June 2011 Volume 21 No. 6
Resilient Thai Auto Industry Cruising to Top 10 Goal After a brief slowdown earlier this year, Thailand’s automotive industry is back near top speed, resuming progress toward the goal of becoming the world’s 10th biggest automaker. Rising steadily by one notch in 2009 and by another in 2010, Thailand currently ranks as the 12th largest auto manufacturing country.
CONTENTS
Page
Resilient Thai Auto Industry
1
Industry experts predict the country will enter the global top 10 on output of 2.3 million units in three or four years. Looking further, on the strength of its good fundamentals and untiring optimism, the Thai automotive industry is projected to keep advancing and turn out 2.5 million units by 2020.
News Bites & BOI Net Applications
2
Thailand’s Economy Continues Growth
5
Company Spotlight: Advance Asian
6
Japan’s powerful earthquake and tsunami in March had a significant but short-term impact on auto production in Thailand this year. The tragedy disrupted the operations of auto parts suppliers in Japan, resulting in a parts shortage for several months that prevented many carmakers in Thailand from being able to produce certain models.
IMD Still Sees Thailand among World’s Most Competitive
7
Company Spotlight: Toyota Motor Thailand
8
Master Plan on Pattaya Special Zone
10
BOI Investment Missions/Activities
11
Thailand Economy-At-A-Glance
12
Continued on P. 3
June 2011
NEWS BITES
BOI NET APPLICATIONS 2009 (US$ = 31.68THB)
Fifteen Creative Products to Be Selected for Overseas Markets The Department of Intellectual Property has launched a project to select 15 creative products for marketing promotion overseas.
2010 (Jan-Apr) (US$ = 32.23THB)
2011 (Jan-Apr) (US$ = 30.05THB)
Number of projects
Value
Number of projects
Value
Number of projects
Value
1,591
14,122
381
4,017
582
5,660
866
7,451
245
1,654
336
3,594
Agricultural Products
73
501
25
168
24
169
Minerals / Ceramics
18
834
4
68
12
197
Light Industries / Textiles
67
276
15
73
20
115
Automotive / Metal Processing
244
1,852
67
525
119
1,627
Total Investment Total Foreign Investment
The Director-General of the Department of Intellectual Property, Mrs. Pajchima Tanasanti, said that the project is aimed at enhancing the competitiveness of Thailand through the creative economy. It is also in line with the Government’s policy of focusing on the creative economy as a new development model for the country.
By Sector
Electrical / Electronics
155
1,966
49
262
72
621
Mrs. Pajchima explained that the selection of the 15 creative products is part of the pilot project, “Enhancing Potential and Competitiveness in Product Designs for 15 Creative Industries,” carried out by the Department in response to the “Creative Thailand” policy. She said that this project would also assist small and medium-sized enterprises (SMEs), which are facing a shortage of funding sources, technology, and personnel in the field of design.
Chemicals / Paper
118
729
28
164
33
346
Services
191
1,293
57
394
56
520
Japan
364
3,297
99
795
172
1,501
Europe
123
1,215
41
100
55
182
Taiwan
39
117
13
62
17
116
USA
42
231
11
28
9
105
Hong Kong
26
133
7
70
11
336
Singapore
66
362
25
214
23
404
Zone 1
241
860
85
452
97
482
Zone 2
432
4,466
113
903
183
2,548
Zone 3
193
2,126
47
299
56
564
One Province One AgroIndustrial Product (OPOAI) Thailand’s Ministry of Industry is to allocate a budget of Bt40 million (US$1.3 million) to 150 small- and medium-sized enterprises (SMEs) to develop their businesses under the government’s policy of One Province One Agro-Industrial Product (OPOAI) in 75 provinces.
By Economy
By Zone
Unit: US$ Million Note: Investment projects with foreign equity participation from more than one country are reported in the figures for both countries.
Each entrepreneur must have registered capital of no more than Bt200 million, while the ministry is to increase their investment value by at least Bt150 million (US$3 million). In early May, Vice Minister Puttipong Punnakan signed a memorandum of understanding on the project and presided at the opening ceremony of a project to increase regional capacity to compete in agricultural processing. The event was set up at Siam City Hotel, Bangkok. The ministry will push the OPOAI project so that each province has its own label of processed agricultural goods. The project was successful in 2007-2008, when 400 entrepreneurs participated and which helped them earn more income and reduce production costs, with an economic value of over Bt1.3 billion.
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June 2011
Continued from P. 1
In April, as a demonstration of the immediate effect of the Japan tsunami, Thailand’s total vehicle production was uncharacteristically weak at just 89,179 units, down 15.16% y-o-y and 48.5% m-o-m, the Federation of Thai Industries reported. In comparison, the targets set earlier by industry experts were for output of 130,000 units in April and 150,000 in May.
production was cut back temporarily. The company provided intensive skills-enhancement training courses for all personnel, strengthening operations even during the downtime. Another positive development for the local industry is that more parts and components suppliers based in Japan are considering relocation to Thailand to avoid tsunami and yen appreciation concerns. An influx of the small and medium enterprises or SMEs would spur greater growth in Thailand’s bustling automotive industry and expand local capability. Thailand stacks up as a perfect investment site for these automotive parts suppliers, as they could carry out production here at lower cost, without interruption and in proximity to their major customers.
