Thailand Tightens Investment Incentives Amid U.S. Tariff Pressures, Boosts Support For Local SMEs

According to reports from Thai media, the Thailand Board of Investment (BOI) held a meeting on the 19th and introduced a series of new measures aimed at helping Thai enterprises respond to increasing U.S. tariffs and other external economic challenges. The BOI has decided to cancel investment promotion incentives for certain industries that are currently facing global oversupply or are vulnerable to trade restrictions imposed by the United States and other countries. These include the production of solar cells and panels, specific types of automotive parts such as lead-acid batteries and non-essential decorative components, as well as metal cutting operations, waste sorting outside designated industrial zones without links to recycling systems, and several downstream steel industries, including long steel production, hot-rolled coil and thick plate manufacturing, and various steel pipe products.

In addition to this, the BOI plans to implement stricter reviews of critical production processes within industries that are likely to be impacted by U.S. trade measures. Industries such as automotive parts, electronics, home appliances, metal products, and light manufacturing must meet clearly defined criteria. These include demonstrating essential processing capabilities, completing full material transformations, and ensuring the competitiveness and acceptance of Thai-manufactured products in global export markets, thereby protecting national economic interests.

The BOI is also adjusting its policies regarding the employment of foreign personnel in BOI-promoted manufacturing companies. Enterprises with 100 or more employees will now be required to maintain a workforce consisting of at least 70% Thai nationals. Additionally, foreign individuals applying for BOI visas and work permits must meet new minimum salary thresholds. Executives must earn no less than 150,000 Thai baht per month, while professional and technical staff must earn at least 50,000 baht. These changes aim to strengthen protections for domestic employment and labor standards.

To further support domestic enterprises, particularly small and medium-sized businesses affected by U.S. tariffs, the BOI will encourage investment in modernization and competitiveness enhancements. This includes upgrades in machinery, adoption of automation and digital technologies,

implementation of energy-saving measures, pursuit of international sustainability certifications, and the transition toward emerging sectors. As part of this initiative, the existing corporate income tax exemption policy will be enhanced. The current three-year exemption-limited to 50% of the investment value-will be expanded to a five-year exemption, covering up to 100% of the investment amount. This is intended to provide a stronger incentive for Thai SMEs to adapt to the evolving international trade environment and improve their long-term resilience.