Post on 20-Aug-2015
Updated Information on Trade and Investment Opportunities in Thailand:
Automotive Industry Part 2
Ms.Nattinee NetraumpaiMs.Nattinee NetraumpaiAssistant DirectorAssistant Director
Thailand Board of Investment, Frankfurt OfficeThailand Board of Investment, Frankfurt Office
USA
Imports: 330,663
Exports: 662,741
China
Imports: 564,591
Exports: 510,756
ASEAN
Imports: 872,365
Exports: 1,119,956
EU
Imports: 403,243
Exports:672,824
Japan
Imports: 988,536
Exports: 625,061
Australia
Imports: 132,191
Exports: 197,516
Hong Kong
Imports: 50,147
Exports: 298,955
Korea
Imports: 184,223
Exports: 102,298
Major Trade Partners in 2007unit: million Baht
Source: MOC
Thailand’s FTA
Thailand-Japan FTA (under implementation)
JAPAN : 128 million population
ASEAN-Japan FTA
KOREA: 48 million population
ASEAN-Korea FTA ( Under Negotiation)
ASEAN: 550 million
population AFTA
NEW ZEALAND : 4 million population
ASEAN-New Zealand FTA(Under Negotiation)
AUSTRALIA : 20 million population
ASEAN-Australia FTA(Under Negotiation)
INDIA : 1.1 billion population
ASEAN-India FTA(Under Negotiation)
CHINA: 1.3 billion population
ASEAN-China FTA (Under Negotiation)
ASEAN-EU FTA(Under Negotiation)
Thailand-India FTA (Under negotiation)
PERU: 28 million population
Thailand-Peru FTA (under implementation)
Thailand – Australia FTA TAFTA (implemented)
Bilateral
Thailand – NZ FTA (implemented)
Thailand-EFTA: 13.5 million population
(Norway, Iceland, Switzerland
and Liechtenstein). (Under Negotiation)
BIMSTEC: 1.4 billion population (India, Burma, Sri Lanka ,Thailand, Nepal,
Bhutan, Bangladesh) (Under Negotiation)
US : 300 million population
Thailand-USA FTA (Under Negotiation)
Multilateral
Effective Date:Thailand-China: October 2003 ASEAN-Australia-NZ: Will be implemented in late 2008Thailand-India: Early harvest Sept 1, 2004 ASEAN-EU: Negotiations began in 2003Thialand-India FTA: Late 2008 early 2009 will be implemented ASEAN-Korea: Aug 2006Thailand-Japan: April 3, 2007 ASEAN-India: Will be signed in Dec; put into
effect in early 2009Thailand-Korea: Concluded negotiations in Jan 2008 ASEAN-Japan: Implemented late 2008Thailand-Peru: Implemented in Nov 2008 ASEAN-China: July 1,2005Thailand-US: Negotiations began in 2003 AFTA: July 1, 2003Thailand-EFTA: Negotiations began in May 2005 TAFTA: Jan 1, 2005Thailand-NZ: July 1, 2005BIMSTEC: Negotiations on goods concluded in 2005 for implementation in 2006 Negotiations on service: investment; concluded in 2007
Cambodia
Imports: 1,689
Exports: 46,718
Laos
Imports: 16,296
Exports: 45,208
Philippines
Imports: 74,630
Exports: 99,965
Indonesia
Imports: 138,551
Exports: 164,228Brunei
Imports: 3,900
Exports: 3,134
Singapore
Imports: 218,708
Exports: 328,169
Malaysia
Imports: 299,903
Exports: 268,614
Myanmar
Imports: 80,031
Exports: 33,064
Vietnam
Imports: 38,655
Exports: 130,856
Source: MOC
Thailand – ASEAN Trade in 2007unit: million Baht
Thailand-ASEAN Trade
0
300
600
900
1,200
1,500
Bil
lio
n b
ah
t
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008(Jan-Apr)
Imports Exports
Source: Bank of Thailand, as of June 25, 2008
ASEAN Economies as a Potential Single MarketCountry Popul
ation
(million)
GDP current price
(billion US$)
GDP per
Capita (US$)
GDP Grow
th (%)
Total Trade
(billion US$)
Indonesia
222.05 5.6 1,640 5.6 161.86
Malaysia 26.69 5.9 5,880 5.9 285.54
The Philippines
86.91 5.3 1,351 5.3 99.18
Singapore
4.84 7.9 29,499 7.9 510.09
Thailand 65.23 5.0 3,167 5.0 248.69
Vietnam 84.20 8.2 724 8.2 77.27
ASEAN 567.56
6.0 1,890 6.0 1,404.81
Pure Thai
23 %
SMEs
Foreign J/V
Foreign
Majority
47 %.
