Inside the Rising of "the Detroit of the East"

Inside the Rising of "the Detroit of the East"

When we think of automobiles, we most likely associate certain parts of the world with them. North America, particularly the United Sates, is probably one of the best examples. Nations like the United Kingdom, China, Germany, Italy, Japan, South Korea, and Sweden are all equally associated with the automobile.

Each have a manufacturing history and an automotive lifestyle unique to their respective cultures. 

Powerful Presence

Thailand is part of that conversation today more so than ever. The nation’s automotive industry has steadily risen the last fifty years on the heels of one of the world’s strongest manufacturing bases. Last year alone, 1.9 million vehicles were manufactured in Thailand. Almost 800,000 were sold domestically and the reminder exported.

According to a December 2015 report by the Thailand Investment Review, the nation ranked 12th globally for motor vehicle production. As of June, Thailand’s total vehicle export value was 9.4 billion dollars, making them now one of the world’s top ten automotive exporters.

“Thailand is the hub of the Association of Southeast Asian Nations (ASEAN) which has been playing an important role in Thailand’s economy for decades,” said Ms. Ajarin Pattanapanchai, Deputy Secretary General of the Thailand Board of Investment (BOI). “In 2015, more than 50 percent of the vehicles manufactured in Thailand were exported, which is a key driver of the economy.”

Keterangan Gambar (© Pemilik Gambar)Thailand's Automotive Industry

Ford Thailand Manufacturing (FTM) employs over 2,000 workers and manufactures the EcoSport, Focus, and Fiesta. Photo: Thailand Automotive Industry, Thailand Board of Investment.

BOI Facilitates Growth

Thailand’s BOI, a unit under the Prime Minister’s Office, helps foster the nation’s automotive industry. The BOI is the principal government agency responsible for creating a climate that enhances competitiveness, encourages investment, and strengthens the country’s economic health. Thailand’s BOI has 14 offices worldwide, each responsible for communicating with potential investors about the benefits of Thailand’s economic landscape.

During the BOI’s inception in the 1960s, Thailand’s government introduced policies to promote the automotive industry directly.

“Since then, the automotive industry has grown fast and is now one of the country’s bread and butter industries with a production of approximately 2 million cars expected in 2016,” Pattanapanchai said.

The One Start One Stop Investment Center further accommodates, helping investors attain imperative resources like factory operation agreements and foreign business licenses. The One Start One Stop Investment Center also advises potential investors on Thailand’s Special Economic Zones, where additional incentives apply.

Automotive companies have access to additional support if needed.

“As a major industry with strong business influence, the automotive industry is well represented by many bodies,” Pattanapanchai said. “The Automotive Industry Club under the Federation of Thai Industries is a strong body with lots of activities and involvement in the Thai business sector.”Thailand's Automotive Industry

Keterangan Gambar (© Pemilik Gambar)

Organizations like the ASEAN Automotive Federation (AAF) establish a coherent perspective on global business, internal trade, and future investments for ASEAN countries. AAF also provides guidance, knowledge, and technical information for ASEAN countries for a stronger manufacturing presence. Photo: Thailand Automotive Industry, Thailand Board of Investment.


Economic Incentives

Thailand’s automotive industry blossoms under stimulus packages and a continual involvement in human resources. Tax-based incentives include the exemption or reduction of import duties on machinery, raw materials, and an 8-year corporate income tax exemption.

An additional 5-year, 50 percent reduction applies if a company’s efforts and location are befitting to the criteria in one of the Special Economic Zones.

Thailand’s location is also vital.

“Thailand is a destination for a world-class automotive production base, situated in the center of Southeast Asia, the world’s fastest growing regional market,” Pattanapanchai explained. “We offer convenient trade with many countries such as China, India, and ASEAN members, and easy access into the Greater Mekong sub-region, where emerging markets offer great business potential.”

Incoming businesses can supply their own employees and experts, however, among ASEAN countries, Thailand’s workforce is one of the most well-versed.

“In order to train the next generation of skilled labor for Thailand’s growing automotive industry, the Thai government is cooperating with the private sector on different programs,” Pattanapanchai said.

