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Interview

Thailand offers tax breaks to capture spoils of US-China trade war

Economic zone chief says country set to benefit from rising tensions

Laem Chabang Port, located in Thailand's Eastern Economic Corridor. The Thai industrial park hopes to snare manufacturers that are leaving China. (Photo by Takaki Kashiwabara) 

TOKYO -- Thailand looks to extend as much tax relief as possible to manufacturers setting up shop in the country, the head of a special economic zone there told Nikkei in a recent interview.

Kanit Sangsubhan, secretary-general of Thailand's Eastern Economic Corridor, said the tax breaks are designed to attract businesses seeking an alternative production hub to China amid Washington's trade war with Beijing.

Thailand's real gross domestic product rose 2.3% on the year in the April-June quarter, down from 2.8% growth in January-March, as exports to major trading partners like China declined. The country downgraded its growth forecast for the year to between 2.7% and 3.2%.

Though the negative aspects of the U.S.-China trade war far outweigh the positives at present, Thailand likely will profit from the situation in the medium term, Kanit said. The trade war will serve as the alarm that wakes up Asia, pushing countries in the region to work closer together, he said.

Companies looking to move operations from China to Thailand should have economic reasons for doing so, Kanit said, noting that Bangkok will reject proposals that are unsuited to Thailand's development.

Thailand is bolstering efforts to develop the EEC, the country's export hub on its eastern seaboard, as part of its push to join the world's advanced economies. New technologies can revolutionize lives, Kanit said, citing artificial intelligence and the "internet of things."

Fifth-generation networks will be vital to Thailand's technological advancement, the secretary-general said. The country will not shut out China's Huawei Technologies, he said. The U.S. blacklisted the telecom equipment provider over national security concerns and is pressing other countries to do the same.

In connection to Beijing's Belt and Road infrastructure-building initiative, Kanit said Japan and China could work together on constructing airports. He said that Thailand is not dependent on Chinese loans and has been able to focus on projects that truly serve local interests.

Airport and seaport expansion, as well as high-speed rail construction, have begun at the EEC with cooperation from foreign businesses. Thailand looks to develop communications infrastructure in the corridor and attract next-generation auto companies and digital businesses.

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