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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

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updated information on trade and investment opportunities in thailand automotive industry part 2

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

Ms.Nattinee Netraumpai

Assistant Director

Thailand Board of Investment, Frankfurt Office

major trade partners in 2007 unit million baht
Major Trade Partners in 2007unit: million Baht

EU

Imports: 403,243

Exports:672,824

China

Imports: 564,591

Exports: 510,756

Hong Kong

Imports: 50,147

Exports: 298,955

USA

Imports: 330,663

Exports: 662,741

Japan

Imports: 988,536

Exports: 625,061

ASEAN

Imports: 872,365

Exports: 1,119,956

Korea

Imports: 184,223

Exports: 102,298

Australia

Imports: 132,191

Exports: 197,516

Source: MOC

thailand s fta
Thailand’s 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)

BIMSTEC: 1.4 billionpopulation(India, Burma, Sri Lanka ,Thailand, Nepal, Bhutan, Bangladesh)

(Under Negotiation)

Thailand-Japan FTA (under implementation)

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: 550million 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

thailand asean trade in 2007 unit million baht
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

thailand asean trade
Thailand-ASEAN Trade

Source: Bank of Thailand, as of June 25, 2008

slide8

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

slide9

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)

slide10

Automotive Assemblers in Thailand

98% Exported at

Laem Chabang Port-LCP

Source: Port Authority Thailand, Dr.Siri Jirapongphan

slide11

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%, Mold&Die: 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%, Mold&Die: 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%, Mold&Die: 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%, Mold&Die: 4%, Accessories: 3%, Other: 36%

slide12
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

Parts Manufactured in Thailand

major steel makers in thailand
Major Steel Makersin Thailand
  • Sahaviriya Steel
  • Siam Steel
  • Nippon Steel
  • JFE Steel
  • ArcelorMittal Steel
  • Baosteel
  • TATA Steel
slide15

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
world oem automotive electronics demand
World OEM Automotive Electronics Demand

* Estimated.

Source: The Freedonia Group.

asia pacific oem automotive electronics demand 1996 2016
Asia-Pacific OEM automotive electronics demand, 1996-2016*

* Estimated

Source: The Freedonia Group.

distribution of thailand s tier 1 automotive suppliers
Distribution of Thailand’s Tier-1 Automotive Suppliers

Source:

Company information; Thai Automotive Institute; Thai Department of Business Development; and SVI Public Co., Ltd.

thailand s oem automotive electronics demand 1996 2016
Thailand’s OEM Automotive Electronics Demand, 1996-2016

* Value in USD. ** Value in millions of USD. *** Estimated.

Source: The Freedonia Group.

thailand s automotive electronics technology road map
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

Thailand’s Automotive Electronics: Strengths

Source:

Thailand Sectoral Study Report: Automotive Electronics by Tractus (Thailand) Co., Ltd.

thailand s automotive electronics opportunities
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.

slide25

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)
slide26

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
BOI Basic Promotion Packages

3 Investment Promotion Zones to promote industrial decentralization

Zone: 1 2 3

Incentives: Lower Higher

passenger car project
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
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
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
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
slide32

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
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

  • 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

Remark: * Dec 2007 figure from www.pttplc.com

slide34

Investment Incentives

for Automotive Component & Part Manufacturing

Zone 1

Zone 2

Zone 3

General

Machinery Duty:

50% reduction

Corporate Income

tax exemption:

In IE - 7 years

OutsideIE - 3 years

Machinery Duty: Exempt

Corporate Income

tax exemption:

exempt 8 years

Machinery Duty: 50% reduction

Corporate Income tax exemption:

In IE - 3 years

High-Tech

Exempt from machinery import duties

Exempt from corporate income tax for 8 years

  • Examples: Electronic Fuel Injection Systems, ABS Brake Systems, Substrates for Catalytic Converters, NGV Parts, Molds/Dies
slide35

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.

slide36

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)

Interaction with other govt.

agencies on behalf of investors

Country desks

Overseas offices

Internationally-acclaimed support services:

Dedicated to creating an enabling environment

for investment

slide37

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
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
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

slide40

THAILANDOF INVESTMENT

The perfect opportunity

www. boi.go.th

Thailand—Each Piece Fits Perfectly.