World Auto Leader

Thailand's automotive industry was born in 1961 with the assembly of semiknock-down units imported from the United Kingdom. Now, just more than half a century later, the country has achieved its goal set several years ago to become one of the world's top-10 auto manufacturing countries by producing 2.45 million units in 2012.

Already the target has been set for the production capacity to reach 3.4 million units by 2015. Production continued to increase during the first half of 2013 with 1,340,959 units produced from January to June. Slightly more than half of all production is for the domestic market, while Thailand continues to attract investment in the industry with its strong exports as well.

It was only 8 years ago that Thailand surpassed the United States to become the world's number one producer of one-ton pick-up trucks with a production level that year of 820,000.

Given that automotives produced in Thailand have a local content of between 30% and 70%, and as high as 90% for some pick-ups, the opportunities for investors in the parts and components sector continue to grow as well. Thailand has no local content requirements in the production, but is recognized for its solid production of parts and components made to international standards. In fact, 219 billion baht in OEM parts were exported from Thailand in 2012.

Success in the auto industry has created significant demand for skilled labor, particularly engineers. Thailand is working with the industry to meet this demand through both formal and informal education, and many automotive companies have set up training programs, working with the government.

Thailand's industrial success has rested in part on its willingness to quickly identify and react to industrial needs and economic trends. This is what led the Board of Investment to adopt in June 2007 its promotion of Eco-Car manufacturing, which met with resounding success. In fact, new policies related to Eco-Car production are being formulated and should be announced later this year. Additionally, Thailand is working hard to attract automotive research and development to support the industry as it becomes an auto hub of ASEAN following the formation of the ASEAN Economic Community in 2015.

On 27 June of this year, Dr. Witoon Simachokdee, Permanent Secretary, Ministry of Industry (MOI), attended the signing of an MOU on Automotive Industry Development for R&D, Testing and Human Resource Development among the Thailand Automotive Institute (TAI), The Army Research and Development Office (ARDO) and 4 universities: Siam University (SU), Kasetsart University (KU), King Mongkut's University of Technology Thonburi (KMUTT) and King Mongkut's Institute of Technology Ladkrabang (KMITL).

In March of this year, the Thai Auto Institute held an open house at its new Testing Center. "At present, the testing center's lab provides services not only for product development but also for certifying automotive and auto parts‌It is also certified by inspection body accreditation from the National Accreditation Council of Thailand (NAC), and the Thai Industrial Standards Institute (TISI) as a standard of ISO/IEC 17020," says TAI's news brief.

Moving Towards Global Green Automotive Industry The Automotive Summit 2013 held earlier this year featured the theme of future trends in energy efficiency in automotive production, as now most global auto manufacturers are showing more concern to the world's changing climate and the importance of scarce energy resources. The summit was given a warm

welcome by both the public and private sectors in the industry, as they all share the vision to develop smart but practical energy-saving vehicles.

The summit started with a presentation by Dr. Toshio Kobayashi, president of the Japan Automobile Research Institute (JARI), who shared his views on the current status of Japan's automobile industry and the work being done to move forward in such areas as low CO2 emission, clean air and road safety.

He mentioned that Japanese manufacturers have been putting more efforts to reduce the energy consumption in automobile production by using fuel efficient technologies as well as methods on how to develop the appropriate design of vehicles. Many approaches had been researched and surveyed, such as the effort to have cleaner exhaust gas, and the effort to reduce traffic accidents. In summary, he said that it is important that administrative measures and technological developments be developed, as well as bringing about a change in the awareness of users, to achieve a global green automotive industry. Finally, there is a need to educate users about the CO2 reduction, eco-driving and to promote eco-driving in a sustainable manner for the future of a global green industry.

ASEAN in the Eyes of Global Green Automotive Manufacturers as a Strategic Hub of Auto Production to the World In the subsequent panel discussion, experts from the industry shared their views and provided an update on the current situation of automotive production and the potential growth of the industry in response to the global trends, focusing on environment and safety.

The panel started with Mr. Peter Wolf, Automotive Chairman of European ASEAN Business Centre (EABC), who talked about ASEAN's potential growth and the concepts of sustainability and the future of mobility. He said that Thailand, Indonesia and Malaysia are now current key automotive markets for the industry. As AEC 2015 gets closer, ASEAN will be even more attractive for foreign investment. By 2018, ASEAN is forecasted to become the world's 6th largest automotive market in the world, according to Frost & Sullivan. In moving the industry to become a global green automotive industry, the concept

of sustainability should be implemented throughout the automotive lifecycle.

This should bring in a defining feature of new technology such as Design for Environment / Life Cycle Engineering (clean production), Sustainability Standards for Suppliers (environmentally-friendly logistic concept), Fuel Efficiency, Traffic Management, and Design for Recycling. However, without strong supporting measures there is a lower chance of pushing ASEAN towards becoming the Global Hub of Automotive Production.

Mrs. Piengjai Keawsuwan, president of the ASEAN Automotive Federation, also confirmed the strong growth in ASEAN automotive production, which grew 42% last year, moving the region closer to be among top auto manufacturers like Japan. Among global environmental concerns, each government in ASEAN is trying hard to move their countries toward green technologies. For example, Thailand as a Hub of Global Green Automotive Production, Malaysia as a Hub of Energy-Efficient Vehicles (EEV), Philippines to offer tax incentives to manufacturers and importers of EVs and Hybrid cars, and Indonesia to promote a Low Cost Green Car Program.

Thailand also is promoting the vision of moving toward becoming a global green automotive production base with strong domestic supply chains, creating value added for the country. In addition, the country also offers among the best tax incentives to manufacturers of green technology, which includes an 8 year corporate income tax exemption and import duty exemption on machinery.

Thailand's auto industry is strongly supported by clusters and networks (government, associations and universities), so it is understandable why so many supporting industries and global top suppliers are located here.

Although the AEC will make ASEAN a hub of auto production, there are challenges to overcome and a need to minimize any barriers that will impact industrial growth.