Investment Opportunities in Auto Sector in Thailand. Mr. Chokedee Kaewsang Deputy Secretary General Thailand Board of Investment

Transcription

1 Investment Opportunities in Auto Sector in Thailand Mr. Chokedee Kaewsang Deputy Secretary General Thailand Board of Investment

2 Outline Current Status and Trend of Thailand Automotive Industry Thailand s Human Resource Development in Automotive Industry Investment Promotion Policy for Automotive Industry

3 Overview of Thailand Automotive Industry 3

4 World s Automotive Production 2013 (Units of production) World s Production: Million (+3.6%) Thailand : 2.45 Million (+4.3%) #9 in Worlds Automotive Production #1 in ASEAN for Automotive Production Source: OICA as of Mars, 2014

5 Thailand Ranked # Automobile Production World s Production: 89.7 Million (+2.6%) THAILAND: 1.89 Million (-23.5%) #12 in Worlds Automotive Production #1 in ASEAN for Automotive Production 2014 No.12 1,880,007 units Source: OICA as of Mars, 2015

6 Thailand as Production Hub for All Regions Thailand exports car to the world Asia (32%) Middle East (24%) Oceania (21%) EU (7%) Africa (4%) Source: Automotive Summit ( TAPMA) as of June 20, 2013

7 Automotive Capacity Getting Stronger Thailand: 9th largest automobile producer in the world in 2013 Output: 18 assemblers with a combined capacity of 2.8 mil. Units in 2015 Target: To manufacture 3,000,000 units in 2017 (2014 produced 1.88 mil.units exports 1.12 mil.units to 150 countries) High local content : 80-90% for pick-up and 30-70% for passenger car

8 Future Expansion from Eco-car 2 9 brands ready to operate Eco-car 2 programs Create additional capacity of 1.38 million units

9 Thailand Automotive Industry Growth units 3,000,000 2,500,000 2,000,000 Year 2014 Production = 1,880,007 Units -23% Domestic Sale = 881,832 Units -34% Export = 1,228,102 Units 0% 1,645,304 2,453,717 2,457,057 1,880,007 1,394,029 1,436,335 1,500,000 1,125,316 1,188,044 1,287,346 1,330,672 1,457, , ,831 1,128,152 1,128, ,250 1,000, , , , , ,100776, ,378 1,026, , , , , , , ,428389, , , , , , , , , , , , , , , , , ,563 14,000 42, ,130 66, ,836175, , , , Production Sale Export

10 450,000 workers Structure of Thai Automotive Industry Assembler (18 car companies, 8 motorcycle companies) 100,000 workers Foreign J/V LSEs Tier 1 (Total 709 Companies) Foreign Majority 54 % Thai Majority 23 % Pure Thai 23 % Tier 2,3 (1,700 Companies) Local Suppliers SMEs [* LSEs : Large Scale Enterprises SMEs : Small & Medium Enterprises] Source: Thai Autoparts Manufacturers Association, OIE and BOI as of

11 TIER 2 & 3 TIER 1 Strong Cluster & Supply Chain Structure SERVICE INDUSTRY -Distribution (W/H) -Finance -Testing -Consulting -Logistics -Banking/ Leasing POLICY& SUPPORTING BODY -Government -Associations/ Institutes -Universities/ Technical Colleges SUPPORTING INDUSTRY (Machinery, Equipment & Devices, Mold& Die, Jig & Fixture) SME (Local suppliers) (1,700 companies) Stamping, plastics, rubber, machining, casting, forging, function, electrical, trimming Vehicle parts (386 companies) Vehicle &motorcycle parts (201 companies) Engines, Drivetrains, Steering, Suspensions, Brake Wheels, Tires, Bodyworks, Interiors, Electronics and Electric systems. Parts manufacturers (450,000 workers) Supporting industries (100,000 workers) & Pick-up (17 companies, 23 factories) Motorcycle (8 companies, ASSEMBLERPassenger 8 factories) Vehicles Assemblers (100,000 workers) Dealer, Service center (200,000 workers) UPSTREAM INDUSTRY (Steel, Plastics, Rubber, Electronics, Glass, Textiles, Leather, Chemicals, Oil, Coating, and Galvanized Metal)

