Thailand Automotive Industry and Investment Opportunities. Ms. Sudjit Inthaiwong Deputy Secretary General Board of Investment 16 March 2007.

Transcription

1 Thailand Automotive Industry and Investment Opportunities Ms. Sudjit Inthaiwong Deputy Secretary General Board of Investment 16 March 2007 Thailand

2 Presentation Overview Economy and Business Climate Overview Infrastructure Investment Opportunities BOI Incentives and Outsourcing services

3 Overview of Thailand s s Economy and Business Climate

4 Consistent growth and productivity Gross Domestic Product 5% in 2006* Foreign Direct Investment US$ 8.12 billion 2006 US $41.34 billion State Budget 2007** Current Account at 6-year high US$ 3.2 billion Unemployment at 1.3% and underemployment at 1.7% Capacity utilization a steady 73.5% *Revised by NESDB **1.566 trillion baht $37.88/THB

5 World Bank s Ease of Doing Business ASEAN/China Singapore Thailand Malaysia China Vietnam Philippines Indonesia Cambodia Laos Thailand GLOBAL RANKINGS Source: World Bank Study: Doing Business in 2007

6 Thailand Rated #3 Most Attractive FDI Location in Asia by UNCTAD ( ) Ranking of FDI Prospects in Asia Top 1 Top 2 Top 3 Top 4 Top 5 China India THAILAND Vietnam South Korea UNCTAD survey of world s 325 largest transnational corporations Asian region has most positive FDI prospects Overall, Thailand ranked #9 in world UNCTAD Global Investments Prospects Assessment, Sept. 2005

7 JBIC FY 2006 Survey When asked about profitability for each region, including Japan, the percentage of companies answering higher was greatest for Thailand In E&E, within the ASEAN4, the response to strengthen or expand is largest in Thailand. In automotives, strengthen or expand stronger in Thailand than any other region, including Southern China and North America.

8 Quality at Low Cost Ranked 127 in global Cost of Living Survey* A lowest cost destination within the region and the world Avg. general industry wage US$146/mth** Avg. Monthly office rent US$11.67/sqm** 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 Grant Thornton International Business Owners Survey 2006 *Mercer Human Resources Consulting **Jetro Survey March 2006

9 Low level of bureaucracy Singapore Malaysia Thailand China India Philippines Vietnam Indonesia Thailand Source: World Bank Group Number of days to incorporate and register new firms 97

10 Infrastructure

11 Enhanced Infrastructure Transportation National highway system: 64,000 km connecting all 76 provinces Expanding connections into Cambodia, Laos, Vietnam and southern China 7 international airports Rail system: 4,000 km linking to Malaysia & Singapore Citywide light rail US $4.8 billion expansion Communications Mobile phones: growing 8 million in 2006 to 39 million users, with a 60%+ market penetration rate Wi-Fi and broadband access Shipping 8 deep sea ports Including tanks farms and liquid jetties

12 304 Industrial Park Amata Industrial Estate Asia Industrial Estate Gateway City Industrial Estate Hemaraj Land and Development PLC Laem Chabang Industrial Estate Map Ta Phut Industrial Estate Padaeng Industrial Estate Ping Thong Industrial Estate Rojana Industrial Park Wellgrow Industrial Estate International School & University Golf Course Hospital

13 Percentage of Foreign Investors in Industrial Estates Japan USA England Germany Korea Singapore Australia Taiwan Belgium Netherlands India Malaysia China Hong Kong

14 Thai Graduates by Major Major Humanities and Social Sciences Science, Technology, and Engineering 229, ,704 77,329 82,415 Health Science 12,942 17,105 Technology and Business Computer (vocational) 9,085 15,037 TOTAL 319, ,224 Source: Commission on Higher Education; includes BA, MA, and post-graduate degrees

15 Thai Graduates in Science, Technology, and Engineering 140, , ,000 80,000 60,000 40,000 20, Source: Commission on Higher Education; includes BA, MA, and post-graduate degrees

16 Investment Opportunities

17 Sustainable Production Base Thailand : The Automotive Hub of Asia Production Center Exporting Center

18 Industrial Structure Thailand Car sales PPV & SUV 7% Passenger Car 27% Pickup Truck 1 ton 60% Other Commercial Car 6% First-tier Second-tier 648 Companies 1,641 Companies Third-tier

19 Investment Opportunities in Automotive Industries Auto assembly for local and export markets under AFTA and other FTA arrangements Auto part manufacturing to serve domestic and export markets Motorcycle production for local and export markets NGV 2011 target: 257,000 cars, 533 stations

