THAILAND’S
MANUFACTURING
STRENGTH – WHAT IT
MEANS FOR AUSTRALIA
Carey Ramm
Principal Economist
AEC Group Ltd
Thailand’s Economy
• Growth
– 2011 Thailand moved into the upper-middle income category
of nations
– Thailand Output has grown for 25 years above an average
rate of 7% or more
– Thailand will move into the World Bank’s high income
category by 2020.
• Thai exports
– mostly machinery, electronic components, agricultural
commodities and jewellery
2
Scale of Thailand’s Manufacturing
•
Highly competitive,
– Toyota
– Nissan
– Mazda
– Toshiba
– Michelin
– Lenovo
characterised by world-leading manufacturers:
- General Motors
- Caterpillar
- Ford
- Seagate
- Canon
- Sony
- Nikon
- Hewlett Packard
- Isuzu
- Western Digital
•
Over 2 million vehicles produced in 2012
•
Over $US 8 billion in machinery exports
•
Rapidly expanding into high value industries:
– Top hard disk drive and components manufacturing base
worldwide
– Alternative energy, green automotive, high value electronics
and ICT
3
Thailand/Australia Manufacturing
Comparison (2011)
Manufacturing Gross Value Added
($US)
Manufacturing % of GDP
Employment
% of Total Employment
Source: World Bank, NSO, AEC Group
Thailand
Australia
$113.6 Billion
$98.3 Billion
35.6%
9.3%
5.3 million
903,000
13.8%
9.2%
Thailand’s manufacturing
sector is now 16% larger than
Australia and growing fast
due to exports
4
Manufactured Product Exports
2000-2011 (USD$Million)
$250,000
$200,000
$150,000
Thailand’s manufactured
exports are 400% larger
than Australia
$100,000
$50,000
$0
2000
2001
2002
2003
2004
Thailand
2005
2006
2007
2008
2009
2010
2011
Australia
Source: Bank of Thailand, ABS, AEC Group
5
BOI Approved FDI (2007-2011)
Thailand is now a major manufacturing hub,
particularly for Japanese and US companies.
Japan United States
Projects
Approved
Total
Investment
(Million Baht)
European
Union
Australia
1,723
197
421
94
588,657
150,838
193,739
12,705
Source: BOI
6
BOI Approved Foreign Investment
2007-11 (Million Baht)
700,000
600,000
500,000
Australian companies
clearly need further
assistance to expand
into Thailand/ASEAN
400,000
300,000
200,000
100,000
0
Japan
United States
European Union
Australia
Source: BOI
7
Share of Japanese Manufacturing
FDI into ASEAN
100%
90%
80%
70%
Japanese
companies get
substantial
assistance to
expand into
ASEAN
60%
50%
40%
30%
20%
10%
0%
2005
Singapore
Thailand
2006
Indonesia
2007
Malaysia
2008
2009
Philippines
Vietnam
2010
Other
Source: Hamanaka
8
Thailand… Land of Opportunity
Australian companies already in Thailand see opportunities for expansion in the
manufacturing, mining, services, construction and technology sectors.
Business Opportunities for Australian Companies in Thailand
No Answer
4.6%
Unsure
26.2%
No
4.6%
Yes
64.6%
Source: AEC Group
9
Thailand… Land of Opportunity
Industries with Opportunities in Thailand
Manufacturing
Mining and Resources
Education and Training
Financial and Insurance Services
Clean Energy and Environment
Professional, Scientific and Technical Services
Tourism and Hospitality
Technology and Telecommunications
Construction and Infrastructure
Electricity, Gas, Water and Waste Services
Agriculture, Forestry and Fishing
Health Care and Social Assistance
Transport, Postal and Warehousing
Wholesale Trade
Public Administration and Safety
Rental, Hiring and Real Estate Services
Administrative and Support Services
Retail Trade
Arts and Recreation Services
Other
Source: AEC Group
0.0%
73.8%
54.8%
54.8%
50.0%
47.6%
45.2%
42.9%
40.5%
35.7%
31.0%
23.8%
23.8%
19.0%
14.3%
14.3%
11.9%
11.9%
7.1%
4.8%
7.1%
20.0%
40.0%
60.0%
80.0%
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Why Manufacture In Thailand?
•
•
•
64.1% of Australian businesses established in Thailand to service the
international market
59.4% to service the Thailand market
14.1% to re-export to Australia
To service regional or
international market
64.1%
To service Thai market
59.4%
To re-export to Australia
Other
Unknown/Not applicable
Source: AEC Group
0.0%
This is not about offshoring
Australian jobs
14.1%
6.3%
3.1%
20.0%
40.0%
60.0%
80.0%
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Key Considerations
Key factors which support Thailand as a destination for Australian
manufacturing investment include:
•
Centre of the ASEAN Community
•
Friendly and Manageable Business Environment
•
Accounting and Regulatory Familiarity
•
The Thailand-Australia Free Trade Agreement (TAFTA)
•
Functioning and Secure Legal System
•
Skilled Labour Force
•
Attractive Investment Incentives
12
World Bank Ease of Doing Business
2012 Ranking
Singapore
1 Australia is #11
Thailand
17
Malaysia
Brunei
China
Vietnam
Indonesia
Philippines
Cambodia
Laos
18
83
91
98
129
136
138
165
Source: World Bank
13
Australian Domestic
Manufacturing Outlook
Manufacturing lost 106,775 jobs in the last four
years... another 85,600 jobs may be lost in the next
five years...
Prime Minister’s Manufacturing
Taskforce – Report of the Non-Government Members August 2012
One out of every ten manufacturing jobs disappeared
over the last four years.
Prime Minister’s Manufacturing
Taskforce – Report of the Non-Government Members August 2012
14
Australian Domestic
Manufacturing Outlook
•
A small number of Australian firms have demonstrated how Thailand
can be used as a base for expansion. They are not only saving
manufacturing jobs in Australia - but creating them.
•
Australian manufacturers need to grow into much larger markets to get
economies of scale and to integrate into global supply chains.
•
So how do we help them do this? The Asian Century Whitepaper raises
awareness but it doesn’t have the on-the-ground initiatives to help
business grow into Asia….
15
Unlocking The Potential Of Asia
The Incubator will advise on:
•
•
•
•
•
•
•
•
•
•
Company registration / start up
Identification of partners
Office / factory location and
establishment
Market analyses
Practical export sales advice
Production sourcing
Product approvals
Human resources and labour
market legislation
Government regulations
Accounting rules and tax
legislation
16
Danish Export Incubators
Denmark is a world leader in Export Facilitation Incubators. They:
• service 7,500 clients a year
• 92% satisfaction level
• increased exports by AUD$5 billion pa
The Trade Council of Denmark
• Atlanta
• Washington
• New Delhi
• Bangalore
• Guangzhou • Tokyo
has established export incubator facilities in:
• Silicon Valley • Montreal
• Beijing
• Chongqing
• Sao Paulo
17
In Summary
•
Time is running out to save Australian Manufacturing.
•
Expanding offshore and linking into global supply chains is the solution.
•
Australia can no longer ignore the opportunities in the ASEAN region.
•
Thailand is the logical choice for manufacturers to expand.
•
Australian manufacturers need an Incubator to make the change from
thinking LOCAL to acting GLOBAL.
Thank you…
www.aecgroupltd.com
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