AutomotiveAutomotive InnovationInnovation ForumForum AsiaAsia 20072007 ThailandThailand

Ms. Sudjit Inthaiwong Deputy Secretary Geneal Thailand Board of Investment , 2007

1 AA CompetitiveCompetitive LocationLocation ThailandThailand ForefrontForefront forfor investmentinvestment

‰ World Bank Ease of Doing Business, Thailand ranks #18 in the world ‰ UNCTAD Global Investment Prospects Assessment, FDI prospects in Asia 2005 – 2008: Thailand ranks #3 ‰ JBIC 2006 Survey on promising countries for overseas business operations over next 3 years: Thailand ranks #4 ‰ JBIC 2006 Survey on promising countries for SMEs over next 3 years: Thailand ranks #4 ‰ Grant Thornton International Business Owners Survey 2006:“Thailand’s assets include an entrepreneurial population, abundant natural resources and a wonderful lifestyle and, if these strengths are promoted and supported, the country will continue to be a great place to do business” JBICJBIC FYFY 20062006 SurveySurvey

‰When asked about profitability for each region, including Japan, “the percentage of companies answering “higher” was greatest for Thailand”

‰Automotives, “strengthen or expand” response stronger in Thailand than any other region, including southern and North America. JBICJBIC Survey:Survey: CompaniesCompanies LookingLooking toto 250 StrengthenStrengthen oror ExpandExpand inin ASEANASEAN--44

200 238

150 Thailand Vietnam 118 102 Indonesia 100 86 Malaysia 55 50 50 33 31 22 12 24 10 15 10 5 0 All Industries E&E Automobile

Source: JBIC 18th Annual Survey Report on Overseas Operations by Japanese Manufacturing Companies ComparisonComparison ofof LandLand andand OfficeOffice PricesPrices Bangkok Beijing Hanoi Jakarta Kuala Manila Singapore Lumpur Industrial 61.60 57 - 70 No Land 40 – 45 5.5 -11 45 - 50 79.54 - Estate Purchase 241.82 Purchase Rate (per sq/m) Monthly 5.2 - 5.5 6 - 9 0.16 - 4.1 – 4.6 --- 1 5.40 - Industrial 0.23 13.64 Estate Rents (per sq/m) Office Rent 13.69 39 - 45 22 - 45 23 – 26 10.36 - 7.02 – 22 - 83 (per sq/m) 15.11 8.03 Monthly 1,779 2,300 – 3,200 1,850 – 879 – 1,404 – 1,924 – Housing for 6,000 2,100 1,236 1,605 3,849 Foreigners

Source: JETRO 17th Survey of Investment-Related Cost Comparison in Major Cities and Regions in Asia; prices are in US dollars AA CostCost--EffectiveEffective WorkforceWorkforce ThailandThailand ThaiThai LaborLabor ForceForce ‰ Average Thai person works 2,184 hours/year, ranked #9 out of 55 countries surveyed ‰ Thailand ranks as the number 6th country of those surveyed for pro- business regulations(including minimum wage, hiring/firing practices)

Source: IMD World Competitiveness Yearbook, 2005 AverageAverage MonthlyMonthly WagesWages 2000

) 1500 1000

Wage (in US$ 500 0 e i r k r g o la ta u o o n i r p k l ji n n a g a i a a k m n g e H a a a n B M J L B a B la a u General Industry Mid-Level Engineer Mid-Level Manager K

Source: JETRO Survey, March 2007, based on top figure in average range 250,000 IncreasingIncreasing LaborLabor ProductivityProductivity 200,000 Baht/year

150,000

100,000 50,000 0 2001 2002 2003 2004 2005

Source: Ministry of Labor HumanHuman ResourceResource DevelopmentDevelopment

‰ About 80,000 Students Graduated Annually in Science and Engineering ‰ Comprehensive training and R&D for specific high-tech sectors, e.g.