12 Capacity of Vehicle Production in Thailand Manufactures Brand Capacity Future Expansion 1 Auto Alliance (Thailand) Mazda, Ford 300,000-2 BMW Manufacturing (Thailand) BMW/MINI 6,000-3 Dongfeng Automobile Dongfeng 5,300-4 Ford Motor Company (Thailand) Ford 200,000-5 General Motors (Thailand) Chevrolet 160,000-6 Hino Motors Manufacturing (Thailand) Hino 25,150-7 Honda Automobile (Thailand) Honda 240, ,000 8 Isuzu Motors Company (Thailand) Isuzu 220,000-9 Mitsubishi Motors (Thailand) Mitsubishi 450, Nissan Motor (Thailand) Nissan 240, SAIC Motor-CP MG 50, Scania (Thailand) Scania 1, Suzuki Motor (Thailand) Suzuki 135, Thonburi Automotive Assembly Plant Mer. Benz 7,000 - Tata 8, Toyota Motor Thailand Toyota 700, Toyota Autoworks Toyota 18, TC Manufacturing and Assembly Fuso 12, Thai-Swedish Assembly Volvo / UD 21,700 - Total 2,799,150 3,039,150* Note *Not include expansion project of Eco-car Phase 2 12

13 Japanese Global Suppliers 2. Denso 4. Aisin Seiki 13. Yazaki 15. Sumitomo 16. Toyota Boshoku 18. Calsonic Kansei 19. JTEKT 20. Hitachi 28. Toyoda Gosei 33. NTN 34. NSK 35. Mitsubishi 39. NHK Spring 40. Koito 41. TS Tech 43. Takata Strength of Thai Automotive Industry Top 100 Global Suppliers Active in Thai Automotive Industry Other Global Suppliers 46. Bridgestone 49. Tokai Rika 1. Robert Bosch 3. Continental 44. Federal-Mogul 47. Michelin 57. Showa 6. Faurecia 50. GKN Driveline 61. Mitsuba 7. Johnson Control 52. Goodyear 8. ZF 66. Asahi Glass 56. Grupo Antolin 11. TRW 58. Bayer 72. Stanley 12. Delphi 59. TI Automotive 74. Akebono 14. Lear 65. Draexlmaier Brake 17. BASF 67. American Axle 82. Sanden 21. Valeo 73. Rieter Auto. 84. F-Tech 22. Visteon 84. F-Tech 92. Alpine 23. Autoliv 86. Hayes Lammerz 25. Mahle 94. Pioneer 93. 3M 27. Dana 98. Omron 31. BorgWarner 28/29 Companies 36. Teneco 29/71 Companies 13

14 Thai Automotive Industry - OEM Location Source: Thailand Automotive Institute

15 Thai Automotive Industry - Auto parts Location Pathumthani Body Parts: 18%, Engine Parts; Electrical Parts: 13% each, Suspension & Brake Parts: 10%, Drive, Transmission&Steering Parts; Accessories: 8% each, Other: 31% Rayong 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% Bangkok Body Parts: 9%, Engine Parts; Electrical Parts; Drive, Transmission&Steering Parts; Accessories: 6% each, Suspension & Brake Parts: 4%, Mold&Die: 3%, Other: 60% Samutprakarn 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% Chonburi 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% Source: Thailand Automotive Institute

16 Great Leap of Next Decade for ASEAN Automotive Industry Relatively low penetration of vehicles Market expansion due to Rise of Income Growth and Rise of Middle Class Growth Factors of ASEAN Market Push to produce small cars by Low Cost Eco Car Policy (Eco Car and Low Cost Green Car Policy) More market competition due to liberalization under FTAs Market: 5 million cars by 2020-larger than Japanese market in Production: Surpass 6 million cars through export growth by Source: Automotive Summit ( TAPMA) as of June 20, 2013

17 By 2018, ASEAN will be the 6 th Largest Automotive Market Globally Global Rank SALE ,708,634 11,562,701 3,524,789 3,475,760 3,173,634 2,904,338 2,593,769 2,409,826 2,204,229 1,941,253 Source: Frost & Sullivan & ASEAN Automotive Federation SALE 2015F 29,010,852 16,466,283 5,788,462 5,364,935 4,591,476 3,850,511 3,499,860 3,429,031 2,704,451 2,563,360 SALE 2018F 33,391,276 16,970,585 9,039,806 6,287,188 4,717,218 4,692,961 4,025,975 3,968,411 2,897,909 2,793,822

18 Strong Network in ASEAN and ASEAN+6 Parts Sourcing for ASEAN+ Dialogue Partner Source: ASEAN Automotive Federation(Automotive Summit 2013) as of June 24, 2013

