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  1. 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. 2. Investment Opportunities for Automotive and Supplier Industries
  3. 3. Major Trade Partners in 2007 unit: million Baht 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 Source: MOC
  4. 4. 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 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
  5. 5. Thailand – ASEAN Trade in 2007 unit: million Baht 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: 164,228 Brunei 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
  6. 6. Thailand-ASEAN Trade Source: Bank of Thailand, as of June 25, 2008
  7. 7. ASEAN Economies as a Potential Single Market 567.56 84.20 65.23 4.84 86.91 26.69 222.05 Population (million) 1,404.81 6.0 1,890 6.0 ASEAN 77.27 8.2 724 8.2 Vietnam 248.69 5.0 3,167 5.0 Thailand 510.09 7.9 29,499 7.9 Singapore 99.18 5.3 1,351 5.3 The Philippines 285.54 5.9 5,880 5.9 Malaysia 161.86 5.6 1,640 5.6 Indonesia Total Trade (billion US$) GDP Growth (%) GDP per Capita (US$) GDP current price (billion US$) Country
  8. 8. Pure Thai 23 % SMEs Foreign J/V Foreign Majority 47 % . Local Suppliers Tier 1 LSEs (Total 648 Companies) Thai Majority 30 % [* LSEs : Large Scale Enterprises SMEs : Small & Medium Enterprises] The data updated in January 2005 by TAI (Car 16 Companies, Motorcycle 7 Companies) (1,641 Companies) Tier 2,3 Assembler Structure of Thai Automotive Industry
  9. 9. MAPPING OF AUTO-ASSEMBLERS Ayudhaya - Honda Automobile (Thailand) Bangkok -Thai Honda Manufacturing (MC) Cholburi - Mitsubishi Motors Thailand Pathumthani - Thai Suzuki Motor (MC) <ul><li>Samutprakarn </li></ul><ul><li>- Toyota Motor Thailand </li></ul><ul><li>- Isuzu Motors (Thailand) </li></ul><ul><li>- Siam Nissan Automobile </li></ul><ul><li>- Thai Yamaha Motor (MC) </li></ul><ul><li>- Tiger Motor (MC) </li></ul><ul><li>- Thai Swedish Assembly </li></ul><ul><li>Thonburi Automotive Assembly </li></ul><ul><li>- Hino Motors (Thailand) </li></ul>Rayong - Auto Alliance (Thailand) - General Motors (Thailand) - BMW Manufacturing (Thailand) - Kawasaki Motors Enterprise (Thailand) (MC) <ul><li>Chachoengsao </li></ul><ul><li>Toyota Motor Thailand (2 Plants) </li></ul><ul><li>Triumph Motorcycle (MC) </li></ul>
  10. 10. 98% Exported at Laem Chabang Port-LCP Source: Port Authority Thailand, Dr.Siri Jirapongphan Automotive Assemblers in Thailand
  11. 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% 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%
  12. 12. <ul><li>Engines </li></ul><ul><ul><li>Diesels, Motorcycles </li></ul></ul><ul><li>Engine Components </li></ul><ul><ul><li>Starters, Alternators, Pumps, Filters, Hoses, Gears, Flywheels </li></ul></ul><ul><li>Body Parts </li></ul><ul><ul><li>Chassis, Bumpers, Fenders, Hoods, Door Panels </li></ul></ul><ul><li>Brake Systems </li></ul><ul><ul><li>Master Cylinders, Drums, Discs, Pads, Linings, </li></ul></ul><ul><li>Steering Systems </li></ul><ul><ul><li>Steering Wheels, Gears, Columns, Pumps, Linkages </li></ul></ul><ul><li>Suspensions </li></ul><ul><ul><li>Shocks, Coils, Ball Joints </li></ul></ul><ul><li>Transmissions </li></ul><ul><ul><li>Gears, Casings, Rear Axles, Drive Shafts, Propellor Shafts </li></ul></ul><ul><li>Electrical/Electronics </li></ul><ul><ul><li>Alternators, Starters, Speedometers, Lamps, Motors, Flasher Relays </li></ul></ul><ul><li>Interiors/Exteriors </li></ul><ul><ul><li>Seats, Mats, Weather Strips, Console Boxes </li></ul></ul><ul><li>Others </li></ul><ul><ul><li>Windshields, Seat Belts, Radiators, Wheels, Compressors </li></ul></ul>Parts Manufactured in Thailand