 National Science Park in electronics, material science, bio- technology, and nanotechnology

 HDD Cluster Development Program

 Thailand – Japan Institute of Technology ThaiThai GraduatesGraduates inin Science,Science, 140,000 Technology,Technology, andand EngineeringEngineering 120,000 100,000 80,000 60,000 40,000 20,000 0 2004 2005 2006 2007 2008 2009 2010

Source: Commission on Higher Education; includes BA, MA, and post-graduate degrees AA WellWell--DevelopedDeveloped InfrastructureInfrastructure ThailandThailand LowLow incidenceincidence ofof PowerPower OutagesOutages

Percent of Production Lost Due to Power Outages India

Philippines

Indonesia

Brazil

China

Thailand

Malaysia

0246810

Source: World Bank WaterWater SupplySupply onon EasternEastern SeaboardSeaboard

Source: Eastern Water Resource Development and Management EconomicEconomic Gateway:Gateway: RegionalRegional NetworkNetwork

South Asia

Japan, China, Pacific, USA,...

West Gateway

Middle East, Europe, … Laem Chabang Port:max capacity 18 TEUs Source: NESDB Rank: 12nd in the world AirportAirport DevelopmentDevelopment asas GatewayGateway ofof SoutheastSoutheast AsiaAsia

Source: NESDB Auto & Auto Parts Industries Thailand: Automotive Hub of Asia AsiaAsia--PacificPacific VehicleVehicle ProductionProduction CapacityCapacity 20052005--20102010 8.00 Million Units7.00 6.00 5.00 4.00 3.00 2005 2.00 2008 1.00 2010 0.00 AutomobileAutomobile ForecastForecast 20072007

Increase from last year 92,000 Units ProductionProduction Growth ~ 7.7% 1,280,000 Units

DomesticDomestic SaleSale Increase from last year 18,000 Units 700,000 Units Growth ~2.6%

ExportExport SaleSale Increase from last year 67,000 Units 605,000 Units Growth ~12.5% AUTOMOTIVEAUTOMOTIVE CLUSTERCLUSTER

Automotive Manufacturer Location Pathumthani Ayudhaya Thai Motor Automobile Chachoengsao (Thailand) Motor Thailand Motors (Thailand) Bangkok Samutprakarn Bangchan General Assembly Y.M.C. Assembly Isuzu Motors (Thailand) Thai Honda Manufacturing Siam Automobile Siam V.M.C. Automobile Thai Auto Work Rayong Millennium Motors Auto Alliance (Thailand) Thai Yamaha Motor General Motors (Thailand) Thai Swedish Assembly BMW Manufacturing (Thailand) (Thailand) Kawasaki Motors Enterprise Samutsakorn Thonburi Automotive (Thailand) Thai Rung Union Assembly MMC Sittipol PrincipalPrincipal AutoAuto PartsParts ProductionProduction SitesSites

Pathumthani Total suppliers: 39 Body Parts: 18%, Engine Parts; Electrical Parts: 13% each, Suspension & Brake Parts: Rayong 10%, Drive, Transmission &Steering Parts; Total suppliers: 41 Accessories: 8% each, Other: 31% Body Parts: 24%, Engine Parts; Drive, Transmission &Steering Parts: 15% each, Bangkok Suspension & Brake Parts: 12%, Electrical Parts: 10%, Accessories: 7%, Total suppliers: 232 Mold&Die: 2%, Other: 15% Body Parts: 9%, Engine Parts; Electrical Parts; Drive, Transmission &Steering Parts; Accessories: 6% each, Suspension & Brake Parts: 4%, Mold&Die: 3%, Other: 60%