20 2010 Target World s s Top 10 Total production of 2 million units Domestic sales of 1 million units 1-ton trucks 700,000 units Passenger cars 250,000 units Commercial Veh. 50,000 units Exports of 1 million units 1-ton trucks 800,000 units Passanger cars 200,000 units

21 Production Base Investment value within the country (the whole Cluster) Production Value within the country (GDP share) Value added share within country Production Base of One-Ton Pick Up High High Sedan Assembly Factory Low Low % 10-50% Export opportunity of cars and auto-part OEM Thailand product image in foreign market Producer opportunity for auto-part REM and Thai Accessories Persistence in free trade market World Market Yes Good Opportunity Persistence Quota No Hard to be true Uncertain

22 Thailand: Automotive Hub of ASEAN 2006 production ~ 1,176,840 million units 15 assembly plants Export ~ 539,206 units 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

23 Vehicle Production 2006 Passenger Cars 298,678 Trucks 878,162 Motorcycles 2,079,555 Source: Thailand Automotive Institute

24 Automotive Industry in Thailand 1,400,000 1,200,000 1,000, , , , ,000 0 Thousand Units Production Domestic Export Avg. Growth 35% Per Year ( ) ,176,840 1, , ,

25 Vehicle Production in Thailand Motorcycles Excluded 1,400,000 1,200,000 1,000, , , , ,000 Passenger Cars & Off-road Passenger Vehicles Pickup and Pickup Passenger Vehicles Total (nonmotorcycles) Source:Thai Automotive Institute

26 Automotive Production Automotive Production Top 15 Manufacturers (2005 data) 2.Japan 3.Germany 4.China 5.S.Korea 6.France 7.Spain 8.Canada 9.Brazil 10.UK 11.Mexico 12.India 13.Russia 14.Thai 15.Italy 1.US

27 Spare Auto Parts Exports $ '97 '98 ' '01 '02 '03 '04 '05 '06 Unit: Million US$

28 Vehicle Jig & Die Exports US$ '97 '98 ' '01 '02 '03 '04 '05 '06 Unit: Million US$

29 OEM Auto Component Part Exports US$2, '97 '98 ' '01 '02 '03 '04 '05 '06 Unit: Million US$

30 Thailand Motorcycle Production 3,500 Units (1,000) 3,000 2,500 2,000 1,500 1, ,551 1,414 1,465 1, Production Domestic Sales Exports 1, , ,962 1, ,378 1, ,867 1, ,359 2,112 2, , ,080 2,055 1,575 Source: Thai Automotive Institute

31 Market Structure One-Ton Pick Up Sedan World Market size 1.2 Million cars 34.1 Million Cars Leader production country Thailand USA Production volume of the leader country Thailand Market size 0.8 Million cars 7.4 Million cars 0.4 Million Cars 0.2 Million Cars Analyze as Boston Model Thailand is S t a r Thailand is D o g Product Positioning in the world market "Global Niche" Global Mass

32 Automotive Sales and Exports Automotive Sales and Exports 800, , , , , , , , , , , , , ,000 0 Domestic Sales (Units Exports (Units) Sales Exports

33 25km Key Infrastructure Suvarnabhumi Airport Laem Chabang Port Eastern Seaboard Industrial Area Many auto firms are located on Thailand s s Eastern Seaboard 57 Industrial Estates Deep seaports: 5 million TEU capacity

34 Ayudhaya Honda Automobile (Thailand) Bangkok Bangchan General Assembly Y.M.C. Assembly Thai Honda Manufacturing Samutsakorn Thai Rung Union Car 1. AUTOMOTIVE CLUSTER Automotive Manufacturer Location Pathumthani Thai Suzuki Motor Rayong Auto Alliance (Thailand) General Motors (Thailand) BMW Manufacturing (Thailand) Kawasaki Motors Enterprise (Thailand) MMC Sittipol Chachoengsao Toyota Motor Thailand Isuzu Motors (Thailand) Samutprakarn Toyota Motor Thailand Isuzu Motors (Thailand) Siam Nissan Automobile Siam V.M.C. Automobile Thai Auto Work Millennium Motors Thai Yamaha Motor Thai Swedish Assembly Hino Motors (Thailand) Thonburi Automotive Assembly

35 Principal Auto Parts Production Sites in Thailand 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%

36 More Moulds & Dies Needed in Thailand Thailand is still in need of moulds & dies to produce the following products: 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

37 Priority Government Policies Promote NGVs and Eco-car car

38 Investment Opportunities in Automotive Industries Auto assembly for local and export markets under AFTA and other FTA arrangements Auto part manufacturing to serve domestic and export markets Motorcycle production for local and export markets NGV segment target: 120,000 NGVs by 2008

