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Thailand : Detroit of Asia By.. Mr.Ninnart Chaithirapinyo Vice Chairman The Federation of Thai Industries Toyota Motor Thailand Today’s topic I. Where are we? II. Where will we go? III. How will we go? IV. Why Thailand? I. Where are we?

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Thailand : Detroit of Asia

By..

Mr.Ninnart Chaithirapinyo

Vice Chairman

The Federation of Thai Industries

Toyota Motor Thailand


Today’s topic

I. Where are we?

II. Where will we go?

III. How will we go?

IV. Why Thailand?


I. Where are we?


1.1 Circumstance Change in Market

  • Local content

  • regulations

  • Ban for CBU

  • vehicle import

  • Deregulation of

  • Local content

  • Tariff reduction

  • Free

  • competition

25% local

Content

requirement

Increase of

local

content to 50%

Abolishment

of local

content

FTA

Negotiation

AFTA Tariff

reduction

to 0%

Higher

competition

Regulation

Deregulation

Liberalization

Vehicle Assembly

Asian Car

Global Car

Country Competition

Regional Competition

Global Competition


1.2 PRODUCTION CAPACITY IN 2005


1.3 Market ratio

P/U Ratio = 58%

Local Content = 80-90%

P/C Ratio = 33%

Local Content = 30-70%


1.4 Industry structure

Foreign

Joint Venture

Assemblers

12 Companies

LEs

Tier 1

Foreign

Majority

287

Thai

Majority

68

Pure

Thai

354

709 Companies

SMEs

Tier 2&3

LOCAL SUPPLIERS

1,000

Companies


Contribution of Auto Industry to Thai Economy

Auto Industry

Auto Industry

GDP

EMPLOYMENT

Manufacturing Sector


1.5 Production, Domestic sales and Exports

Unit


1.6 Thai Export Value

(Ranking compared with other products)

Million US$

No.1 Computer 9,320

No.2Vehicles & Parts 5,681

No.3Circuit Board 4,974

No.4 Rubber 3,432

No.5 Plastic 3,132


1.7 World Productions & Sales Ranking in 2004

In 2005

Thailand will

rank No.14 in

Production and

No.17 in

Domestic sale

and will celebrate

One Million

Productions

in December


1.8 Productions, Domestic Sales and Exports in 2005

FORCASTING, 2005

EXPORT FORCAST 2005


II. Where will we go?


Detroit of Asia’s Target

Production 1.8 million units with export 40% in 2010

Being 1 ton P/U production base of the world

Being the production base of motorcycle

Being the production base of OEM andREM parts


III. How to go?


3.1AHRDP

(Automotive Human Resource Development Project)

Objective

: To enhance competitiveness in term of price,

quality and delivery

: To Improve the following:

- Engineering capability

- Mould & Die-making capability

- Manufacturing capability

(Plastic/ rubber, Casting, Machining,Stamping)

(Joint project among Jetro, JCC,TAI, FTI)


3.2 R&D and Training Fund

  • Car assemblers

  • withdraw for

  • Oversea & Domestic training

  • Scholarship

  • R&D

  • SOURCE OF FUND

  • CAR ASSEMBLERS

  • PART MAKERS

90%

R&D

TRAINING

FUND

  • SMEs withdraw for

  • Training

  • R&D

100%

10%

R&D and Training fund will be managed by term committee


3.3 Free Trade Agreements

To expand additional market

INDIA

(Pop~ 1,000 million)

CHINA

(Pop~ 1,300million)

PERU

(Pop~ 28 million

BAHRAIN

(Pop 0.9 million)

AUSTRALIA

(Pop ~ 20 million)

THAILAND

(Pop ~ 64.8 million)

AFTA

(Pop ~ 500 million)

NEWZEALAND

(Pop ~ 4 million)

BIMSTEC

JAPAN

(Pop~127 million)

AMERICA

(Pop~292 million)


3.3 Free Trade Agreement : Australian Tariff Reduction

10 % increase

In export

Tariff reduction

30 % increase

in export

Tariff reduction


The opportunities for Automotive Industry

I. Enhancing trade in vehicles

  • The Australian and Thai vehicles are complementary. There are global platform similarities and both use the right hand drive format.

  • Thailand is a centre for light commercial vehicles production (Detroit of Asia).

  • Australia has a competitive advantage in large car production.

  • The trade expansion would be expected to affluent rise as a result of the tariff reduction.


The opportunities for Automotive Industry

II. Enhancing trade in Auto components

  • There will be trade exposure potential for exports and sales under TAFTA.

  • Improving the economies of scale via production increases as well as cost reduction from cheaper raw material ex: steel, copper, aluminum etc.


The opportunities for Automotive Industry

III. Enhancing in Services and Investment

  • Enhancing in the service in the area of training, technology transfer, Design & Engineering Alliance, Mold & Die making or plastic injection ,etc.

  • Labor and services are able to move easier under the TAFTA. Leading to export engineering, design and technical expertise.

