TRENDS AND IMPACTS OF FOREIGN INVESTMENT IN DEVELOPING COUNTRY AGRICULTURE

the two data sources are compiled on a different
basis.
FDI data collected by the Bank of Thailand
follow the International Monetary Fund
(IMF) Balance of Payments Manual, which is
an international standard for collecting FDI
statistics. The BOT’s FDI statistics comprise three
components: equity capital, with at least 10
percent of foreign shareholding, loans from
affiliates, and reinvested earnings (Bank of
Thailand, 2010). Since the data definitions are in
accordance with the international standard, they
are comparable among countries and widely
used in the analysis of FDI. The BOT’s statistics
represent the entire streams of investment
and are often reported as net FDI flows. Net
FDI flows are defined as FDI inflows minus FDI
outflows.
Foreign direct investment data collected by
BOI refer to projects with foreign capital of at
least 10 percent. The BOI’s FDI definition does not
strictly comply with the IMF’s direct investment
standard; therefore the data is often called
foreign investment instead of foreign direct
investment. The BOI’s foreign investment data
cover only projects which have applied for – or
received approval from – BOI promotion. There
are seven sectors under the BOI promotion: i)
agriculture and agricultural products; ii) mining,
ceramics and basic metals; iii) light industry;
iv) metal products, machinery and transport
equipment; v) electronic industry and electrical
appliances; vi) chemicals, paper and plastics; and
vii) services and public utilities. This study focuses
only the first sector.
Since the two sources of FDI data are compiled
on a different basis they are not comparable.
Nonetheless, both data sets complement each
other. BOT’s FDI data represent actual flows of FDI
into Thailand while BOI’s data indicate trends of
FDI. The BOT’s FDI depict the overall picture of FDI
at an aggregate level while BOI’s FDI allows us to
investigate the role of foreign companies at the
project level.
Part 3: Policies for attracting FDI and impacts
on national economic development
3. Policies, legislations, institutions
affecting FDI in Thai
agriculture
3.1 Overview
Investment barriers
High Transaction Costs
Thailand has evolved towards an open economy.
This is reflected in its declining tariff and nontariff
barriers over time. During the 1960s and
1970s, import tariffs were set at high levels,
especially for those that were infant industries
at the time (e.g. the automotive industry), when
the import substitution policy was put in place
to protect domestic industries (The Board of
Investment of Thailand, www.boi.go.th). In the
late 1990s, import duties on machinery and
capital goods (61 categories) were removed for
export oriented firms. Additionally, import taxes
imposed on raw materials of exported products
were exempted for both the Board of Investment
of Thailand (BOI) and non-BOI promoted firms.
Firms could obtain import tax refunds from
Thailand’s customs department.
High transaction costs still remain, due to
inefficient public services, ambiguous regulations
and duplicate/complex administration processes
amidst the liberalization of trade and investment
in Thailand. The Asian financial crisis in 1997
was a wake-up call for Thailand’s wide range
of reforms, including government transparency
and economic reforms. Many Thai Government
agencies like the Thai export promotion
department and the BOI launched their One-Stop-
Service centres in order to facilitate exporters and
investors. To date, only some of these centres
have proved to be efficient in providing services in
a short period of time (i.e. visa and work permit
approved within three hours as well as single
window for submission of required customs/
business permits and standard certification
documents). Nevertheless, processing time in the
clarification and interpretation of the Harmonised
System (HS) code, customs clearance and import
tax refunds (maximum of 30 days with high
possibility of delays), and value-added tax refunds
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