The Eastern Economic Corridor (EEC) is a strategic plan under Thailand 4.0, building on the success of the Eastern Seaboard Economic Development Plan that has been in place for over 30 years. The EEC project aims to enhance the country's industries, increase competitiveness, and ensure long-term economic growth for Thailand.

 

Initially, the project will focus on upgrading three provinces: Chonburi, Rayong, and Chachoengsao, transforming them into a special economic zone to systematically and efficiently drive economic growth through management mechanisms overseen by the Eastern Economic Corridor Policy Committee.

 

So far, the EEC project reflects the overall economic growth in the region, which has been consistently expanding in line with government support strategies. As of November 2018, the eastern economy continued to grow, supported by private consumption and investment, as well as industrial activities.

Private Consumption and Investment Drive Economic Growth

 

The Office of the National Economic and Social Development Board (NESDB) has provided clearer insights into the ongoing economic expansion in the eastern region, particularly in Chonburi, Prachinburi, and Sa Kaeo, which aligns with the tourism sector that continues to thrive.

Economic indicators related to demand, especially private consumption as reflected by the value-added tax at constant prices, showed a growth of 24.1% year-on-year in November, driven by growth in Chonburi, Rayong, and Nakhon Nayok. This is consistent with the consumption of durable goods, as evidenced by a 3.7% year-on-year increase in new car registrations across almost all provinces. Meanwhile, private sector investment in machinery saw a slowdown compared to the previous month, but the amount of investment starting operations grew by 254.9% year-on-year, totaling 2.56 billion baht.

 

On the supply side, particularly in industrial production, there has been a continuous improvement, as reflected by the Eastern Industrial Confidence Index, which remained above 100 for the 13th consecutive month in October 2018, reaching 110.4. This increase is attributed to the automotive parts and accessories industry, as well as the air conditioning and refrigeration sectors, and the jewelry industry.

Moreover, the tourism sector has also shown strong growth, with visitor numbers increasing by 3.7% year-on-year in October 2018. The internal stability remains favorable, as indicated by the preliminary general inflation rate of 0.8% year-on-year in November 2018 and an unemployment rate of 0.8% of the total labor force in October 2018.

 

Confidence in the Eastern Region Remains Bright

 

The Regional Economic Sentiment Index (RSI) for December 2018 indicates a positive outlook for the eastern region, with the index continuing to grow positively at a level of 61, primarily due to improved trends in the industrial sector. It is expected that the number of factories will continue to increase in line with the Eastern Economic Corridor policy, while the service sector receives support from the government to stimulate and promote domestic tourism. The clarity of the EEC project has become a significant driver of confidence, coupled with the government's election announcement, which has boosted investor confidence in Thailand's economic system.

The economic sentiment index for December 2018 in the eastern region shows growth in agriculture at 39.6, industry at a high level of 80.3, services at 59.9, employment at 58.1, and investment at 66.5.

 

This aligns with the Board of Investment (BOI), which continues to implement significant investment support measures, including stimulating large projects, promoting grassroots economies, and supporting capital markets, particularly in targeted industries that Thailand aims to drive forward. This represents another important step for Thailand's investment, moving towards stable and sustainable economic growth.

 

Recently, the BOI has approved special measures to stimulate investment applications for promotion within 2019, focusing on large-scale projects that significantly impact the national economy and involve high-tech industries or knowledge-based industries that create high added value, as well as enhancing the country's competitiveness.

 

These measures will apply to applications submitted from November 19, 2018, until the end of 2019, offering additional benefits such as a 50% reduction in corporate income tax for three years, provided that the project has an investment of at least 1 billion baht, excluding land and working capital, across all types of businesses (except for businesses without a physical establishment, such as air transport and maritime transport). These projects will receive corporate income tax exemptions for five years or more based on normal eligibility criteria, but not exceeding eight years, and can be established in all provinces except Bangkok, following all timelines.

 

Looking at the overall investment promotion during the first nine months of 2018 (January-September), there were 1,120 investment promotion applications totaling 377 billion baht, representing a 10% increase in the number of projects compared to the same period last year, while the investment amount remained close to the previous year's level.

 

Investment in the EEC Expands

 

Ms. Duangjai Asawachintachit, Secretary-General of the BOI stated that applications for investment promotion in targeted industries have increased by 69% compared to the previous year, with a total of 525 applications amounting to 290 billion baht. The industries with the highest investment value include environmentally friendly petrochemicals and chemicals, followed by automotive and parts, tourism, agriculture and biotechnology, and digital sectors.

 

"The number of investment promotion applications in the EEC area has seen significant growth in both the number of projects and investment value, with 288 projects representing a 13% increase from the same period last year, which had only 255 projects, and a total investment value of 230 billion baht, a remarkable increase of 117% from the previous year, which had only 106 billion baht in total investment." Ms. Duangjai

Additionally, the BOI has approved three large projects with a total investment of over 21.7 billion baht, all of which are in high-tech industries and high-value-added businesses. These include Progen Holdings (Thailand) Co., Ltd., which received investment promotion for the production of passenger cars and small trucks with a total investment of 7.69 billion baht. The vehicles produced under this project will meet Euro 5 emission standards and will use domestic raw materials such as air conditioning systems, tires, and interior parts, amounting to approximately 13.7 billion baht annually.

 

Auto Alliance (Thailand) Co., Ltd. received investment promotion for the production of hybrid electric vehicles (HEVs) with a total investment of 11.4 billion baht. The company has proposed a comprehensive investment plan, including vehicle assembly and production or use of key components, battery management systems, which will also utilize domestic raw materials, totaling over 19.4 billion baht annually.

    

Lastly, PTT Public Company Limited received investment promotion for a science and technology park with a total investment of 2.6 billion baht, located in the Eastern Economic Corridor Innovation Zone (EECi) in Wang Chan District, Rayong Province. This project will develop the "Wang Chan Valley" area into a science and technology zone to support research and innovation that can be commercially utilized.

 

Overall, these three projects approved by the BOI cover three areas: 1. ARIPOLIS, a center for research and innovation in automation, robotics, and intelligent systems in the automotive, electronics, metal, and machinery industries; 2. BIOPOLIS, a center for research and innovation in biosciences and biotechnology related to modern agricultural development; and 3. SPACE INNOPOLIS, a center for research and development to support the aviation, space technology, and geoinformatics industries.

This represents another "success" of the "EEC investment project," as evidenced by the continuous growth in investment, signaling a positive future for Thailand's economy, which can achieve stable and sustainable growth with this effective driving force.

 

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