Training Programs

One such program is German apprenticeship, considered proven and effective by proponents. Tamar Jacoby, in a 2014 feature in The Atlantic, writes about how the German approach could benefit the United States. Furthermore, specialized academic training is provided by the National Science and Technology Development Agency (NSTDA). Vocational labor initiatives, like sending young technicians to intern with automakers, are supported by the Ministry of Education’s Office of the Vocational Education Commission (VEC).

“As Thailand continues to lead Southeast Asia’s automotive industry, major industrial leaders such as Nissan, Toyota, Honda, and BMW already operate their R&D, design, and testing centers here,” Pattanapanchai said.

Investment Benefits

Ms. Piengjai Keawsuwan, Vice President of Government Relations, Nissan Motor Thailand, points to the automaker’s presence in Thailand as proof of the nation’s economic viability. The Nissan Technical Center of South East Asia, for example, is located in Bangsaotong, Samutprakarn in Central Thailand.

“We have invested specifically to promote research and development here,” Keawsuwan said. “With human resource development, the employment rate is high, which will raise up Thai economic growth.”

Pattanapanchai agreed, citing how others connected to the automotive industry in Thailand benefit from OEM presence.

“Such facilities have promoted technology and knowledge transfer to local suppliers and work forces,” she said.

Investment Opportunities

As a past president of both the Thailand Automotive Industry Association (2010-2015) and the ASEAN Automotive Federation (2013-2015), Keawsuwan advocates for stronger relationships between government, investors, and the greater automotive industry. Although Thailand’s vehicle production is increasing, there is plenty more opportunity.

“Thailand is still welcoming new investors to coordinate with and encourage growth with,” Keawsuwan explained. “The Thai auto industry will see a lot of economic growth from these win/win situations.”

It’s not just OEMs reaping the benefits either. Suppliers like Denso have thrived in Thailand’s automotive climate. The Thai Denso Group’s website, for example, shows the Wellgrow Plant recorded 33,105 million Baht in sales for fiscal year 2014 – nearly $1 billion USD. According to Pattanapanchai, 57 of the world’s top 100 auto parts manufacturers have factories in Thailand.

Keterangan Gambar (© Pemilik Gambar)

“Auto parts clusters are well developed and expand their business connections between automotive firms to lower logistics costs and improve efficiency,” she said.

Thailand's Automotive Industry

Economic Impact

According to The Thai Automotive Industry Association (TAIA), the automotive sector accounted for approximately 12% of the nation’s GDP in 2015. Similar to the United States, truck production is strong, with lasting effects on the economy.

In the first half of 2016, 600,000 commercial units, including one-ton pickups, were produced out of the one million total vehicles manufactured in Thailand.

Since 2010, more than a million one-ton trucks are produced each year in Thailand, making it one of the world’s top markets for trucks. Local manufacturers supply nearly 85 percent of the parts for trucks assembled in Thailand; 70 percent for passenger cars.

“The industry has created millions of direct and indirect jobs and become a great source of income for all people within the supply chain,” Pattanapanchai said.

Green Vehicle Production

Automakers are continually introducing green vehicle platforms, including some that utilize solar power. With consumer demand growing for these types of vehicles, Thailand is evolving their manufacturing model accordingly.

“Thailand is, without doubt, moving strongly to global green automotive production,” Pattanapanchai said.

In July, The Bangkok Post reported that BMW Group is considering Thailand as a location for a new plug-in hybrid battery factory. Amid concerns Thailand was not ready for electric vehicle production, the Bangkok Press highlighted the government’s plan to build an EV ecosystem.

In June, TAIA jointly organized the Pathway to Global Green Automotive Hub. The summit addressed problems caused by emissions and proposed solutions centered around more eco-friendly vehicles, with Thailand acting as a global production base. Through the nation’s economic resources, tax incentives, and consistent training for workers, Pattanapanchai believes Thailand is ready for the demands of green vehicle manufacturing.

“Skilled labor forces and research and development institutions are prepared,” she said. “Thailand’s production base is diverse enough to supply all the necessary parts, from tires to structural components.”

