Updated Information on
Trade and Investment Opportunities in Thailand:
Automotive Industry Part 2
Ms.Nattinee Netraumpai
Assistant Director
Thailand Board of Investment, Frankfurt Office
Investment Opportunities for
Automotive and Supplier
Industries
Major Trade Partners in 2007
unit: million Baht
China
Imports: 564,591
Exports: 510,756
EU
Imports: 403,243
Exports:672,824
USA
Hong Kong
Imports: 330,663
Imports: 50,147
Exports: 662,741
Exports: 298,955
Japan
ASEAN
Imports: 988,536
Imports: 872,365
Exports: 625,061
Exports: 1,119,956
Australia
Korea
Imports: 132,191
Imports: 184,223
Exports: 197,516
Exports: 102,298
Source: MOC
Thailand’s FTA
CHINA: 1.3 billion
ASEAN-EU FTA
(Under Negotiation)
population
ASEAN-China FTA
(Under Negotiation)
Thailand-EFTA: 13.5
KOREA: 48 million
population
ASEAN-Korea FTA
( Under Negotiation)
million population
(Norway, Iceland, Switzerland
and Liechtenstein).
(Under Negotiation)
JAPAN : 128 million
US : 300 million population
Thailand-USA FTA
INDIA : 1.1 billion
(Under Negotiation)
population
ASEAN-India FTA
PERU: 28 million population
Thailand-Peru FTA
(under implementation)
Effective Date:
Thailand-China:
October 2003
Thailand-India:
Early harvest Sept 1, 2004
Thialand-India FTA: Late 2008 early 2009 will be implemented
Thailand-Japan:
April 3, 2007
(Under Negotiation)
Thailand-India FTA
(Under negotiation)
ASEAN-Australia-NZ: Will be implemented in late 2008
ASEAN-EU:
Negotiations began in 2003
ASEAN-Korea:
Aug 2006
ASEAN-India:
Will be signed in Dec; put into
effect in early 2009
ASEAN-Japan:
Implemented late 2008
ASEAN-China:
July 1,2005
AFTA:
July 1, 2003
TAFTA:
Jan 1, 2005
Thailand-Korea:
Concluded negotiations in Jan 2008
Thailand-Peru:
Implemented in Nov 2008
Thailand-US:
Negotiations began in 2003
Thailand-EFTA:
Negotiations began in May 2005
Thailand-NZ:
July 1, 2005
BIMSTEC: Negotiations on goods concluded in 2005 for implementation in 2006
Negotiations on service: investment; concluded in 2007
population
ASEAN-Japan FTA
BIMSTEC: 1.4 billion
Thailand-Japan FTA
population (India, Burma, Sri
Lanka ,Thailand, Nepal,
Bhutan, Bangladesh)
(Under Negotiation)
(under implementation)
ASEAN: 550 million
population AFTA
NEW ZEALAND : 4 million
population
ASEAN-New Zealand FTA
(Under Negotiation)
Thailand – NZ FTA
(implemented)
AUSTRALIA : 20 million
population
ASEAN-Australia FTA
(Under Negotiation)
Thailand – Australia FTA
TAFTA (implemented)
Multilateral
Bilateral
Thailand – ASEAN Trade in 2007
unit: million Baht
Laos
Imports: 16,296
Exports: 45,208
Myanmar
Imports: 80,031
Exports: 33,064
Cambodia
Imports: 1,689
Exports: 46,718
Vietnam
Imports: 38,655
Exports: 130,856
Malaysia
Imports: 299,903
Exports: 268,614
Singapore
Imports: 218,708
Exports: 328,169
Brunei
Philippines
Imports: 74,630
Exports: 99,965
Indonesia
Imports: 138,551
Exports: 164,228
Imports: 3,900
Exports: 3,134
Source: MOC
Thailand-ASEAN Trade
1,500
Imports
Exports
Billion baht
1,200
900
600
300
0
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
(JanSource: Bank of Thailand, as of June 25, 2008
Apr)
ASEAN Economies as a Potential Single Market
Country
Indonesia
Malaysia
The Philippines
Singapore
Thailand
Vietnam
ASEAN
Population
(million)
GDP current
price
(billion US$)
GDP per
Capita
(US$)
GDP
Growth
(%)
Total Trade
(billion US$)
222.05
5.6
1,640
5.6
161.86
26.69
5.9
5,880
5.9
285.54
86.91
5.3
1,351
5.3
99.18
4.84
7.9
29,499
7.9
510.09
65.23
5.0
3,167
5.0
248.69
84.20
8.2
724
8.2
77.27
567.56
6.0
1,890
6.0
1,404.81
Structure of Thai Automotive Industry
Assembler
(Car 16 Companies,
Motorcycle 7 Companies)
Tier 1
(Total 648 Companies)
Foreign
J/V
LSEs
Foreign
Pure
Thai
Majority Majority Thai
30 %
23 %
47 %.