Robust and Racing Ahead The Thai automotive industry is coming off a robust performance in 2010. Last year exports of motor vehicles grew 55.2%, production climbed 20.7% and sales of automobiles increased 18.6% y-o-y, according to the Office of Industrial Economics.
Nevertheless, indicative of the local industry’s potency, even with the dip in April overall production for the first four months of 2011 rose 14.4% y-o-y to 558,160 units. Most makers in Thailand expect their output to return to 100% sometime between July and September this year.
Right in step with that strong growth are the numerous projects sprouting up across Thailand’s investment landscape this year. In fact, 2011 has already seen an explosion of new factories and operational expansions by automotive companies. Major developments are taking place on nearly a weekly basis, adding to the muscularity of the local industry. Toyota has reached a milestone by producing its 5 millionth car in Thailand. This follows a project to increase capacity at the company’s plant in Ban Pho, Chachoengsao Province, by 83%. Ford this year begins construction on a US$450 million state-of-the-art passenger car plant covering 750,000sqm at its Rayong Province site. The company in May also announced plans to open 30 more showrooms and service centers nationwide by 2012 to support its introduction of eight new vehicles in five years. Ford currently has 100 showrooms in the country. Mitsubishi is preparing to start work on a 15 billion baht eco-car manufacturing plant in Chonburi Province, the company’s largest-ever investment in Thailand and its biggest facility outside Japan. Chevrolet Thailand’s plant at Rayong has been awarded landfill-free status certifying that it produces no waste for landfills and recycles for reuse. Audi, Volkswagen and the U.S. firm Navistar, a manufacturer of commercial and military vehicles, each recently expressed an interest in building production plants in Thailand.
In the wake of the temporary slowdown, Thailand’s automotive output for the whole of 2011 will likely be limited to between 1.65 million and 1.80 million units. Still, the former matches last year’s output and the latter figure would represent impressive growth considering the brief down period. Showing the resolute nature of the local industry, during the parts shortage many automakers in Thailand acted to turn adversity into opportunity. For example, Toyota Motor Thailand, the biggest maker in the country, kept all of its workers on-shift while
In other industry developments, Mazda will start delivery of its Mazda3 2.0 car to Thai customers in June 2011. Tata intends to launch more truck models domestically in September, adding to its local presence of one-ton pickups. Suzuki has set aside 380 million baht for marketing in 2011. Chery also unveiled a major marketing campaign to boost sales. Peugeot said it will increase its automobile sales in Thailand in 2011 under a strategy to brand for the mass market instead of as a niche product. GM aims to lift its local content to US$1.6 billion worth of annual purchases of Thai-made components and services within three years. Continued on P. 4
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June 2011 Continued from P. 3
Leading tire maker Bridgestone is pouring out 140 million baht to upgrade its car service network in Thailand this year. In 2010, the company announced a 5.95 billion baht expansion of its local production facilities. AGC Automotive (Thailand) in April this year revealed plans to expand its automotive glass production with a major new investment, and Siam Fukoku is increasing its rain wiper output with an 854 million baht project. In the first quarter, Inergy Automotive Systems said it intends to expand its manufacture of plastic oil tanks for vehicles.
World-Class Production Base Born in 1961 with just one assembly plant and output that year of only 525 units, the Thai automotive industry has matured into a world-class production base. There are now 16 car and truck makers and seven motorcycle assemblers. In fact, nearly all of the world’s leading vehicle makers, assemblers and parts manufacturers operate production bases in Thailand. The list of foreign companies with production centers here includes Ford, General Motors, BMW, DaimlerChrysler, Mitsubishi, Mazda, Toyota, Isuzu, Honda and Nissan. One-ton pickups remain the largest product category, accounting for more than half of local automotive output. In fact, Thailand continues to rank No. 1 globally for production of 1-ton pickups. The country is Southeast Asia’s largest sales market for such vehicles. Parallel to its vibrant pickup truck and passenger car segments, Thailand is also home to a lively motorcycle manufacturing sector. Producing 1.9 million motorcycles in 2010, makers focus heavily on family models that account for 94% of output, with sports models constituting a lesser line. The vast majority of production is for the domestic market. Honda and Yamaha are currently the top two motorcycle brands in Thailand. As the local market is saturated, forward-looking manufacturers are trying out innovative models to stimulate sales. Thailand’s automotive industry is likewise attractive to some makers as an affordable R&D location with strong supporting facilities. Several foreign companies have established auto R&D facilities in the country, including Toyota as a prime example with an advanced technical center for product design, testing and evaluation.
Energetic Parts Sector With annual value estimated at 400 billion baht, parts and components already represent a strong-growth sector in the Thai automotive industry. Local parts manufacturers supply nearly 100% of the requirement used in the assembly of motorcycles, about 85% of parts used in pickup truck assembly, and about 70% of those for passenger cars.