39 Opportunities in Component Production Passenger Car Engines Fuel Injection Pumps Transmissions Differential Gears Injection Nozzles Electronic Systems Electronic Control Units Turbo Chargers Substrates for Catalytic Converters Anti-Lock Brake Systems

40 NGV Reduces Energy s s Cost of Thailand 1. For Nation NGV station investment cost NGV vehicle investment cost Reduced oil consumption Increased NGV consumption 43,600 million baht 45,700 million baht ~10 million liter/day ~365 million ft 3 /day Unit: Million Baht Dubai Crude Price Level ($/BBL) 50 IRR 32% NPV@12% 113,600 Reduced import value per year 62,200 Reduced energy s cost per year 39,500 Remarks: Project life is 20 year (Investment is during ). There are 500,000 vehicles with 740 NGV stations. Oil and gas Dubai is $50/BBL.

41 NGV Stations

42 Technology for NGV Vehicle DIESEL 1. Dedicated NGV - It uses NGV only. - Most vehicles are produced from manufacturers (OEM) and fitted the additional equipments or adapted the engines (Retrofit, Repowering). - It saves completely because of using NGV only. - The expense is high. 2. Duel Fuel - It uses both NGV and diesel or diesel only. - The vehicles are produced from manufacturers (OEM), fitted additional equipments, or adapted the engines (Retrofit, Repowering). - It has low expense and installs fast. - The duel fuel saves less than dedicated NGV.

43 NGV Expansion Target Vehicles Type Benzene Car 22,890 52,000 74, , , ,000 Diesel Car 2,950 8,850 24,300 50,300 79,600 96,600 Total NGV 25,840 60,850 99, , , ,600 Stations Region BKK/vicinity Countryside Total stations

44 Technology for NGV Vehicle BENZENE 1. Car with the installation of NGV equipments (Bi Fuel) - Bi Fuel: It can select to use benzene or NGV. - Installation cost is ~30,000-60,000 baht. The capable distance is kilometers. 2. There are two types of manufactured car (OEM) : Dedicated and Bi Fuel. - Dedicated: It uses NGV only. - Bi Fuel: It can select to use benzene or NGV. -The car price will be added ~ 150, ,000 baht. The capable distance is kilometers.

45 Eco-Car Investment Promotion Fuel consumption no more than 5 litres/100 km Emissions standards compliant with Euro4 specification or higher Carbon dioxide emissions no more than 120 gm/km Safety standards for front and side impact to comply with UNECE Reg. 94 and Reg.95 specifications, or higher

46 General Guidelines for Eco-car car Incentives 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

47 Why? <= 5 L/100 km 5L/100km = CO 2 120g/km for Benzene engine In 1998, EU agreement with automotive companies that by 2008, 2012 cars sold in EU will have an average of CO2<=140g/km and 120g/km The The European Commission has published an action plan on energy efficiency which restates the threat to the car industry that legislation will come if the makers do not meet the EU s carbon dioxide reduction target of 120 g/km by [European Federation for Transport and Environment, October 2006]

48 BOI Incentives and outsourcing services

49 The Board of Investment Basic Incentives and Measures Land ownership: A promoted company 50% or more foreign owned may apply, per section 27 Investment Promotion Act Permission to bring in technicians and experts Corporate Tax exemption: 3 to 8 years Import duty exemption/reduction on machinery and raw materials Subsequent 50% reduction of corporate income tax after expiration of exemption Double deduction of public utility costs Deductions for infrastructure construction/installation costs

50 Automotive Industry Cluster: Assemblers & Suppliers Applying as Package for BOI Promotion Conditions Total investment at least THB 10 billion ($250 million) including component parts manufacturing Covers: Automotive Assembling Manufacture of Vehicle Parts and Engines Incentives All Zones: Duty Free Machinery

51 Local Sourcing BUILD Promote and develop supporting industries Strengthen parts and component market Increase capability of Thai suppliers Assist suppliers to tailor parts and components production to the needs of manufacturers Stimulate localization induce manufacturers to source domestically Attract foreign investment

52 BUILD Programs Vendors meets customers Suppliers taken directly to assembly plants VMC Road Show Hannover Fair, MIDEST, MTech BUILD Marketplace Suppliers exhibit at domestic trade shows BUILD Sourcing Program Local sourcing for domestic and global supply chain

53 Subcon component manufacturers to participate in Subcon Thailand 2007, held alongside Intermach 07, South East Asia s Premiere Machinery Exhibition

54 Date and Time 9-13 May 2007 / AM PM (The exhibition is held during the same period as Intermach 2007) Venue BITEC International Conference and Exhibition Center, Bangkok, Hall 105 Exhibition Area 6,000 square meters Show Profile 54

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