtheIFCT
cancharge noteissuers notmore than11.25 percentp.a.
(iii) Amount ofpayment (total)
Thetotalcredit lineofB12,000 million isavailable upuntil30December 1996.
(b) Effect oftheprogramme
Theobjective oftheprogramme istoencourage industrial decentralization toprovincial areas,
particularly small andmedium scale industries.
5. Investment Incentive Scheme
(a) Nature andextent oftheprogramme
(i) Background andauthority
TheBoard ofInvestment provides bothlocalandforeign companies withfiscal incentives in
anattempt topromote theestablishment ofindustries inThailand toaccelerate thecountry 's
industrialization process andregional development. During recent years, investment incentives are
geared towards decentralization asoneofthegovernment 'spolicy themes isregional development.
Investment incentives areoffered toattract more investment toregional areaswhich facedisadvantages
invarious aspects. Thelegislation thatgoverns theprovision ofincentives bytheBoard ofInvestment
istheInvestment Promotion Act(1977) amended in1991.
(ii) Incidence
Major fiscal incentives granted include corporate income taxexemption andreduction; and
exemption andreduction ofimport duties onmachinery andrawmaterials. Awiderange ofactivities
covering manufacturing services areeligible forpromotion. Themagnitude ofincentives provided
varies according toproject locations.
SincethepolicyrevisioninApril1993,theBoardofInvestmentalsooffersincentivesforfactory
relocation andspecial invectives forresearch anddevelopment activities.
(iii) Amount ofpayment (total)
There isnospecific budget earmarked forinvestment incentives. Theextent ofincentives
depends onthenumber ofprojects promoted bytheBoard ofInvestment. Thus, thegovernment revenue
foregone inthisregard fluctuates fromyeartoyear. Nostatistics oncorporate income taxexemption
andreduction areavailable. Onlyfigures onexemption ofimport duties onmachinery andrawmaterials
areavailable.G/SCM/N/3/THA
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Import Duty Exemption andReduction Granted toBOI-Promoted Firms
Unit: BMillion
1992 1993 1994
Machinery
*Exemption 5,924.8 4,323.0 6,810.9
*Reduction 55.7 34.7 37.0
*Total 5,980.5 4,357.7 6,847.9
RawMaterial
*Exemption 38,294.1 38,879.1 51,935.0
*Reduction 134.5 188.3 205.4
*Total 38,428.6 39,067.4 52,140.4
Total 44,409.1 43,425.1 58,988.3
(b) Effect oftheprogramme
Thisscheme isaimed fordecentralization andregional development.