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There are approximately 2,500 automotive parts and components suppliers in Thailand, of which about 700 are OEMs or original equipment manufacturers. The breakdown of the sector is 70% small companies, 20% mediumsized ones and 10% large companies. Major foreign parts manufacturers here include France’s Valeo, Germany’s Bosch, U.S.b a s e d T R W, B r i t a n ’ s GKN, and Japan’s Denso, Mitsuba and Mitsubishi Electric Thai Auto-Parts Co., Ltd. The Japan Automobile Manufacturers Association describes the quality of Thailand-made automotive parts as the highest of any ASEAN nation. The sector continues to offer ample investment opportunity, as the domestic market and local manufacturers have a parts and components import requirement totaling 250 billion baht each year. Among the numerous organizations extending substantial assistance to Thailand’s automotive industry, the Thai AutoParts Manufacturers Association has proposed a blueprint for boosting the technology, automation, innovation and human resources of local parts and components suppliers through 2020. The association said the plan would increase productivity in this sector by 10% annually.
Prime Investment Location Thailand is seen as an excellent investment location for international carmakers due to its strategic location at the heart of Asia, highly skilled but low-cost workforce, and efficient industrial estates that focus on the automotive industry. Another big factor is the government’s strong automotive support, including promotion benefits granted by the Thailand Board of Investment (BOI). Eco-cars, for example, are one of the initiatives currently receiving high-level support. The BOI and Ministry of Finance are actively promoting eco-car development in the country, with no fewer than five global auto assemblers having proposed investments totaling an annual production capacity of 585,000 such environment-friendly vehicles. Joining early arrivers Honda and Nissan, Mitsubishi has become the latest company to launch an eco-car in the Thai market. Honda and Nissan have even announced plans to offer four-door models of eco-cars within the next two years. The steady flow of new investment projects, eager plans to launch innovative products and reliable government support ensure the continued growth of Thailand’s automotive industry.
Thailand’s Economy Continues Growth Thailand’s economy continues along the path of success, as the National Economic and Social Development Board (NESDB) reports that the first quarter of 2011 shows GDP growth of 3%, following a seasonally adjusted growth of 2% in the fourth quarter of 2010.
June 2011
The forecast for export growth in 2011 by 17.0 percent represents an upward revision from the previous forecast of 12.5 percent; both export volume and price have been revised upwards. The NESDB expects Thailand’s export volume to grow by 9.8 percent, an upward revision from the previous projection of 6.8 percent. This positive change is the result of better than expected growth during Q1 2011 of 18.6 percent and because of a higher projected growth in world trade volume. Likewise, the export price is expected to increase by 7.2 percent, an upward revision from the previous projection of 5.7 percent. The total export of goods and services is projected to expand by 9.7 percent, revised up from a 6.3 percent growth in the previous projection. Overall, NESDB sees the trade balance having a surplus of US$10.4 billion, with an increase in imports. The current account is forecast to have a surplus of US$ 11.2 billion, or 3.1 percent of GDP.
NESDB forecasts full year economic growth in Thailand in the range of 3.5 – 4.5%; exports are projected to expand by 17.0%, and consumption and private investment to increase by 3.7 and 8.5%, respectively. During this period, the outlook is for headline inflation to be in the range of 3.0 to 3.8%, with an unemployment rate of 0.8%. Current account surplus is expected to be equivalent to 3.1% of GDP. As in the past several quarters, Thailand’s economic growth continues to be supported by strong domestic demand, which NESDB attributed to “(i) rising purchasing power in rural area following a continual increase of agricultural products’ prices in the last two years as a result of the implementation of measures of farm income and agricultural price stability; and (ii) increase purchasing power from rising minimum wage rate. For that reason, the government should maintain stability and strengthen income of the majority of Thai citizens. Thus, the government should give emphasis to: (i) increase productivity, specifically on agricultural products and food processing; (ii) employ proactive marketing strategy in the agricultural sector; and (iii) improve labor productivity in the industrial and service sectors by various approaches.” Also supporting Thailand’s healthy GDP growth is the continuing demand from abroad for its exports, which recorded a historical high of US$ 56,002 million compared to the same quarter in 2010. This represents an expansion of 27.4 percent compared to the same period of last year. NESDB reports that “The key drivers were exports of jewelry, vehicles, parts and accessories, electrical appliances, and rubber which expanded by 119.7, 23.0, 27.4, and 86.3 percent respectively. The major export markets included China, USA, Japan and EU (15) expanded by 24.8, 21.3, 30.2 and 24.2 percent respectively.”
Looking at specific areas of the economy, the agricultural sector grew by 6.7%in the first quarter, owing largely to “(i) increased production of agricultural products by 12.2 percent (particularly rice, sugarcane, maize, and rubber); and (ii) increased prices of agricultural products by 25.7 percent. Collectively, farm income in the first quarter of 2011 grew by 41.0 percent, up from 19.0 percent in the preceding quarter.” Tourism also has rebounded with the number of arrivals in Q1 2011 at 5.4 million persons, which is a 15% increase over the same period of last year. Tourists from Asian countries account for the uptick, with arrivals from China, South Korea, Malaysia and India up by 29.5, 17.9, 14.7 and 14.1 percent, respectively. The average occupancy rate in Q1 was 64.6%, which is a 61.0% increase over the same period in 2010. It was also noted by NESDB that consumer confidence remains optimistic, with government salaries recently increased along with the minimum wage rate. Consumer confidence registered at 71.9, up from 71.3 in the preceding quarter. Looking ahead over 2011, the NESDB maintains its economic forecast for growth in the range of 3.5-4.5%, owing to ”(i) improved tourism sector leading to steady expansion of related manufacturing and service sectors; (ii) increase in prices of agricultural products leading to strong domestic demand as well as consumer confidence and; (iii) satisfactory level of investment. However, there remain risks and uncertainties which comprise of: (i) volatility of world economy; (ii) economic effects from the deceleration of Japanese economy; and (iii) high interest rate and oil price.” With Thailand’s economy on track and showing strength amid global economic uncertainty, investors should find this just one additional reason why Thailand remains a safe, predictable and profitable location for their investment.
