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Trade war

Thailand dangles 50% tax cut for manufacturers fleeing China

Bangkok seeks to draw high-tech production in competitive region

A garment factory in Bangkok: Thailand seeks to move its manufacturing sector into higher-value activities.   © Reuters

BANGKOK -- Thailand announced a package of incentives on Sept. 6, including a 50% tax cut, for companies to relocate production to the slowing Southeast Asian economy from China amid the Sino-American trade war.

To qualify for the incentives, companies must apply next year for approval to invest 1 billion baht ($32.7 million) or more in the country and carry out the investment by 2021.

Approved investors will see their corporate tax obligations reduced by half for five years.

The incentives show Thailand jockeying for foreign investment against neighbors like Vietnam as the country seeks to move its manufacturing sector into higher-value activities.

Forty-eight multinationals including U.S. chipmaker Western Digital are considering relocating production to Southeast Asia from China, Thailand's Office of the National Economic and Social Development Council says.

Ten of these companies are strong candidates for investment in Thailand, according to the office.

"Under the new package, Thailand can compete with other countries in Asia for foreign investment, especially to attract advanced technology firms that want to move production to Thailand," Kobsak Pootrakool, an official in the prime minister's office, said at an economic policy meeting on Sept. 6.

Beyond offering a tax cut, the government also will create a single portal that advises companies on their applications and allows them to file.

To encourage training of skilled workers, tax breaks will be offered to offset the cost of building training centers and providing employee development programs. Labor rules will be eased to help skilled foreigners work in Thailand.

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