Updated Information on Trade and Investment Opportunities in Thailand: Automotive Industry Part 2

1
Updated Information on Trade and Investment
Opportunities in Thailand Automotive Industry
Part 2
Ms.Nattinee Netraumpai Assistant
Director Thailand Board of Investment, Frankfurt
Office
2
Investment Opportunities for Automotive and
Supplier Industries
3
Major Trade Partners in 2007unit million Baht
EU Imports 403,243 Exports672,824
China Imports 564,591 Exports 510,756
Hong Kong Imports 50,147 Exports 298,955
USA Imports 330,663 Exports 662,741
ASEAN Imports 872,365 Exports 1,119,956
Japan Imports 988,536 Exports 625,061
Korea Imports 184,223 Exports 102,298
Australia Imports 132,191 Exports 197,516
Source MOC
4
Thailands FTA
CHINA 1.3 billion population ASEAN-China FTA
(Under Negotiation)
KOREA 48 million population ASEAN-Korea FTA (
Under Negotiation)
ASEAN-EU FTA (Under Negotiation)
Thailand-EFTA 13.5 million population (Norway,
Iceland, Switzerland and Liechtenstein). (Under
Negotiation)
JAPAN 128 million population ASEAN-Japan FTA
US 300 million population Thailand-USA FTA
(Under Negotiation)
INDIA 1.1 billion population ASEAN-India
FTA (Under Negotiation)
Thailand-Japan FTA (under implementation)
BIMSTEC 1.4 billion population (India, Burma,
Sri Lanka ,Thailand, Nepal, Bhutan, Bangladesh)
(Under Negotiation)
PERU 28 million population Thailand-Peru FTA
(under implementation)
Thailand-India FTA (Under negotiation)
NEW ZEALAND 4 million population ASEAN-New
Zealand FTA (Under Negotiation)
ASEAN 550 million population AFTA
Effective Date Thailand-China October
2003
ASEAN-Australia-NZ Will be implemented in
late 2008 Thailand-India Early harvest
Sept 1, 2004
ASEAN-EU Negotiations began in
2003 Thialand-India FTA Late 2008 early 2009
will be implemented ASEAN-Korea Aug
2006 Thailand-Japan April 3, 2007

ASEAN-India Will be signed in Dec put
into effect in
early 2009 Thailand-Korea Concluded
negotiations in Jan 2008
ASEAN-Japan Implemented late
2008 Thailand-Peru Implemented in Nov
2008 ASEAN-China
July 1,2005 Thailand-US
Negotiations began in 2003
AFTA July 1,
2003 Thailand-EFTA Negotiations began in
May 2005 TAFTA
Jan 1, 2005 Thailand-NZ July 1,
2005 BIMSTEC Negotiations on goods concluded in
2005 for implementation in 2006
Negotiations on service investment concluded
in 2007
Thailand NZ FTA (implemented)
AUSTRALIA 20 million population ASEAN-Australia
FTA (Under Negotiation)
Multilateral
Thailand Australia FTA TAFTA (implemented)
Bilateral
5
Thailand ASEAN Trade in 2007unit million Baht
Laos Imports 16,296 Exports 45,208
Cambodia Imports 1,689 Exports 46,718
Myanmar Imports 80,031 Exports 33,064
Vietnam Imports 38,655 Exports 130,856
Malaysia Imports 299,903 Exports 268,614
Philippines Imports 74,630 Exports 99,965
Singapore Imports 218,708 Exports 328,169
Indonesia Imports 138,551 Exports 164,228
Brunei Imports 3,900 Exports 3,134
Source MOC
6
Thailand-ASEAN Trade
Source Bank of Thailand, as of June 25, 2008
7
ASEAN Economies as a Potential Single Market
8
Structure of Thai Automotive Industry
Assembler
LSEs
(Car 16 Companies, Motorcycle 7 Companies)
Foreign J/V
Tier 1
Pure Thai 23
Foreign Majority 47 .
Thai Majority 30
(Total 648 Companies)
SMEs
Tier 2,3
Local Suppliers
(1,641 Companies)
LSEs Large Scale Enterprises SMEs
Small Medium Enterprises The data updated in
January 2005 by TAI
9
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)
10
Automotive Assemblers in Thailand
98 Exported at Laem Chabang Port-LCP
Source Port Authority Thailand, Dr.Siri
Jirapongphan
11
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
Rayong Total suppliers 41 Body Parts 24,
Engine Parts Drive, Transmission Steering
Parts 15 each, Suspension Brake Parts 12,
Electrical Parts 10, Accessories 7, MoldDie
2, Other 15
Bangkok Total suppliers 232 Body Parts 9,
Engine Parts Electrical Parts Drive,
Transmission Steering Parts Accessories 6
each, Suspension Brake Parts 4, MoldDie 3,
Other 60
Chonburi Total suppliers 55 Body Parts 25,
Engine Parts 22, Drive, Transmission Steering
Parts 15, Electrical Parts 9, Accessories
5, Suspension Brake Parts 4, MoldDie 4,
Other 16
Samutprakarn Total suppliers 158 Body Parts
22, Electrical Parts 15, Engine Parts Drive,
Transmission Steering Parts 8 each, Suspension
Brake Parts 5, MoldDie 4, Accessories 3,
Other 36
12
Parts Manufactured in Thailand