Chonburi Samutprakarn Total suppliers: 55 Total suppliers: 158 Body Parts: 25%, Engine Parts: 22%, Body Parts: 22%, Electrical Parts: 15%, Drive, Transmission &Steering Parts: Engine Parts; Drive, Transmission 15%, Electrical Parts: 9%, Accessories: &Steering Parts: 8% each, Suspension & 5%, Suspension & Brake Parts: 4%, Brake Parts: 5%, Mold&Die: 4%, Mold&Die: 4%, Other: 16% Accessories: 3%, Other: 36% AutomotiveAutomotive HubHub ofof ASEANASEAN ‰14 assemblers from Japan, US, and Europe ‰Exports to 140 countries ‰Largest domestic pickup market in the world after the US ‰More than 700 first-tier suppliers ‰1,100 second and third-tier suppliers ‰2006 motorcycle production – more than 3.5 million units Thailand:Thailand: AutomotiveAutomotive HubHub ofof ASEANASEAN

‰ 2006 production ~ 1,176,840 million units ‰ 2006 export ~ 539,206 units ‰ 15 assembly plants ‰ Largest in Southeast Asia ‰ Capacity of 2.0 million units by 2010 ‰ Production of pickup trucks ~ 877,890 units – world’s largest one-ton pick-up truck manufacturer MajorMajor AutoAuto AssemblyAssembly ProductionProduction CapacityCapacity Company 2006 Total Toyota 450,000 Isuzu 200,000 Mitsubishi 208,000 Auto Alliance (Ford/Mazda) 155,000 Honda 120,000 General Motors 160,000 Nissan 134,400 Hino 28,800 DaimlerChrysler(2006) Others (2007) 16,300 YMC Assembly 12,000 BMW 10,000 10,000 Total 2006 1,576,500 Projected total for 2007 1,627,710 800,000AutomotiveAutomotive SalesSales andand ExportsExports600,000

700,000 500,000 Domestic Sales 600,000 Exports s 400,000 500,000 )

400,000 300,000

300,000 200,000

200,000 (Units Exports Domestic Sales (Unit Sales Domestic 100,000 100,000 0 0 96 97 98 1991 1992 1993 1994 1995 19 19 19 1999 2000 2001 2002 2003 2004 2005 2006 AutomotiveAutomotive ElectronicsElectronics

‰Thailand’s 2006 auto electronics and parts industry valued at US$7 billion. ‰Goal of becoming world-class auto electronics parts production center within 2011, with production to increase in value by US$1.4 billion.

Omron Automotive Electronics Pioneer Electronics Summit Electronic Components Kyushu Matsushita Electronics Panasonic Automotive Systems NewNew EcoEco--CarCar PromotionPromotion New import and corporate tax waivers (up to 8 years, regardless of zone) to develop smaller, more fuel efficient

‰ No more than 5 litres/100 km ‰ Emissions compliant with Euro4 specification or higher 9 Carbon dioxide emissions no more than 120 gm/km ‰ Full front and side impact protection based on UNECE specifications ‰ Investment applications starting March 2007 GeneralGeneral GuidelinesGuidelines forfor EcoEco--carcar IncentivesIncentives ‰ Project package must be proposed along with:  auto assembly, motor manufacture and motor vehicle parts project, and investment and manufacture plan for 5-yr period must be included, along with actual production quantity of not less than 100k units/yr from the fifth year ‰Qualify on MOI energy saving, environmental and safety specifications SpareSpare AutoAuto PartsParts ExportsExports Unit: Million Baht

6000 5,026.385,026.38 4,100.74 4000 2,909.43 2,182.00 2000 1,758.561,796.41 1,245.65 883.42 505.28 722.79 0 215.44 1996 '97 '98 '99 2000 '01 '02 '03 '04 '05 '06 VehicleVehicle JigJig && DieDie ExportsExports Unit: Million Baht

1000 797.48 683.42 690.37 800

600 400

200 171.53 141.35 119.96 141.19 145.26 43.66 56.34 63.7 0

1996 '97 '98 '99 2000 '01 '02 '03 '04 '05 '06 OEMOEM AutoAuto ComponentComponent PartPart ExportsExports