Tier 2,3
(1,641 Companies)
[* LSEs : Large Scale Enterprises
Local
Suppliers
SMEs
SMEs : Small & Medium Enterprises]
The data updated in January 2005 by TAI
MAPPING OF AUTO-ASSEMBLERS
Pathumthani
- Thai Suzuki Motor (MC)
Samutprakarn
- Toyota Motor Thailand
- Isuzu Motors (Thailand)
- Siam Nissan Automobile
- Thai Yamaha Motor (MC)
- Tiger Motor (MC)
- Thai Swedish Assembly
- Thonburi Automotive Assembly
- Hino Motors (Thailand)
Ayudhaya
- Honda Automobile (Thailand)
Bangkok
-Thai Honda Manufacturing (MC)
Chachoengsao
-Toyota Motor Thailand (2 Plants)
-Triumph Motorcycle (MC)
Cholburi
- Mitsubishi Motors Thailand
Rayong
- Auto Alliance (Thailand)
- General Motors (Thailand)
- BMW Manufacturing (Thailand)
- Kawasaki Motors Enterprise (Thailand) (MC)
Automotive Assemblers in Thailand
98% Exported at
Laem Chabang Port-LCP
Source: Port Authority Thailand, Dr.Siri Jirapongphan
PRINCIPAL AUTO PARTS PRODUCTION SITES
Pathumthani
Total suppliers: 39
Body Parts: 18%, Engine Parts; Electrical
Parts: 13% each, Suspension & Brake Parts:
10%, Drive, Transmission &Steering Parts;
Accessories: 8% each, Other: 31%
Bangkok
Total suppliers: 232
Rayong
Total suppliers: 41
Body Parts: 24%, Engine Parts; Drive,
Transmission &Steering Parts: 15% each,
Suspension & Brake Parts: 12%,
Electrical Parts: 10%, Accessories: 7%,
Mold&Die: 2%, Other: 15%
Body Parts: 9%, Engine Parts;
Electrical Parts; Drive, Transmission
&Steering Parts; Accessories: 6%
each, Suspension & Brake Parts: 4%,
Mold&Die: 3%, Other: 60%
Chonburi
Samutprakarn
Total suppliers: 55
Total suppliers: 158
Body Parts: 25%, Engine Parts: 22%,
Drive, Transmission &Steering Parts:
15%, Electrical Parts: 9%, Accessories:
5%, Suspension & Brake Parts: 4%,
Mold&Die: 4%, Other: 16%
Body Parts: 22%, Electrical Parts: 15%,
Engine Parts; Drive, Transmission
&Steering Parts: 8% each, Suspension &
Brake Parts: 5%, Mold&Die: 4%,
Accessories: 3%, Other: 36%
Parts Manufactured in Thailand
•
•
•
•
•
Engines
Diesels, Motorcycles
Engine Components
Starters, Alternators,
Pumps, Filters, Hoses,
Gears, Flywheels
Body Parts
•
•
•
Chassis, Bumpers, Fenders,
Hoods, Door Panels
Brake Systems
Master Cylinders, Drums,
Discs, Pads, Linings,
Steering Systems
Steering Wheels, Gears,
Columns, Pumps, Linkages
•
•
Suspensions
Shocks, Coils, Ball Joints
Transmissions
Gears, Casings, Rear Axles,
Drive Shafts, Propellor
Shafts
Electrical/Electronics
Alternators, Starters,
Speedometers, Lamps,
Motors, Flasher Relays
Interiors/Exteriors
Seats, Mats, Weather
Strips, Console Boxes
Others
Windshields, Seat Belts,
Radiators, Wheels,
Compressors
Major Steel Makers in Thailand
•
•
•
•
•
•
•
Sahaviriya Steel
Siam Steel
Nippon Steel
JFE Steel
ArcelorMittal Steel
Baosteel
TATA Steel
Current Demand in Automotive
Industry
Opportunities: Components not
Sufficiently Produced in Thailand
 Passenger Car Engines
 Fuel Injection Pumps*
 Transmissions*
 Differential Gears
 Injection Nozzles*
 Electronic Systems
 Electronic Control Units
 Turbo Chargers*
 Substrates for Catalytic converters
 Anti-Lock Brake Systems
 NGV Equipment  target: 99,000 NGVs by 2008
Business Opportunities for
Automotive Electronics
World OEM Automotive Electronics Demand
2001
2006 2011*
% Annual Growth
2001-2006 2006-2011*
North America
22.9
30.1
41.2
5.6
6.5
23
28.8
36.3
4.6
4.8
19.8
36.3
55.4
12.9
8.8
Others
4.4
11.2
29
20.8
12.3
Global demand
70 106.3 152.8
8.7
7.5
Western Europe
Asia-Pacific
* Estimated.