• 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

• 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

13
Major Steel Makers in Thailand

• Sahaviriya Steel
• Siam Steel
• Nippon Steel
• JFE Steel
• ArcelorMittal Steel
• Baosteel
• TATA Steel

14
Current Demand in Automotive Industry
15
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

16
Business Opportunities for Automotive Electronics
17
World OEM Automotive Electronics Demand
Estimated. Source The Freedonia Group.
18
Asia-Pacific OEM automotive electronics demand,
1996-2016
Estimated Source The Freedonia Group.
19
Distribution of Thailands Tier-1 Automotive
Suppliers
Source Company information Thai Automotive
Institute Thai Department of Business
Development and SVI Public Co., Ltd.
20
Thailands OEM Automotive Electronics Demand,
1996-2016
Value in USD. Value in millions of USD.
Estimated. Source The Freedonia Group.
21
Thailands Automotive Electronics Technology Road
Map
Source Thailand Embedded Systems Association.
22
Thailands 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 RD centers
• Strong disc drive and integrated circuit
  industry
• Relative ease of doing business
• Strong governmental support incentives for
  automotive, high-technology and RD investors
  promotion of a knowledge-based society
  supporting organizations

Source Thailand Sectoral Study Report
Automotive Electronics by Tractus (Thailand) Co.,
Ltd.
23
Thailands 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.
24
BOI Incentives and Outsourcing Services
25
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)

26
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

27
BOI Basic Promotion Packages

• 3 Investment Promotion Zones to promote
  industrial decentralization

Zone 1 2
3 Incentives Lower Higher
28
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

29
Eco-Car Project

• Start of Production 2010-2012
• Project approval 6 projects
• Total investment 43.4 Billion Baht
• Increased production capacity 685,000 units
• Estimated export volume (CBU) 344,000 units
• Estimated export volume (CKD) 100,000 units
• Estimated export value 113,000 Mil.Baht
• Employment over 9,400

30
RD and Skill Labors
Thailand is a very attractive location for RD,
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 RD base in ASEAN.
• In 2003,Toyota established a technical and
  testing RD 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
  RD Southeast Asia and Honda Motor established
  Honda RD 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
31
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

32
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

33
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

34
Incentives for Natural Gas Vehicles

• 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

• Current status
• 55,868 NGV vehicles
• 166 NGV service stations
• NGV on national
• agenda
• Government Targets 99,000
• NGVs by 2008

• NGV assemblers and NGV service stations duty
  free machinery regardless of zone

Remark Dec 2007 figure from www.pttplc.com
35
Incentives for Eco-Car

• No more than 5 litres/100 km
• Emissions complaint with Euro 4 specification or
  higher-carbon dioxide emissions of no more than
  120 gm/km
• Safety standards compliant with UNECE Reg 94 and
  Reg 95

• Conditions
• Actual production of at least 100,000 units per
  annum in 5 year onwards
• Manufacture of the major engine parts identified
  e.g. cylinder head, cylinder block and crankshaft
• Minimum total investment of 5 billion baht
  (US140 million) (including investment of
  suppliers)

• Incentives for All Zones
• 8 year Tax Exemption
• Exemption of Machinery Import Duty

36
Investment Incentives for Automotive Component
Part Manufacturing
Zone 3
Zone 2
Zone 1
Machinery Duty Exempt Corporate Income tax
exemption exempt 8 years
Machinery Duty 50 reduction Corporate
Income tax exemption In IE - 7 years Outside
IE - 3 years
General
Machinery Duty 50 reduction Corporate Income
tax exemption In IE - 3 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
37
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

Note Corporate income tax holiday may not exceed
eight years.
38
Internationally-acclaimed support services
Dedicated to creating an enabling environment
for investment
39
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
40
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

41
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

42
Investment Promotion StrategiesThailand
Investment Year 2008-2009
43
1. Strengthen sectors that are already
competitive stimulate investment in
competitive sectors2. Promote industries of the
future promote investment in
knowledge-based and high-tech industries
revise activities eligible for promotion towards
higher value-added and more advanced
technology3. Promote infrastructure to
accommodate future industrial expansion
Southern Seaboard for the expansion of
industries high quality upstream steel
industry to meet the rising demand4. Promote
industrial competitiveness offer tax
incentives to change or upgrade machinery,
develop technology and IT systems
promote RD activities among local industries and
upgrade industrial work force
Thailand Investment Year 2008-2009
44
Thailand Investment Year 2008-2009

• 5. Promote Thai Overseas Investment establish
  Investment Support Centers in target countries
  support knowledge development of Thai investors
• 6. Proactive Investment Marketing to build
  Thailands image and
• enhance investor confidence through media
  and investment road shows Public-Private
  Partnership
• 7. Improve investment related services and
  measures propose amendment to the Investment
  Promotion Act swiftly and efficiently solve
  problems and obstacles
• 8. Set up the Competitiveness and Investment
  Enhancement Fund to support the aforementioned
  policies

45
(No Transcript)
46
THAILAND OF INVESTMENT
The perfect opportunity
www. boi.go.th
ThailandEach Piece Fits Perfectly.