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June 2011
COMPANY SPOTLIGHT
Advance Asian Strives to Improve Society with Eco-Friendly Products In everything that it does, the biotech firm Advance Asian Co., Ltd. puts emphasis on improving society while preserving nature. “We research and develop highyield rice, energy and paper crops that are friendly to the environment. This plays an important role in the world of today and tomorrow,” said Mr. Suwira Songmetta, chairman and owner of Advance Asian.
The rice is marketed as a premium product under the company’s Rice for Health label. Advance Asian also extracts the bran of grain for Rice for Beauty cosmetics in its Sinin line.
Established in 2008, the 100% Thai company aims to help local and global society prosper. As such, corporate social responsibility (CSR) is a high priority. “CSR is extremely important to us,” Suwira noted. “It would not be fair if our company benefitted while communities suffered.”
With 20 researchers and 425 research assistants, Advance Asian is the biotechnology R&D arm of the Shaiyo-aa Group, extending the corporation’s reach as an agro-business specialist. The group has more than 100 facilities worldwide, with 10,000 employees in Thailand and 1,000 overseas.
Advance Asian believes that everyone is a winner from CSR activities. One example would be where the company donates saplings to poor farmers, temples and schools in rural areas. With income generated from these saplings, the farmers can improve their livelihoods, the monks can maintain their temples, and the schools can buy food and supplies. Under the project, Advance Asian is helping more than 2.5 million Thai farmers earn additional income by planting the company’s Paper Trees along their paddy ridges or at unused spaces between other crops. These special trees, a eucalyptus breed with an exceptional growth rate, represent the start of a communal chain for making furniture, charcoal, woodchips and even biomass fuel for electricity generators. The company’s sustainable development efforts also include providing rural communities with jobs in tree cutting and log transport and processing. Besides the Paper Tree, other patented products developed by Advance Asian are its Energy Tree for biomass power plants, and breakthroughs in the use of cassava roots for gasohol and palm oil for biodiesel. It has also produced a new kind of rice.
“This naturally violet-colored rice is unique in the world. It is enriched in iron, protein, omega3 and anti-oxidant properties,” Suwira said.
The headquarters and state-of-the-art lab center of Advance Asian are located at the Thailand Science Park near Bangkok. With a total of two laboratories and four plants across the country, it also runs facilities in the provinces of Khon Kaen, Roi Et, Prachinburi, Nong Khai and Nakhon Ratchasima. In addition, the company has operations abroad in Laos and Vietnam. Covering 80 acres, the Thailand Science Park is a world-class center for R&D in biotech engineering. More than 1,600 full-time researchers work at the laboratories, incubator units, pilot plants and greenhouses of the park. Using the park as a base presents a range of benefits to Advance Asian. “There are many facilities at the Thailand Science Park, including some very special types of high-tech equipment that we may need only one or two times a year. It is more cost-efficient to use those types as needed instead of to purchase them. As such, we can do that particular research at a lower cost,” Suwira said. Being located close to the park’s multitude of other research personnel also makes consultation very convenient for Advance Asian. “We can easily coordinate with various researchers or technicians,” he added. The Shaiyo-aa Group, of which Suwira’s wife Mrs. Siriwan Songmetta is president, was one of the first biotechnology enterprises in Thailand to receive promotion benefits from the Board of Investment (BOI). With more than 30 years of experience, it currently has several power plants and one biotech Continued on P. 10
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June 2011
IMD Still Sees Thailand among World’s Most Competitive
SPOTLIGHT ON BOI FAIR On 19 May 2011, Secretary General Dr. Atchaka Sibunruang joined a signing ceremony with representatives from the Hard Disk Drive manufacturers in Thailand, who have pledged to participate in the BOI Fair 2011. The HDD sector will collaborate in its exhibit with members of the academic community and industrial sector.
Thailand continues to stand firmly in the top 45% of the world’s most competitive economies, according to the Institute for Management Development (IMD). Among 59 countries and territories rated, Thailand currently ranks a solid 27th in the Switzerland-based institute’s “2011 World Competitiveness Yearbook.” Findings from surveys undertaken between January and April this year show Thailand rising in several major categories. While maintaining its impressive rating as the world’s second most competitive labor market, the Kingdom’s strengthening business efficiency scored 16th place for attitudes and values and 33rd for productivity in 2011. Those represent increases from 19th and 49th on the IMD’s survey report a year earlier.