LocalSuppliers
Tier 1
LSEs(Total 648
Companies)
Thai Majorit
y30 %
[* LSEs : Large Scale Enterprises SMEs : Small & Medium Enterprises]
The data updated in January 2005 by TAI
(Car 16 Companies, Motorcycle 7 Companies)
(1,641 Companie
s)
Tier 2,3
Assembler
Structure of Thai Automotive Industry
MAPPING OF AUTO-ASSEMBLERS
Ayudhaya- Honda Automobile (Thailand)
Bangkok-Thai Honda Manufacturing (MC)
Cholburi- Mitsubishi Motors Thailand
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)
Rayong- Auto Alliance (Thailand)- General Motors (Thailand)- BMW Manufacturing (Thailand)- Kawasaki Motors Enterprise (Thailand) (MC)
Chachoengsao-Toyota Motor Thailand (2 Plants)-Triumph Motorcycle (MC)
98% Exported at
Laem Chabang Port-LCP
Source: Port Authority Thailand, Dr.Siri Jirapongphan
Automotive Assemblers in Thailand
PRINCIPAL AUTO PARTS PRODUCTION SITESPathumthani
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
Body Parts: 9%, Engine Parts; Electrical Parts; Drive, Transmission &Steering Parts; Accessories: 6% each, Suspension & Brake Parts: 4%, Mold&Die: 3%, Other: 60%
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%
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%
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%
• EnginesDiesels, Motorcycles
• Engine ComponentsStarters, Alternators, Pumps, Filters, Hoses, Gears, Flywheels
• Body PartsChassis, Bumpers, Fenders, Hoods, Door Panels
• Brake SystemsMaster Cylinders, Drums, Discs, Pads, Linings,
• Steering SystemsSteering Wheels, Gears, Columns, Pumps, Linkages
• SuspensionsShocks, Coils, Ball Joints
• TransmissionsGears, Casings, Rear Axles, Drive Shafts, Propellor Shafts
• Electrical/ElectronicsAlternators, Starters, Speedometers, Lamps, Motors, Flasher Relays
• Interiors/ExteriorsSeats, Mats, Weather Strips, Console Boxes
• OthersWindshields, Seat Belts, Radiators, Wheels, Compressors
Parts Manufactured in Thailand
Major Steel Makers in Thailand
• Sahaviriya Steel • Siam Steel• Nippon Steel• JFE Steel• ArcelorMittal Steel• Baosteel• TATA Steel
Passenger Car EnginesFuel Injection Pumps*Transmissions*Differential Gears Injection Nozzles*Electronic SystemsElectronic Control UnitsTurbo Chargers*Substrates for Catalytic convertersAnti-Lock Brake SystemsNGV Equipment target: 99,000 NGVs by 2008
Opportunities: Opportunities: Components not Components not Sufficiently Produced in ThailandSufficiently Produced in Thailand
World OEM Automotive Electronics Demand
* Estimated.Source: The Freedonia Group.
2001 2006 2011* % Annual Growth
2001-2006 2006-2011*
North America 22.9 30.1 41.2 5.6 6.5
Western Europe 23 28.8 36.3 4.6 4.8
Asia-Pacific 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
Distribution of Thailand’s Tier-1 Automotive Suppliers
Company Type Chassis
Powertrain Electrical/Electronic
Body
Others
Pure Thai 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
Source: Company information; Thai Automotive Institute; Thai Department of Business Development; and SVI Public Co., Ltd.
Thailand’s OEM Automotive Electronics Demand, 1996-2016
* Value in USD. ** Value in millions of USD. *** Estimated.Source: The Freedonia Group.
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
- Percentage of products sold to Thai conumers 1 1 3 4 4
Asia Pacific OEM auto electronics demand** 12,796 16,500 30,208 46,125 66,750
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.
• 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)
Liberal Investment Regime
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
Basic BOI Incentives
BOI Basic BOI Basic Promotion Promotion PackagesPackages
BOI Basic BOI Basic Promotion Promotion PackagesPackages
3 Investment Promotion Zones to promote industrial decentralization
Zone: 1 2 3Incentives: Lower 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
• 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.
Thailand is a very attractive location for R&D, product development and marketing activities for emerging markets.
Source: Thailand Automotive InstituteSource: Thailand Automotive Institute
Incentives: Automotive Industry Cluster (Assemblers & Suppliers)
ConditionsConditions Total investment over 10 billion baht Total investment over 10 billion baht (including component parts manufacturing)(including component parts manufacturing) Covers: Covers:
Automotive AssemblingAutomotive Assembling Manufacture of Vehicle Parts and EnginesManufacture of Vehicle Parts and Engines
Total Investment at least THB 10 BillionTotal Investment at least THB 10 Billion
IncentivesIncentives Import Duties on Machinery Exemption, regardless of zoneImport Duties on Machinery Exemption, regardless of zone Corporate Income Tax Exemption by zoneCorporate Income Tax Exemption by zone
Passenger Car Assembly Incentives
ConditionsConditions– 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
IncentivesIncentives– 5- year corporate income tax holiday in any zone– Projects in Zone 1, 2 or 3 receive import duty exemption on
machinery
• 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: General Car Assemblers
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
Zone 3Zone 2Zone 1
Examples: Electronic Fuel Injection Systems, ABS Brake Systems, Substrates for Catalytic Converters, NGV Parts, Molds/Dies
Exempt from corporate income tax for 8 years
Exempt from machinery import duties
Machinery Duty: 50% reductionCorporate Income tax exemption:
In IE - 3 years
High-Tech
Machinery Duty: ExemptCorporate Incometax exemption:
exempt 8 years
Machinery Duty: 50% reductionCorporate Incometax exemption: In IE - 7 years Outside IE - 3 years
General
Investment Incentives
for Automotive Component & Part Manufacturing
% 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 2 years
3% or at least 450 million baht 3 years
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.
Additional incentives for skills, technology, and innovation (Optional)
Internationally-acclaimed support
services:
Overseas offices
Country desks
1-Stop for visas & work permits:work permits in 3 hours
Interaction with other govt. agencies on behalf of investors
Industrial Subcontracting Vendors Meet Customers Program
(BUILD Unit)
Investment Matchmaker Program
ASEAN Supporting Industry Database (ASID)
Dedicated to creating an enabling environment
for investment
BUILD ActivitiesBUILD 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