Source: The Freedonia Group.
Asia-Pacific OEM automotive
electronics demand, 1996-2016*
* Estimated
Source: The Freedonia Group.
Distribution of Thailand’s Tier-1 Automotive Suppliers
Company Type
Chassis
Powertrain
Electrical/
Electronic
Body
Others
5
12
4
14
41
Majority Thai
10
11
12
10
29
Majority Foreign
33
31
9
31
50
Wholly Foreign-Owned
17
18
7
12
25
Pure Thai
Source:
Company information; Thai Automotive Institute; Thai Department of Business Development; and SVI Public Co., Ltd.
Thailand’s OEM Automotive Electronics Demand,
1996-2016
Item
1996
2001
2006
2011
2016
***
***
Value of electronics used per vehicle*
435
630
1,009
1,288
1,716
OEM auto electronics demand**
196
258
1,150
2,183
3,500
- Engines and drivetrains
100
133
500
1,000
1,542
- Safety and security products
42
50
292
542
917
- Comfort, convenience and entertainment
products
29
42
233
417
667
- Navigation and instrumentation
25
33
125
225
375
1
1
3
4
4
12,796
16,500
30,208
46,125
66,750
- Percentage of products sold to Thai conumers
Asia Pacific OEM auto electronics demand**
* Value in USD. ** Value in millions of USD. *** Estimated.
Source: The Freedonia Group.
Thailand’s Automotive Electronics Technology Road Map
Source: Thailand Embedded Systems Association.
Thailand’s Automotive Electronics: Strengths
• Growing consumer demand for automobiles,
particularly those with high-technology components
• Strong presence of automotive OEM manufacturers
• Existing car assembly bases and R&D centers
• Strong disc drive and integrated circuit industry
• Relative ease of doing business
• Strong governmental support: incentives for
automotive, high-technology and R&D investors;
promotion of a knowledge-based society;
supporting organizations
Source:
Thailand Sectoral Study Report: Automotive Electronics by Tractus (Thailand) Co., Ltd.
Thailand’s Automotive Electronics:
Opportunities
• Growth of the automotive sector, particularly within the Asian region
• Increasing demand for cars with advanced electronics systems
• Emissions regulations and move towards a fuel-efficient economy
• Improved safety standards
• Growth of automotive entertainment electronics sector
• FTAs
• Special BOI incentives for select automotive electronics activities
Source:
Thailand Sectoral Study Report: Automotive Electronics by Tractus (Thailand) Co., Ltd.
BOI Incentives and Outsourcing
Services
Liberal Investment Regime
• No export requirements
• No foreign equity restrictions in manufacturing
•
•
sectors
No local content requirements
No location requirements in all but 6 activities
(for environmental protection)
Basic BOI Incentives
•
•
TAX INCENTIVES
Corporate income tax
holidays up to 8 years
Import duty reductions
or exemptions on
machinery and raw
materials
NON-TAX INCENTIVES
• 100% Ownership
• Land rights for foreign
•
•
investors
Permission to bring in
foreign experts and
technicians
Work permit & visa
facilitation
BOI Basic
Promotion
Packages
3 Investment Promotion
Zones to promote industrial
decentralization
Zone:
1
Incentives: Lower
2
3
Higher
Passenger Car Project
• Start of Production 2010
•Total investment 20,893 mil. Baht
• Increase total production capacity 140,000 units
• Estimate export volume 109,000 units
• Employ over 2,058 staff
R&D and Skill Labors
Thailand is a very attractive location for R&D, product development and
marketing activities for emerging markets.
•
•
•
•
In 1991, Isuzu established “Isuzu Technical Center of ASIA (ITA)” to
promote localization of pickup trucks development and transferred from
Japan to Thailand to enhance R&D base in ASEAN.
In 2003,Toyota established a technical and testing R&D and recently
established a new company “ Toyota Motor Asia Pacific Engineering and
Manufacturing (TMAP-EM)”
In 2005, Asian Honda Motor established a design and development center
for motorcycles “ Honda R&D Southeast Asia” and Honda Motor
established “ Honda R&D Asia Pacific” for automobiles.