  • There are motor vehicle service, repair opportunities in the aftermarket sector and also auto part reconditioning .

  • BOI offers more privilege for the auto industry.


Japan-Thailand Economic Partnership Agreement

I. Automobiles

2006

2005

2007

2008

2009

Passenger car

Exceed 3,000 cc.

80%

75%

70%

65%

60%

Passenger car

less than

3,000 cc.

Renegotiation will commence on

a date to be agreed upon before signing

A political declaration on automobile will be issued

at the time of signingJTEPA


Japan-Thailand Economic Partnership Agreement

II. Auto parts

The tariff rate will be reduced to 20%

and maintained before eliminate in 2011

Tariff over

20%

Tariff at 20%

and below

The tariff rate will be maintained and

eliminated in 2011

The tariff rate will be maintained and

eliminated in 2013

Sensitive

(5 items)


Japan-Thailand Economic Partnership Agreement

III. Iron and steel products

Some products will be eliminated on the effective date.

The others will be abolished, at latest, by the first day

of the 11th year after the entry into effect.

For some specific hot rolled coils and plates,

zero tariff quota scheme will be established and their

Quantity will be reviewed annually.


IV. Why’s Thailand


4.1 Nine Government policies in 2005

  • Poverty Eradication Policy

  • Human developmentpolicy and quality of life

  • Economic restructuring policy to create equilibrium and competitiveness

  • Natural Resources and Environmental policy

  • Foreign policy and international economic policy

  • Policy on the development of the legal system and good governance

  • Policy to promote democracy and civil society process

  • National security policy

  • Policy according to directive principles of fundamental state policy


< EUROPE >

Citroen, Peugeot,Volkswagen

,BMW, Volvo ,Daimler

< USA >

Ford + Asia Pacific HQs

GM + Asia Pacific HQs

Chrysler

< JAPAN >

Toyota+ R&D Center

Honda+ R&D Center

Isuzu,Mitsubishi,

Mazda,Hino, Nissan,

ANNUAL PRODUCTION

CAPACITY

1.2MILLION UNITS

4

4.2 Global Brands in Thailand


4.3 Car ownership

Possibility for expansion potential

America2 persons / unit

Japan2 persons / unit

Malaysia5 persons / unit

Singapore6 persons / unit

Thailand 10 persons / unit

Philippines30 persons / unit

Indonesia60 persons / unit

Vietnam300 persons / unit


4.4 Why Thailand

  • Political stability

  • liberalization policy

  • Attractive government incentives

Government

  • Good & Massive infrastructure

    network

    ( Electricity ,Telecommunication ,

    Air ports , Ports )

Infrastructure


4.4 Why Thailand

  • Considerable market size

  • Large production base for pick up truck

  • Gateway to 500 million people of ASEAN

Market

  • Rich pool of supporting industries

  • Good access to raw materials

  • Cheaper parts manufacturing cost

Supplier


4.4 Why Thailand

  • Abundant of quality labor forces

  • Language proficiency

  • Hospitality and friendly attitude

People

  • Delicious foods and fruits

  • Attractive tourist places

  • Plenty of golf courses

Amenity


4.5 Low Cost & Competitive Market

1. Mirror Set

2.Glass set


4.5 Low Cost & Competitive Market

3.Stamping part

4. Insulator Set


4.5 Low Cost & Competitive Market

5.Rubber Set

6. Interior Set


4.5 Low Cost & Competitive Market

7. Engine Set

GASOLINE

DIESEL


4.6 Opportunity for Auto Industry

INSUFFICIENT COMPONENTS 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

  • Training Service

  • Design & Engineering

  • Mould & Die Making

  • Plastic injection

Opportunity to

invest

in Thailand!!

* New investment


Engine

-Diesels, Motorcycles

Engine Components

- Starters, Alternators, Pumps, Filters, Hosed, Gears, Flywheels

Body Parts

- Chassis, Bumpers, Fenders, Hoods, Door Panels

Brake Systems

- Master Cylinders, Drums, Disc, Pads, Linings

Steering Systems

- Steering Wheels, Gears, Columns, Pumps, Linkages

4.6 Opportunity for Auto Industry

PARTS MANUFACTURERED IN THAILAND

  • Suspensions

    -Shocks, Coils, Ball Joints

  • Transmissions

    - Gears, Casings, Rear Axles, Drive Shafts, Propeller Shafts

  • Electrical / Electronic

    - Alternators, Starters, Speedometers, lamps, Motors, Flasher Relays

  • Interiors / Exteriors

    - Seats, Mats, Weather Strips, Console Boxes

  • Others

    - Windshields, Seat Belts, Radiators, Wheels, Compressors


4.6 Opportunity for Auto Industry

BRIGHT FUTURE

POTENTIAL BUSINESS GROWTH FOR NEW/EXISTING INVESTORS

THAILAND

GOVERNMENT

SUPPORT

PRODUCTION

VOLUME INCREASE

+

+

EFFORT OF THE

PRIVATE SECTOR

100%

LOCALIZATION


Vielen vielen Dank


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