Thailand Accelerates Biotech Development with the BCG Model
In January 2021, Thai Prime Minister Prayut Chan-o-cha convened the Bio-Circular-Green Economy Committee (BCG), where discussions focused on Thailand's economic growth and social development. One of the four main pillars of the BCG model, which integrates biotechnology, circular economy, and green economy, is the development of bioenergy, biomaterials, and biopharmaceuticals. The biotech and biomedical sectors have been drawing attention in Thailand, growing at a rate of 10% in recent years.
While the BCG strategy is positioned as a long-term goal for achieving a sustainable society, it has seen accelerated growth due to the response to the COVID-19 crisis. Sirasak Teparkum, CEO of the Thailand Center of Excellence for Life Sciences (TCELS), stated, "The life sciences market in Thailand grew by up to 15% due to the COVID-19 crisis." Baiya Phytopharm, a biotech startup founded in 2018, has been developing technology related to COVID-19 vaccines. Notably, they produce the necessary proteins for the vaccine from low-nicotine tobacco leaves.
As of September 2021, their prototype vaccine, Baiya SARS-CoV-2 Vax, had successfully completed animal trials, and human trials began in August. In December 2020, the Thailand Board of Investment (BOI) approved tax exemptions worth 3,940,000 baht (approximately 13 million yen, 1 THB = 3.293 JPY), with plans to export 70% of their products. Currently, they are also developing Baiya Plant EGF (Human Epidermal Growth Factor), a skincare product technology that promotes epidermal cell growth and collagen production for anti-aging effects.
Foreign Investment in Biotechnology
Thailand's biotechnology sector has indeed attracted global investors. According to BOI, from 2018 to 2020, there were 1,163 investment applications related to BCG projects, totaling approximately $600 million. The Thai government is also focusing on research and development (R&D), planning to double R&D expenditure from 1.1% of the budget in 2019 to 2% by 2027.
This drive is supported by BOI's active promotion of BCG industries through tax and non-tax incentives. Tax incentives include corporate income tax reductions, with up to ten years of exemption for technology development projects. These incentives are determined based on business and product content, technology level, location, and supply chain role. Non-tax incentives include allowing 100% foreign ownership, land ownership rights, and issuance of work permits and visas for executives and experts.
Rising Labor Costs and High-Value Industry Development
Thailand's national strategy, including policies to attract investment in biotechnology, aims to acquire advanced technologies and foster high-value industries. This is partly driven by the rising labor costs in Thailand. The minimum wage has increased over the past few decades, reaching a nationwide rate of 300 baht in 2013. As of 2020, the median basic monthly wage for workers in Thailand was $395, compared to $225 in India, $246 in the Philippines, and $237 in Vietnam. Amid rising labor costs and the COVID-19 crisis, the key to Thailand's future economic development lies in successfully fostering high-value industries using biotechnology.
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