  13. 13. Major Steel Makers in Thailand <ul><li>Sahaviriya Steel </li></ul><ul><li>Siam Steel </li></ul><ul><li>Nippon Steel </li></ul><ul><li>JFE Steel </li></ul><ul><li>ArcelorMittal Steel </li></ul><ul><li>Baosteel </li></ul><ul><li>TATA Steel </li></ul>
  14. 14. Current Demand in Automotive Industry
  15. 15. <ul><li>Passenger Car Engines </li></ul><ul><li>Fuel Injection Pumps * </li></ul><ul><li>Transmissions * </li></ul><ul><li>Differential Gears </li></ul><ul><li>Injection Nozzles * </li></ul><ul><li>Electronic Systems </li></ul><ul><li>Electronic Control Units </li></ul><ul><li>Turbo Chargers * </li></ul><ul><li>Substrates for Catalytic converters </li></ul><ul><li>Anti-Lock Brake Systems </li></ul><ul><li>NGV Equipment  target: 99,000 NGVs by 2008 </li></ul>Opportunities: Components not Sufficiently Produced in Thailand
  16. 16. Business Opportunities for Automotive Electronics
  17. 17. World OEM Automotive Electronics Demand * Estimated. Source: The Freedonia Group. 7.5 8.7 152.8 106.3 70 Global demand 12.3 20.8 29 11.2 4.4 Others 8.8 12.9 55.4 36.3 19.8 Asia-Pacific 4.8 4.6 36.3 28.8 23 Western Europe 6.5 5.6 41.2 30.1 22.9 North America 2006-2011* 2001-2006 % Annual Growth 2011* 2006 2001
  18. 18. Asia-Pacific OEM automotive electronics demand, 1996-2016* * Estimated Source: The Freedonia Group.
  19. 19. Distribution of Thailand’s Tier-1 Automotive Suppliers Source: Company information; Thai Automotive Institute; Thai Department of Business Development; and SVI Public Co., Ltd. 25 12 7 18 17 Wholly Foreign-Owned 50 31 9 31 33 Majority Foreign 29 10 12 11 10 Majority Thai 41 14 4 12 5 Pure Thai Others Body Electrical/Electronic Powertrain Chassis Company Type
  20. 20. Thailand’s OEM Automotive Electronics Demand, 1996-2016 * Value in USD. ** Value in millions of USD. *** Estimated. Source: The Freedonia Group. 66,750 46,125 30,208 16,500 12,796 Asia Pacific OEM auto electronics demand** 4 4 3 1 1 - Percentage of products sold to Thai conumers 375 225 125 33 25 - Navigation and instrumentation 667 417 233 42 29 - Comfort, convenience and entertainment products 917 542 292 50 42 - Safety and security products 1,542 1,000 500 133 100 - Engines and drivetrains 3,500 2,183 1,150 258 196 OEM auto electronics demand** 1,716 1,288 1,009 630 435 Value of electronics used per vehicle* *** *** 2016 2011 2006 2001 1996 Item
  21. 21. Thailand’s Automotive Electronics Technology Road Map Source: Thailand Embedded Systems Association.
  22. 22. Thailand’s Automotive Electronics: Strengths <ul><li>• Growing consumer demand for automobiles, particularly those with high-technology components </li></ul><ul><li>• Strong presence of automotive OEM manufacturers </li></ul><ul><li>• Existing car assembly bases and R&D centers </li></ul><ul><li>• Strong disc drive and integrated circuit industry </li></ul><ul><li>• Relative ease of doing business </li></ul><ul><li>• Strong governmental support: incentives for automotive, high-technology and R&D investors; promotion of a knowledge-based society; supporting organizations </li></ul>Source: Thailand Sectoral Study Report: Automotive Electronics by Tractus (Thailand) Co., Ltd.
  23. 23. Thailand’s Automotive Electronics: Opportunities <ul><li>• Growth of the automotive sector, particularly within the Asian region </li></ul><ul><li>• Increasing demand for cars with advanced electronics systems </li></ul><ul><li>• Emissions regulations and move towards a fuel-efficient economy </li></ul><ul><li>• Improved safety standards </li></ul><ul><li>• Growth of automotive entertainment electronics sector </li></ul><ul><li>• FTAs </li></ul><ul><li>• Special BOI incentives for select automotive electronics activities </li></ul>Source: Thailand Sectoral Study Report: Automotive Electronics by Tractus (Thailand) Co., Ltd.
