Issue 9: 4 Aug 2014

With the political turmoil over, Thailand’s automotive industry has high ambitions to become the hub of ASEAN in 2015. What do industry experts say about the country’s prospects?

Thailand’s automobile industry stands at the heart of the country’s industrial development. Last year, exports amounted to some 1.12 million cars, and the goal for 2014 is to top 1.2 million. According to Vichai Jirathiyut, the president of the Thailand Automotive Institute, there are no signs of the pace slackening off, with the government signing off on measures to encourage further foreign investment.

Vichai Jirathiyut, the president of the Thailand Automotive Institute

“The Board of Investment of Thailand (BOI) has approved 122.8 billion baht (US$3.85 billion) in investment incentives for 18 projects,” says Jirathiyut. “Toyota which plans to expand its auto parts and pick-up truck production in Thailand and China’s SAIC Motor which plans to build a new plant are the first of the incentives recipients.”

More international automotive companies are set to follow, adopting an eco-friendly blueprint for the kingdom’s automotive industry, which includes the prerequisite of Euro IV standard and the UNECE vehicle safety regulation, adds Jirathiyut.

Support for the automotive industry is coming from all directions. “Institutions such as SMRJ[Organisation for Small & Medium Enterprises and Regional Innovation, JAPAN], JETRO [Japan External Trade Organisation], and Thailand’s BOI will be the major facilitators for business deals such as collaboration and joint venture,” says Suttisak Wilanan, project director of ASEAN’s leading event organiser Reed Tradex.

Wilanan adds that Thailand’s economy is recovering fast since the cessation of the political turmoil in May. He is optimistic that an increase in the average wage for Thais can only be good news for the domestic car industry. “We might get to see a better situation for the car demand in Thailand,” he says.

Setsuo Iuchi, JETRO president and chief representative of ASEAN and South Asia also sees Thailand as agood place for automotive investment. “Japanese companies choose Thailand because the Kingdom sits in the centre of the circle,” he says. “The investment, the technology and know-how can expand to the countries around Thailand easily, especially those along the Mekong region.”

Iuchi believes there are many advantages for making Thailand the region’s hub. “The country itself has abundant resources, which is suitable for being the ideal production base,” he says. “Making Thailand a mother factory and other neighbouring countries satellite factories …helps entrepreneurs lower the production cost outside Thailand, and get unit value-add when products get the final wrap up in Thailand.”

History suggests Thailand will bounce back from the setbacks earlier this year, according to Iuchi. “As soon as the political situation resolves, Thailand will grow fast once again, just like its fast recovery from the 2011 floods,” he says.

For further information, visit: http://www.thaiauto.or.th

Words by Phraewphan Puangkasem