On 25 May 2011, BOI’s Secretary General participated in a stone-laying ceremony at Muang Thong Thani Lake to initiate the preparation of the grounds for the Fair.
Despite such impressive gains during the past year, Thailand’s overall rating slipped to 27th in the 2011 report, down from 26th the previous earlier. This dip, however, is overshadowed by the country’s remarkable improvement in global competitiveness over just a five-year span. Compared with the IMD’s 2007 report, Thailand’s has improved from 33rd to 27th in overall performance, from 15th to 10th in economic performance, from 27th to 22nd in government efficiency, from 34th to 19th in business efficiency and from 48th to 47th for infrastructure in 2011. Thailand could achieve greater improvement, the report suggested, with enhanced efforts in creative economy, green technology, public infrastructure, budget disbursement, education and equity of income distribution. Of economies surveyed in the 2011 report, Hong Kong and the United States tied for first place as the most competitive, followed by Singapore. The United States jumped from third last year due to financial market recovery. With headquarters in the city of Lausanne, the IMD operates a world-class business management school and a number of research centers, including the World Competitiveness Center. The 2011 report was based two-thirds on statistical data and one-third on surveys of executives, with the institute’s partner the Thailand Management Association participating.
Thus far, progress is being made with the organization of transportation and traffic, the groundbreaking ceremony, with all pavilions being sold out, and with the creation of the Thailand Pavilion, which will be devoted to exhibits about Thailand, and the BOI Pavilion. The Safety and Traffic Team of BOI Fair 2011 are busy making arrangements to ensure a smooth flow of traffic for the BOI Fair 2011.Thus far, the team has been in contact with several car park locations for park and ride connections. These include Don Muang Airport, Suvarnabhumi Airport, Thai Meteorological Department, Thammasat University (Rangsit Campus) and TOT Co., Ltd., which have already signed on to allow use of parking facilities, with connections to and from Muang Thong Thani, the location of BOI Fair 2011, to be provided. In addition, there are ongoing discussions with several other partners which should be finalized within the next two months or so.
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June 2011
COMPANY SPOTLIGHT
Toyota Motor Thailand Enjoys Deep Friendship with Country
A world-class enterprise, Toyota Motor Thailand Co., Ltd. is the biggest automaker in Thailand. Despite its prominent position, the company continues to appreciate its roots even while looking to future growth here. Established in October 1962, Toyota Motor Thailand will next year celebrate 50 years of business success and friendship in the country. In fact, the company’s extensive background with Thailand is one of its major advantages over competitors. This goes as deep as 1957, when its parent, Aichi, Japanbased Toyota Motor Corporation, started selling automobiles in Thailand. Step by step over the years, new products were introduced, the local sales network was expanded, and the Thai production base ultimately began exporting. Many suppliers to the company have also invested locally. “This strong historical foundation gives us a real competitive edge,” said Mr. Kyoichi Tanada, president of Toyota Motor Thailand. “We were the first automotive company who decided to make Thailand an exports production base. Ultimately we showed a good example to the others who considered investment in this country.” Toyota Motor Thailand has three manufacturing facilities. The Samrong plant in Samut Prakan Province produces 230,000 units per year, the factory at the Gateway City Industrial Estate in Chachoengsao Province makes an additional 200,000 units, and the Ban Pho plant in the same province turns out 140,000 units annually. Of the company’s 15,000 employees in Thailand, 8,500 are permanent and 6,500 are subcontracted. The sales
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and service network has built up to 121 dealers and 327 outlets across the country. In 2010, Toyota Motor Thailand’s output hit 630,000 units, with exports accounting for 53% compared to domestic sales at 47%. Just six years earlier, the export share was only 20%. Today shipments go to 110 countries, led by the increasing global popularity of the Hilux Vigo 1-ton pickup. “Sixty percent of Toyota’s production of the Vigo is now done in Thailand,” Tanada said. “So automatically we have the responsibility of exporting the model from here to around the world. This is the main reason our exports from Thailand are continuing to grow.” Besides being the company’s top export, the Vigo is also the best-selling pickup in Thailand’s automotive market. A solid performer in fuel economy, versatility and durability, the model has garnered 17 quality awards from international institutions. The company produces 10 models in Thailand. These are the Hillux Vigo B-Cab, Hillux Vigo C-Cab, Hillux Vigo D-Cab and Fortuner multipurpose vehicles; and the Vios, Yaris, Corrola Altis, Camry, Camry HV and Prius passenger cars. It also sells in the local market seven other Toyota models made elsewhere, including the Innova and Avanza multipurpose vehicles; Alphard, Hiace, Commuter and Majesty vans; and Toyota’s Lexus premium car. The Prius hybrid is the latest launch, going on sale in the Thai
June 2011
market in December 2010. “Sales of the Prius are doing very well in Thailand, even better than we expected with about 1,000 units sold per month,” Tanada said. Thailand is one of only three countries that Toyota has chosen for production of the environment-friendly midsize liftback, the third-generation of which is being manufactured at the Gateway plant. The world’s first mass-produced gasoline-electric hybrid car, Prius has been named Car of the Year several times since its debut in 1997, including in Japan, North America and Europe. Toyota Motor Corporation has four major business groups operating in Thailand, with Toyota Motor Thailand the biggest. The others are Toyota Motor Asia Pacific Engineering and Manufacturing, which manages affiliates in the Asia-Pacific region such as in Malaysia, the Philippines, Vietnam and Indonesia as well as Thailand; engines producer Siam Toyota Manufacturing; and Toyota Leasing Thailand. Over the past eight years in particular, Toyota Motor Thailand has itself invested about 770 billion baht in Thailand. Toyota Motor Thailand adheres to the mother corporation’s core principles of continuous improvement through challenges and change, complete customer satisfaction, dedication to the highest standards of quality and safety, and respect for people and the environment.