  24. 24. BOI Incentives and Outsourcing Services
  25. 25. <ul><li>No export requirements </li></ul><ul><li>No foreign equity restrictions in manufacturing sectors </li></ul><ul><li>No local content requirements </li></ul><ul><li>No location requirements in all but 6 activities (for environmental protection ) </li></ul>Liberal Investment Regime
  26. 26. <ul><li>TAX INCENTIVES </li></ul><ul><li>Corporate income tax holidays up to 8 years </li></ul><ul><li>Import duty reductions or exemptions on machinery and raw materials </li></ul><ul><li>NON-TAX INCENTIVES </li></ul><ul><li>100% Ownership </li></ul><ul><li>Land rights for foreign investors </li></ul><ul><li>Permission to bring in foreign experts and technicians </li></ul><ul><li>Work permit & visa facilitation </li></ul>Basic BOI Incentives
  27. 27. BOI Basic Promotion Packages <ul><li>3 Investment Promotion Zones to promote industrial decentralization </li></ul>Zone: 1 2 3 Incentives: Lower Higher
  28. 28. Passenger Car Project <ul><li>Start of Production 2010 </li></ul><ul><li>Total investment 20,893 mil. Baht </li></ul><ul><li>Increase total production capacity 140,000 units </li></ul><ul><li>Estimate export volume 109,000 units </li></ul><ul><li>Employ over 2,058 staff </li></ul>
  29. 29. Eco-Car Project <ul><li>Start of Production: 2010-2012 </li></ul><ul><li>Project approval: 6 projects </li></ul><ul><li>Total investment: 43.4 Billion Baht </li></ul><ul><li>Increased production capacity: 685,000 units </li></ul><ul><li>Estimated export volume (CBU): 344,000 units </li></ul><ul><li>Estimated export volume (CKD): 100,000 units </li></ul><ul><li>Estimated export value: 113,000 Mil.Baht </li></ul><ul><li>Employment: over 9,400 </li></ul>
  30. 30. R&D and Skill Labors <ul><li>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. </li></ul><ul><li>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)” </li></ul><ul><li>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. </li></ul><ul><li>In 2008, Nissan lunched “Nissan Value-up” and established Nissan Technical Center South East Asia (NTCSEA) for expanding in the Asian Market. </li></ul>Thailand is a very attractive location for R&D, product development and marketing activities for emerging markets. Source: Thailand Automotive Institute
  31. 31. Incentives: Automotive Industry Cluster (Assemblers & Suppliers) <ul><li>Conditions </li></ul><ul><ul><li>Total investment over 10 billion baht </li></ul></ul><ul><ul><li>(including component parts manufacturing) </li></ul></ul><ul><ul><li>Covers: </li></ul></ul><ul><ul><ul><li>Automotive Assembling </li></ul></ul></ul><ul><ul><ul><li>Manufacture of Vehicle Parts and Engines </li></ul></ul></ul><ul><ul><li>Total Investment at least THB 10 Billion </li></ul></ul><ul><li>Incentives </li></ul><ul><ul><li>Import Duties on Machinery Exemption, regardless of zone </li></ul></ul><ul><ul><li>Corporate Income Tax Exemption by zone </li></ul></ul>
  32. 32. Passenger Car Assembly Incentives <ul><li>Conditions </li></ul><ul><ul><li>minimum investment no less than 15 billion baht </li></ul></ul><ul><ul><li>within 5 years of income tax holiday period </li></ul></ul><ul><ul><li>must have actual production not less than 100,000 units per year in any of the first five years of production </li></ul></ul><ul><li>Incentives </li></ul><ul><ul><li>5- year corporate income tax holiday in any zone </li></ul></ul><ul><ul><li>Projects in Zone 1, 2 or 3 receive import duty exemption on machinery </li></ul></ul>
  33. 33. <ul><ul><li>No corporate income tax holiday in any zone </li></ul></ul><ul><ul><li>Projects in Zone 1 receive 50% reduction of import duty on machinery </li></ul></ul><ul><ul><li>Projects in Zone 2 receive </li></ul></ul><ul><ul><ul><li>50% reduction of import duty on machinery if setting up outside industrial estate </li></ul></ul></ul><ul><ul><ul><li>Exemption on import duty on machinery if setting up inside industrial estate </li></ul></ul></ul><ul><ul><li>Projects in Zone 3 receive import duty exemption on machinery </li></ul></ul>Incentives: General Car Assemblers
  34. 34. Incentives for Natural Gas Vehicles <ul><li>Current status </li></ul><ul><li>55,868 NGV vehicles* </li></ul><ul><li>166 NGV service stations* </li></ul><ul><li>NGV on national </li></ul><ul><li>agenda: </li></ul><ul><li>Government Targets 99,000 </li></ul><ul><li>NGVs by 2008 </li></ul><ul><li>New BOI NGV incentives: </li></ul><ul><li>NGV parts production including engines, tanks and other parts </li></ul><ul><li>Production of natural gas equipment and machinery for NGV service stations </li></ul><ul><li>Priority Incentives: 8 year corporate income tax holiday, duty free machinery regardless of location </li></ul><ul><li>NGV assemblers and NGV service stations: duty free machinery regardless of zone </li></ul>Remark: * Dec 2007 figure from
