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The Board of Investment (BoI) could widen its reach in terms of investment privileges and lower corporate income taxes for five years for clean development mechanism (CDM) projects.
The resolution was made by the National Climate Change Committee chaired by Prime Minister Abhisit Vejjajiva on Wednesday to jump-start greenhouse gas reduction activities.
Thailand has fewer CDM projects than neighbouring countries such as Malaysia where tax incentives are in place, said Prasertsuk Chamornmarn, deputy executive director of the Thailand Greenhouse Gas Management Organisation (TGO).
“The Finance Ministry reported to the committee that incentives for CDM should be provided through the BoI because it would be faster than offering tax cuts by the ministry itself,” said Mrs Prasertsuk.
“We agreed that carbon credits are a byproduct of CDM projects and could be granted the investment privileges.”
The law that governs the BoI might require an amendment to facilitate the changes, Mrs Prasertsuk added.
The BoI is concerned over the same point, saying carbon credits are not generated from a manufacturing process, so they are not eligible for privileges under investment promotion law.
BoI secretary-general Atchaka Brimble said yesterday that the board had informed the Finance Ministry of its concern in the past few weeks, but had yet to receive a response.
“But we are willing to discuss a possible solution,” said Dr Atchaka. “In other countries, such measures are provided by the Finance Ministry and cover more than just investment-promoted companies.”
According to the TGO, Thailand ranks fourth in Asean after Malaysia, the Philippines and Indonesia, respectively, in terms of the number of CDM projects registered with the United Nations Framework Convention on Climate Change (UNFCC), partly because of high transaction costs.
The TGO has approved 88 CDM projects with a combined emission reduction target of 5.78 million tonnes of CO2 equivalent per year.
These projects require an investment outlay of 28.64 billion baht.
The Federation of Thai Industries (FTI) welcomed the idea, saying the private sector had been eagerly awaiting incentives for CDM.
“We have proposed this issue to the government for some time. We want to see Thailand offer at least the same level of incentives as neighbouring countries so it can compete in the global market,” said FTI vice-chairman Payungsak Chartsutipol.
“Thailand has competitive advantages for CDMs because we have vast agricultural and green areas. With the incentives, I think more operators will invest here because they will get higher returns,” he added.
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