Improving the Well-Being of Thais Among the seven subsidiaries under Toyota Motor Thailand are a technical school and a rice mill. Each year Toyota Automotive Technical School provides training for 70 to 80 local people who after graduating go on to work as mechanics at the company’s dealerships nationwide. “Besides supporting our dealers, these people gain a life skill through the technical school education and training,” Tanada said. Rachamongkol Rice Co., Ltd. is another way the company helps the Thai people improve their livelihood. Back when the 1997 Asian financial crisis hit, Toyota Motor Thailand set up the rice mill at the suggestion of the king of Thailand as a way to assist local society. Thai farmers work the land and are able to sell the rice they produce. The farmers also use the grain to make biofuel for their vehicles. “The purpose of the small rice company is not for Toyota to get a profit. It is a type of contribution to society,” Tanada explained. Toyota Motor Thailand believes very strongly in the importance of corporate social responsibility (CSR). “Part of the Toyota way is to be a good citizen in the country where we operate. To achieve that, it is very important to contribute to society,” Tanada said. Among its numerous CSR efforts, Toyota Motor Thailand conducts an “Eco-Forest Project” that represents one of the biggest reforestation campaigns in the country. The company also utilizes environment-friendly production equipment. An “Integrated CSR Across Value Chain” system is currently being developed whereby all facets of operations, from materials and assembly to delivery and after-sales service, will promote practices beneficial to the environment and local communities.
Heartfelt Thanks after Tsunami Like many other automotive manufacturers, Toyota Motor Thailand encountered a parts shortage when suppliers in Japan saw their operations disrupted by the devastating March 2011 earthquake and tsunami. During months immediately after the tragedy, the company scaled production back to just 30% of capacity being unable to obtain parts to produce all models. Due to the tsunami effect, Tanada estimates that Thailand’s automotive output in 2011 might end up lower than last year’s 1.65 million units. Even so, he remains highly optimistic. “The Thai economy currently is very good, so as a result our sales and those of other makers will be increasing,” he said. The country’s overall industry should return to speed soon as well. Currently ranking 12th globally, the Thai automotive industry aims to break into the world top 10. The recent production cuts by all makers due to the tsunami-induced parts shortage represent a temporary situation that will not affect long-term growth. “As long as no special barriers come up, such as increased excise taxes that shrink market size or excessive appreciation of the baht to affect exports, I believe that Thailand’s automotive industry will reach the top 10 in three or four years as production passes 2 million units,” Tanada noted. Operating in Thailand is mutually satisfying, as the Japanese people like Thais and vice versa. This is demonstrated not only in business but also socially. In the period after this year’s massive tsunami in Japan, many Thais could be seen raising donations in Thailand’s urban areas to help the Japanese victims. “I want to say a deep thank you to the people of Thailand for their concern after the tsunami,” Tanada said. “This sincere appreciation is not only the feeling of myself and Toyota but of all Japanese. Back in Japan, as companies there consider relocating to other countries, they will remember the Thai people’s help after the tsunami and I think they will consider investing in Thailand first.” Throughout the company’s nearly half-century of manufacturing in Thailand, the Thai people have proven themselves skillful and Continued on P. 10
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June 2011
Toyota Motor, Continued from
P. 9
very adept at advancing. “We have trained them to produce the cars and now the locally made cars are being exported around the world. The fact that customers in so many countries are continually buying these cars shows that Thai work quality is excellent,” Tanada said. Even greater heights are possible. “Toyota understands that the potential of the Thai people is very high. In the future looking beyond production to R&D as well, there may be the chance that our Thai employees will design the cars as well as produce them.”
Sincere Government Support Thailand is an attractive investment location for international carmakers due to its strategic location at the heart of Asia, highly skilled but low-cost workforce, and efficient industrial estates that focus on the automotive industry. Another big factor is the government’s strong automotive support. “The Ministry of Industry and the Board of Investment (BOI) are promoting Thailand’s development into the Detroit of Asian countries. This is no longer merely a dream as it is becoming a reality,” Tanada said. “Besides granting investment incentives, the BOI always shows concern to our business. When we consult with the BOI or make a request to them, they consider our request with sincerity, whether or not they can meet our demand 100%,” he added. “We very much appreciate the sincerity and friendship that the BOI has always shown to Toyota and other Japanese companies,” he remarked.