  35. 35. <ul><li>No more than 5 litres/100 km </li></ul><ul><li>Emissions complaint with Euro 4 specification or higher-carbon dioxide emissions of no more than 120 gm/km </li></ul><ul><li>Safety standards compliant with UNECE Reg 94 and Reg 95 </li></ul><ul><li>Conditions: </li></ul><ul><li>Actual production of at least 100,000 units per annum in 5 year onwards </li></ul><ul><li>Manufacture of the major engine parts identified e.g. cylinder head, cylinder block and crankshaft </li></ul><ul><li>Minimum total investment of 5 billion baht (US$140 million) (including investment of suppliers) </li></ul><ul><li>Incentives for All Zones: </li></ul><ul><li>8 year Tax Exemption </li></ul><ul><li>Exemption of Machinery Import Duty </li></ul>Incentives for Eco-Car
  36. 36. Zone 3 Zone 2 Zone 1 <ul><ul><li>Examples : Electronic Fuel Injection Systems, ABS Brake Systems, Substrates for Catalytic Converters, NGV Parts, Molds/Dies </li></ul></ul>Exempt from corporate income tax for 8 years Exempt from machinery import duties Machinery Duty: 50% reduction Corporate Income tax exemption: In IE - 3 years High-Tech 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 Investment Incentives for Automotive Component & Part Manufacturing
  37. 37. <ul><li>Investment and Expenditures on: </li></ul><ul><li>Research and development or design </li></ul><ul><li>Advanced technology training </li></ul><ul><li>Funding of educational and research institutes </li></ul>Note: Corporate income tax holiday may not exceed eight years. Additional incentives for skills, technology, and innovation (Optional) 3 years 3% or at least 450 million baht 2 years 2% or at least 300 million baht 1 year 1% or at least 150 million baht Add. Income Tax Exemption, No cap % of First Three Years’ Sales
  38. 38. Internationally-acclaimed support services: Dedicated to creating an enabling environment for investment 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)
  39. 39. BUILD Activities <ul><li>Provide information on subcontracting opportunities in Thailand via database web applications </li></ul><ul><li>Assist foreign buyers wishing to source from Thai manufacturers </li></ul><ul><li>Match buyers and subcontractors in related businesses </li></ul><ul><li>Arrange participation of Thai manufacturers in trade shows and exhibitions abroad </li></ul>Website: http://build. boi .go. th
  40. 40. Benefits to Supply Chain <ul><li>Buyers can locally source parts for domestic or global production needs </li></ul><ul><li>Suppliers can produce according to the needs of clients, streamlining their inventory </li></ul><ul><li>Demand and Supply work in-sync to enhance productive capacity </li></ul>
  41. 41. ASEAN Supporting Industry Database-ASID <ul><li>ASID features a wide range of supporting industry products classified under 5 main industry sectors to assist users in penetrating a specific market </li></ul><ul><li>- Automotive Industry </li></ul><ul><li>- Electronics and Electrical Industry </li></ul><ul><li>- Petrochemical, Paper and Plastic Industry </li></ul><ul><li>- The Mold and Die Industry </li></ul><ul><li>- Other Industries </li></ul>
  42. 42. Investment Promotion Strategies: Thailand Investment Year 2008-2009
  43. 43. 1. Strengthen sectors that are already competitiv e: * stimulate investment in competitive sectors 2. Promote industries of the futur e: * promote investment in knowledge - based and high - tech industries * r evise activities eligible for promotion towards higher value-added and more advanced technology 3 . Promote infrastructure to accommodate future industrial expansion: * Southern Seaboard for the expansion of industries * high quality upstream steel industry to meet the rising demand 4. Promote industrial competitivenes s: * offer tax incentives to change or upgrade machinery, develop technology and IT systems * p romote R&D activities among local industries and upgrade industrial work force Thailand Investment Year 2008-2009
  44. 44. <ul><li>5 . Promote Thai Overseas Investment * establish Investment Support Centers in target countries * s upport knowledge development of Thai investors </li></ul><ul><li>6 . Proactive Investment Marketing to build Thailand’s image and </li></ul><ul><li>enhance investor confidence * through media and investment road shows * Public - Private Partnership </li></ul><ul><li>7. Improve investment related services and measures * propose amendment to the Investment Promotion Act * s wiftly and efficiently solve problems and obstacles </li></ul><ul><li>8 . Set up the “Competitiveness and Investment Enhancement Fund” * t o support the aforementioned policies </li></ul>Thailand Investment Year 2008-2009
  45. 46. THAI LAND OF INVESTMENT The perfect opportunity Thailand—Each Piece Fits Perfectly. www.