In 2008, Nissan lunched “Nissan Value-up” and established Nissan
Technical Center South East Asia (NTCSEA) for expanding in the Asian
Market.
Source: Thailand Automotive Institute
Incentives: Automotive Industry Cluster
(Assemblers & Suppliers)
Conditions
 Total investment over 10 billion baht
(including component parts manufacturing)
 Covers:
 Automotive Assembling
 Manufacture of Vehicle Parts and Engines
 Total Investment at least THB 10 Billion
Incentives
 Import Duties on Machinery Exemption, regardless of zone
 Corporate Income Tax Exemption by zone
Passenger Car Assembly Incentives
Conditions
– minimum investment no less than 15 billion baht
– within 5 years of income tax holiday period
– must have actual production not less than 100,000 units per
year in any of the first five years of production
Incentives
– 5- year corporate income tax holiday in any zone
– Projects in Zone 1, 2 or 3 receive import duty exemption
on machinery
Incentives: General Car Assemblers
•
•
•
No corporate income tax holiday in any zone
Projects in Zone 1 receive 50% reduction of import duty on
machinery
Projects in Zone 2 receive
–
–
•
50% reduction of import duty on machinery if setting up outside industrial
estate
Exemption on import duty on machinery if setting up inside industrial
estate
Projects in Zone 3 receive import duty exemption on machinery
Incentives for Natural Gas Vehicles
Current status
• 55,868 NGV vehicles*
• 166 NGV service stations*
NGV on national
agenda:
Government Targets 99,000
NGVs by 2008
Remark: * Dec 2007 figure from www.pttplc.com
New BOI NGV incentives:
• NGV parts production including
engines, tanks and other parts
• Production of natural gas equipment
and machinery for NGV service
stations
Priority Incentives: 8 year
corporate income tax holiday, duty
free machinery regardless of
location
• NGV assemblers and NGV service
stations: duty free machinery
regardless of zone
Investment Incentives
for Automotive Component & Part Manufacturing
Zone 1
General
Machinery Duty:
50% reduction
Corporate Income tax
exemption:
In IE - 3 years
Zone 2
Machinery Duty:
50% reduction
Corporate Income
tax exemption:
In IE - 7 years
Outside IE - 3 years
Zone 3
Machinery Duty:
Exempt
Corporate Income
tax exemption:
exempt 8 years
Exempt from machinery import duties
High-Tech
Exempt from corporate income tax for 8 years
Examples: Electronic Fuel Injection Systems, ABS Brake Systems,
Substrates for Catalytic Converters, NGV Parts, Molds/Dies
Additional incentives for skills, technology, and
innovation (Optional)
Investment and Expenditures on:
•Research and development or design
•Advanced technology training
•Funding of educational and research institutes
% of First Three Years’ Sales
Add. Income Tax
Exemption, No cap
1% or at least 150 million baht
1 year
2% or at least 300 million baht
3% or at least 450 million baht
2 years
3 years
Note: Corporate income tax holiday may not exceed eight years.
Internationallyacclaimed support
services:
Investment Matchmaker Program
1-Stop for visas & work permits:
work permits in 3 hours
Industrial Subcontracting
Vendors Meet Customers Program
(BUILD Unit)
ASEAN Supporting Industry
Database (ASID)
Dedicated to creating an
enabling environment
for investment
Interaction with other govt.
agencies on behalf of investors
Country desks
Overseas offices
BUILD Activities
 Provide information on subcontracting
opportunities in Thailand via database web
applications
 Assist foreign buyers wishing to source from
Thai manufacturers
 Match buyers and subcontractors in related
businesses
 Arrange participation of Thai manufacturers in
trade shows and exhibitions abroad
Website: http://build.boi.go.th
Benefits to Supply Chain
 Buyers can locally source parts for
domestic or global production needs
 Suppliers can produce according to the
needs of clients, streamlining their
inventory
 Demand and Supply work in-sync to
enhance productive capacity
ASEAN Supporting Industry Database-ASID
ASID features a wide range of supporting
industry products classified under 5 main
industry sectors to assist users in
penetrating a specific market
- Automotive Industry
- Electronics and Electrical Industry
- Petrochemical, Paper and Plastic Industry
- The Mold and Die Industry
- Other Industries
THAILAND OF INVESTMENT
The perfect opportunity
www. boi.go.th
Thailand—Each Piece Fits Perfectly.