Advance Asian, Continued from
The definite trend is that more SMEs in Japan are considering a move overseas due to the high appreciation of the yen and tsunami concerns. In particular, parts suppliers realize they have to consider other countries where they can produce parts without interruption in order to support their mother companies back home. Tanada said the BOI should target these potential investors as their influx would stimulate economic growth in Thailand. Thailand’s economy and overall competitiveness is also expected to get a boost from the upcoming BOI Fair 2011. Part of nationwide celebrations marking the auspicious occasion of His Majesty King Bhumibol Adulyadej’s 84th birthday, the muchanticipated fair from 10-25 November will showcase the country’s industrial capacity, modern technology and knack for innovation. Toyota Motor Thailand has already booked 2,000 square meters and four pavilions at BOI Fair 2011 for exhibiting its new technology to the public, including its hybrid cars. “Toyota Motor Thailand will eagerly take part in the big event, just as the company did in the two previous BOI Fairs of 2000 and 1995,” Tanada said.
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R&D project under BOI promotion, including a large biomass plant in Chonburi Province. With headquarters in Chachoengsao Province, Shaiyo-aa owns 26 woodchip mills in the country, each turning out 1,000 tons per day. Every year the group produces over 4 million tons of farmedtree woodchips, all for export. It also cultivates more than 300 million saplings per year for contract farming. Of its food and beauty products, 50% is sold in the domestic market and 50% is for export. Countries across Asia represent the main overseas market. The expenditure-reducing incentives offered by the BOI have been very important in the enterprise’s investment decisions, especially as biotechnology R&D is costly and long-term. Suwira explained: “Researchers have to observe and wait for the plants to complete their life cycle before determining results. The process is expensive and poses a high risk of failure. But if you succeed, you will make a big contribution to the quality of life for humanity today and in the future.”
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Tanada on 26 April 2011 was named the new president of the Japanese Chamber of Commerce, Bangkok (JCC), stepping up from vice president at the 57-year-old organization. In his capacity as head of the JCC, he is encouraging the Thai government to continue improving the local investment environment to attract small and medium enterprises (SMEs) in Japan that want to relocate.
Besides reliable government support, the company sees Thailand as an excellent operating base because of the country’s abundant land and sunlight, rich soil and ample water sources. More than 95% of the raw materials used by Advance Asian can be found locally. The ready availability of affordable skilled labor is also an advantage. “Thais are careful, patient and detailoriented. This is very suitable for R&D work,” Suwira said. Both Advance Asian and its mother company see their various industry segments in a state of strong growth. The major trends in Thailand and across the globe right now are the concerns for healthy food, clean energy and environmental protection. “Our group is addressing this with our quality products of Rice for Health for high nutrition, Energy Trees to reduce the burning of fossil fuels, and Paper Trees to reduce deforestation,” Suwira said.
BOI INVESTMENT MISSIONS
June 2011
From 29 May to 3 June 2011 Secretary General Atchaka Sibunruang led an investment mission to the western part of China, Chengdu and Chongqing. During the trip she participated in the seminar on “Thailand-Sichuan Economic Cooperation and Investment Opportunities” on Monday 30 May 2011 at Chengdu, Sichuan Provincial, China.
On 17 May 2011 Senior Executive Investment Advisor Hirunya Suchinai participated in an investment seminar on Thailand: Current Business Environment and investment policies, at the Lotte Hotel, Ulsan Korea.
From 24 to 30 April 2011, Deputy Director Duangjai Asawachintachit led an investment mission to Sweden and Norway, where she participated in investment seminars on the business environment in Thailand.
From 14 to 22 May 2011 Deputy Secretary General Duangjai Asawachintachit led an investment Mission to Spain and Italy, where she spoke with potential investors and participated in an investment seminar on 17 May 2011 at Madrid, Spain.
From 3 to 7 May 2011, Deputy Secretary General Chokedee Kaewsang led an investment mission to Cambodia to promote Thai outward investment. The delegation met with high ranking officials from both public and private organizations to discuss investment opportunities in Cambodia.
On 21 April 2011 Senior Executive Investment Advisor Winyoo Lao Poonpittaya welcomed a delegation from France and spoke with them about BOI investment policy and the many opportunities for investment in Thailand.