19 Thailand s Human Resource Development in Automotive Industry 19

20 Thailand s Current Human Resource Status By Skills Manufacturing 50% Mechanics 26% Engineering 7% Electrical 5% Electronics 7% Acct/Admin. 5% Others 1% By Job Level Staff 74% Technical 7% Supervisor 7% Expert 5% Engineer 4% Executive 3% Source: Auto Summit 2013 (TAI/ Role of HR Development in Automotive Industry) as of June 28, 2013 By Education Level Secondary-High School 50% Vocational Certificate 15% Diploma 25% Degree 10%

21 Thai monthly wages are competitive Unit=US$ Thailand (Bangkok) China (Beijing) Vietnam (Hanoi) Malaysia (KL) Singapore Workers ,230 Engineers (Mid-level) ,038 2,325 Managers (Department Chief Level) 1,574 1, ,966 4,268 Monthly Legal Minimum Wage 181* (20 days) Social Security (% paid by employer) 5% 45.4% 22% 13% 16% Source: JETRO 24 th Comparative Survey of Investment-Related Costs Comparison in Major Cities and Regions in Asia and Oceania, as of May 2014

22 HR Development in the Automotive Industry (AHRDP) THAI LAND Ministry of Industry JAPAN JETRO (METI) The Federation of Thai Industries SUPPORTED BY JAPANESE COMPANIES Japan Chamber of Commerce TOYOTA Production System Skill Certification Mind Management Skill Manufacturing Mold & Die TOYOTA NISSAN DENSO HONDA Source: Thai Automotive Institute as of July 1, 2013

23 Update on Investment Promotion Policy 23

24 New Approach to Granting Investment Incentives Activity-based Incentives Merit-based Incentives A1 A2 1. Competitiveness Enhancement A3 A4 B1 B2 Classified incentives based on the importance of activities + 2. Decentralization 3. Industrial Area Development Grant additional incentives to encourage more investment/expenditures that benefit the country or overall industry 24

25 Activity-based Incentives A2: Activities in infrastructure for the country s development, activities using advanced technology to create value added, with none or very few existing investments in Thailand (8-year CIT exemption, exemption of import duty on machinery/raw materials and non-tax incentives) A4: Activities with lower technology than A1-A3 but add value to domestic resources and strengthen supply chain (3-year CIT exemption, exemption of import duty on machinery/raw materials and non-tax incentives) A1 A2 A3 A4 B1 B2 A1: Knowledge-based activities, focusing on R&D and design to enhance the country s competitiveness (8-year CIT exemption without cap, exemption of import duty on machinery/raw materials and non-tax incentives) A3: High technology activities which are important to the country s development, with a few investments already existing in Thailand (5-year CIT exemption, exemption of import duty on machinery/raw materials and non-tax incentives) B1/B2: Supporting industries that do not use high technology but are still important to value chain (B1 : Exemption of import duty on machinery/raw materials and non-tax incentives B2 : Exemption of import duty on raw materials and non-tax incentives)

26 Non-tax Incentives Non-tax Incentives Permit for foreign nationals to enter the kingdom for the purpose of studying investment opportunities Permit to bring into the Kingdom skilled workers and experts to work in investment promoted activities Permit to own land Permit to take out or remit money in foreign currency

27 Eligible Activity for Automotive 4.6 Manufacture of General Automobile : B1 4.7 Manufacture of automobile engines Project must have pressing of parts, not less than 4 out of 5 parts, as follows: Cylinder Head, Cylinder Block, Crankshaft, Camshaft and Connecting Rod : A3 Assembling of engine : A4 4.8 Manufacture of Vehicle Parts : B1 & A2 for Priority List (Cont.)

28 Eligible Activity for Automotive (Cont.) 4.8 Manufacture of Vehicle Parts for Priority Activities Manufacture of vehicle parts using high technology Manufacture of automobile parts for safety parts and energy-saving parts Manufacture of parts for Hybrid, Electric Vehicle (EV) and Plug-in Hybrid (PHEV) Manufacture of rubber tires for vehicles Manufacture of other vehicle parts Incentives: 8 years corporate income tax exemption, accounting for 100% of investment (exc. cost of land and working capital) Exemption of Import Duty on Machine Exemption of Import Duty on Raw Material used in manufacturing export products

29 Automotive : Attractive Investment Sector Non-tax Incentives High Market Potential Strong Support Industries Skilled Labor Competitive Cost

30 Thank you