Keawsuwan believes the same and is confident green vehicle production will increase.

“The supply chain can adjust or modify,” she said. “I anticipate this is the new opportunity for automotive in Thailand and there will be growth accordingly.”

Thailand's Automotive Industry

Photo: Thailand Automotive Industry, Thailand Board of Investment.

Emerging Trends & Established Traditions

Like the workforce initiatives, Thailand coordinates with the private sector on various research and development projects to enhance green vehicle manufacturing. The Thailand Investment Review reported in December 2015 that eco-car production could reach 3 million in 2017. Thailand already supports more than 10,000 natural-gas-powered taxis.

“The global technology trend of automotive is to diversify with the energy evolution and Nissan is ready for the new technology,” Keawsuwan added. “The Thai government has concrete plans to promote things like EVs in Thailand in the future.”

Although she is confident in the forthcoming policies regarding EVs, Keawsuwan also knows gasoline vehicle production will continue in Thailand.

“I can say that EVs are not a substituted model to internal combustion engine vehicles,” she said. “EVs may be an additional new model in the market, but not a substitution.”

Thailand's Automotive Industry

Vehicle testing in Thailand. Photo: Thailand Automotive Industry, Thailand Board of Investment

Automotive Ascension

Based on Thailand’s current direction, we can expect more battery, hybrid, and electric vehicle production, with a talented and diverse workforce ready to meet market demands. Expect the Thai government to continue investing deeply in those making a living within the nation’s automotive landscape. Some believe “Thai” means “human” and carries a certain significance for all citizens, especially as they climb to new heights.

“I believe Thailand will become a developed country, standing in the top 3 to 5 in the world rankings,” Keawsuwan said.

As for Pattanapanchai, who enjoys scuba diving and reading, it’s a chance to see her home succeed on a global stage.

“Thailand has been honored to be the venue for many car makers to debut their new products,” she said.

Carl Anthony is Managing Editor of Automoblog and resides in Detroit, Michigan.

Keterangan Gambar (© Pemilik Gambar)Thailand's Automotive Industry

Photo: Thailand Automotive Industry, Thailand Board of Investment.

Sources: Thailand Automotive Industry, Thailand Board of Investment, Ford Motor Company, Nissan Motor Corporation, Thai Denso Group.

Tags: Thailand auto
Akhyari Hananto

I began my career in the banking industry in 1997, and stayed approx 6 years in it. This industry boost his knowledge about the economic condition in Indonesia, both macro and micro, and how to More understand it. My banking career continued in Yogyakarta when I joined in a program funded by the Asian Development Bank (ADB),as the coordinator for a program aimed to help improve the quality of learning and teaching process in private universities in Yogyakarta. When the earthquake stroke Yogyakarta, I chose to join an international NGO working in the area of ?disaster response and management, which allows me to help rebuild the city, as well as other disaster-stricken area in Indonesia. I went on to become the coordinator for emergency response in the Asia Pacific region. Then I was assigned for 1 year in Cambodia, as a country coordinator mostly to deliver developmental programs (water and sanitation, education, livelihood). In 2009, he continued his career as a protocol and HR officer at the U.S. Consulate General in Surabaya, and two years later I joined the Political and Economic Section until now, where i have to deal with extensive range of people and government officials, as well as private and government institution troughout eastern Indonesia. I am the founder and Editor-in-Chief in Good News From Indonesia (GNFI), a growing and influential social media movement, and was selected as one of The Most Influential Netizen 2011 by The Marketeers magazine. I also wrote a book on "Fundamentals of Disaster Management in 2007"?, "Good News From Indonesia : Beragam Prestasi Anak Bangsa di dunia"? which was luanched in August 2013, and "Indonesia Bersyukur"? which is launched in Sept 2013. In 2014, 3 books were released in which i was one of the writer; "Indonesia Pelangi Dunia"?, "Indonesia The Untold Stories"? and "Growing! Meretas Jalan Kejayaan" I give lectures to students in lectures nationwide, sharing on full range of issues, from economy, to diplomacy Less
View all posts

Terima kasih telah membaca sampai di sini