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June 2011
THAILAND ECONOMY-AT-A-GLANCE
Exchange Rate Trends
Facts about Thailand Population (2009) ASEAN Population Literacy Rate Minimum Wage (1 Jan 11, Bangkok) GDP (2010) GDP per Capita (2010) GDP Growth (2010) GDP Growth (2011, projected) Export Growth (2010) Export Growth (2011, projected) Trade Balance (2010) Current Account Balance (2010) International Reserves (2010) Capacity Utilization (2010) Manufacturing Production Index (2010) Customer Price Index (April 2011) (2007 = 100)
67 million 584 million 96% 215 Baht/day US$ 317.7 billion US$ 4,719.8 7.8% 3.5 - 4.5% 28.5% 12.5%
Source: Bank of Thailand
US$ 14 billion US$ 14.8 billion US$ 172.13 billion 63.42% 190.1 112.01
Corporate Income Tax Withholding Tax Value Added Tax
SET Monthly Closing Values
10-30% 10-15% 7%
April Average Exchange Rates US$1 = 30.05 baht €1 = 43.43 baht £1 = 49.19 baht 100 ¥ = 36.18 baht CNY1 = 4.61 baht
Source: Stock Exchange of Thailand
Industrial Capacity Utilization (%)
Top 10 Exports 2011 (Jan-Apr) Product
Share
Value (US$ bn)
1
Motor cars, parts and accessories
8.30
6.18
2
Automatic data processing machines and accessories
7.93
5.90
3
Precious stones and jewellery
6.33
4.71
4
Rubber
6.03
4.49
5
Polymers of ethylene, propylene, etc in primary forms
3.90
2.90
6
Electronic integrated circuits
3.56
2.65
7
Rubber products
3.46
2.58
8
Chemical products
3.46
2.57
9
Refine fuels
2.93
2.18
10
Rice
2.92 Total
Source: Bank of Thailand
International Reserves / Short-term Debt (%)
BOI Fair 2011
2.17 74.44
Source: Ministry of Commerce
Source: Bank of Thailand
BOI
Head Office, Office of the Board of Investment 555 Vibhavadi-Rangsit Road, Chatuchak, Bangkok 10900, Thailand Tel: +66 (0) 2553 8111 Fax: +66 (0) 2553 8222 Website: www.boi.go.th E-mail: head@boi.go.th BEIJING Thailand Board of Investment, Beijing Office Royal Thai Embassy No.40 Guang Hua Road, Beijing, 100600, P.R.China Tel: (86-10) 6532-4510 Fax: (86-10) 6532-1620 E-mail: beijing@boi.go.th
FRANKFURT Thailand Board of Investment, Frankfurt Office Bethmannstr. 58, 5.OG 60311 Frankfurt am Main Federal Republic of Germany Tel: (49 69) 92 91 230 Fax: (49 69) 92 91 2320 E-mail: fra@boi.go.th
GUANGZHOU Thailand Board of Investment, Guangzhou Office Investment Promotion Section, Royal Thai Consulate-General, Guangzhou, Room 1216-1218, Garden Tower, 368 Huanshi Dong Road, Guangzhou, 510064 P.R.C. Tel: (86-20) 833-38999 Ext: 1216 to 18 (86-20) 838-77770 Fax: (86-20) 838-72700 E-mail: guangzhou@boi.go.th
LOS ANGELES Thailand Board of Investment, Los Angeles Office Royal Thai Consulate-General 611 North Larchmont Boulevard, 3rd Floor, Los Angeles, CA 90004 USA Tel: (1-323) 960 1199 Fax: (1-323) 960 1190 E-mail: boila@boi.go.th
NEW YORK Thailand Board of Investment, New York Office 61 Broadway, Suite 2810 New York, NY 10006 U.S.A. Tel: (1-212) 422 9009 Fax: (1-212) 422 9119 E-mail: nyc@boi.go.th
OSAKA Thailand Board of Investment, Osaka Office Royal Thai Consulate-General, Osaka, Bangkok Bank Bldg. 7th Floor , 1-9-16 KyutaroMachi, Chuo-Ku, Osaka 541-0056 Japan Tel: (81-6) 6271-1395 Fax: (81-6) 6271-1394 E-mail: osaka@boi.go.th
SEOUL Thailand Board of Investment, Seoul Office #1804, 18th Floor, Coryo Daeyungak Tower, 25-5, Chungmuro 1-ga, Jung-gu, Seoul, 100-706, Korea Tel: (822) 319-9998 Fax: (822) 319-9997 E-mail: seoul@boi.go.th
SHANGHAI Thailand Board of Investment, Shanghai Office Royal Thai Consulate-General 15 F., Crystal Century Tower, 567 Weihai Road, Shanghai, 200041, P.R.China Tel: (86-21) 6288-9728, (86-21) 6288-9729 Fax: (86-21) 6288-9730 E-mail: shanghai@boi.go.th
STOCKHOLM Thailand Board of Investment, Stockholm Office Stureplan 4C 4th Floor 114 35 Stockholm, Sweden Tel: +46 (0)8 463 1158 +46 (0)8 463 1172 +46 (0)8 463 1174 to 75 Fax: +46 (0)8 463 1160 E-mail: stockholm@boi.go.th
SYDNEY Thailand Board of Investment, Sydney Office Suite 101, Level 1, 234 George Street, NSW 2000, Australia Tel: (+61) 2 9252 4884 Fax: (+61) 2 9252 2883 E-mail: sydney@boi.go.th
TAIPEI Thailand Board of Investment, Taipei Office Taipei World Trade Center 3rd Floor, Room 3E39-40, No.5, Xin-Yi Road, Sec.5 Taipei 110, Taiwan, R.O.C. Tel: (886) 2-23456663 Fax: (886) 2-23459223 E-mail: taipei@boi.go.th
TOKYO Thailand Board of Investment, Tokyo Office Royal Thai Embassy 8th Fl., Fukuda Building West, 2-11-3 Akasaka, Minato-ku, Tokyo 107-0052 Japan Tel: (81 3) 3582 1806 Fax: (81 3) 3589 5176 E-mail: tyo@boi.go.th
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PARIS Thailand Board of Investment, Paris Office Ambassade Royale de Thailande, 8, Rue Greuze 75116 Paris, France Tel: (33 1) 5690 2600 (33 1) 5690 2601 Fax: (33 1) 5690 2602 E-mail: par@boi.go.th