Unit: Million Baht

100000

80000

60000

40000

20000

0

1996 '97 '98 '99 2000 '01 '02 '03 '04 '05 '06 NGVNGV ExpansionExpansion TargetTarget Vehicles Type 2006 2007 2008 2009 2010 2011 Benzene 22,890 52,000 74,700 101,000 128,000 160,000 Car Diesel Car 2,950 8,850 24,300 50,300 79,600 96,600 Total NGV 25,840 60,850 99,000 151,300 207,600 256,600

Stations Region 2006 2007 2008 2009 2010 2011 BKK/vicinity 73 181 212 253 277 285 Countryside 31 89 138 172 203 250 Total stations 116 270 350 425 480 535 OpportunitiesOpportunities inin AutomotiveAutomotive SectorSector AlternativeAlternative FuelsFuels Government target:99,000 NGVs by 2008, replace 20% of oil consumption in the transport sector within the next 20 years

¾ NGV Assembly/Manufacture ¾ NGV Equipment (i.e. cylinders, conversion kits for gasoline and diesel engines) ¾ NGV Conversion Service ¾ NGV Service Stations Opportunities:Opportunities: ComponentsComponents notnot SufficientlySufficiently ProducedProduced inin ThailandThailand

9Passenger Car Engines 9Fuel Injection Pumps* 9Transmissions* 9Differential Gears 9Injection Nozzles* 9Electronic Systems 9Electronic Control Units 9Turbo Chargers* 9Substrates for Catalytic converters 9Anti-Lock Brake Systems 9NGV Equipment Î target: 120,000 NGVs by 2008 AutomotiveAutomotive InvestmentInvestment OpportunitiesOpportunities

‰ Auto assembly for local and export markets under AFTA and other FTA arrangements ‰ Auto part manufacturing to serve domestic and export markets ‰ NGV segment Î target: 99,000 NGVs by 2008

 NGV Assembly/Manufacture  NGV Equipment (i.e. cylinders, conversion kits for gasoline and diesel engines)  NGV Conversion Service  NGV Service Stations OpportunitiesOpportunities inin MachineryMachinery

Thailand continues to industrialize, but is dependent on foreign industrial machinery for immediate future. High demand for: 9 Food and farm machinery 9 Alternative energy/energy conservation machinery 9 Textile machinery 9 Automotive machinery 9 Mould & Die Industry MoreMore MouldsMoulds && DiesDies NeededNeeded inin ThailandThailand

‰ Moulds for Die Casting - Engine block - Crank shaft - Front case - Oil pan - Gear box – auto - Safety parts : Master pump & Clipper brake ‰ Moulds for Plastic Injection - Automotive Electronic Control Unit (ECU) - Housing for automotive steering column - Automotive dashboard - Parts for digital camera & cellular telephone - Parts for notebook computer and PDA (personal digital assistant) Transfer press dies - Automotive body press die BOIBOI GlobalGlobal ServicesServices FocusFocus 20072007

Auto industry Incentives for “green car” production

Enhancing competitiveness Think tanks and academia

Human resources development

Skills, technology and innovation EnhancingEnhancing universityuniversity linkageslinkages toto promotepromote productivity,productivity, technologytechnology andand R&DR&D

Program Facilitator (BOI and S&T Institutes)

Potential Technology Universities Manufacturer and Research Institutes Industry target and researchers

R&D Facility Pilot Plant BUILDBUILD ActivitiesActivities

‰ 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 FreeFree ZonesZones ‰Foreign and domestic goods moved into FZs are eligible for tax and duty privileges, dependant on the good ‰Imported machinery, equipment, and tools exempt from import duty ‰Imported merchandise from other FZs, and exports, exempt from duties ‰Imports exempt from VAT ‰No excise taxes for imports or manufactured goods in a FZ THAILAND OF INVESTMENT SUCCEEDSUCCEED

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