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Thailand : Detroit of Asia

Thailand : Detroit of Asia By.. Mr.Ninnart Chaithirapinyo Vice Chairman The Federation of Thai Industries Toyota Motor Thailand Today’s topic I. Where are we? II. Where will we go? III. How will we go? IV. Why Thailand? I. Where are we?

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Thailand : Detroit of Asia

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  1. Thailand : Detroit of Asia By.. Mr.Ninnart Chaithirapinyo Vice Chairman The Federation of Thai Industries Toyota Motor Thailand

  2. Today’s topic I. Where are we? II. Where will we go? III. How will we go? IV. Why Thailand?

  3. I. Where are we?

  4. 1.1 Circumstance Change in Market • Local content • regulations • Ban for CBU • vehicle import • Deregulation of • Local content • Tariff reduction • Free • competition 25% local Content requirement Increase of local content to 50% Abolishment of local content FTA Negotiation AFTA Tariff reduction to 0% Higher competition Regulation Deregulation Liberalization Vehicle Assembly Asian Car Global Car Country Competition Regional Competition Global Competition

  5. 1.2 PRODUCTION CAPACITY IN 2005

  6. 1.3 Market ratio P/U Ratio = 58% Local Content = 80-90% P/C Ratio = 33% Local Content = 30-70%

  7. 1.4 Industry structure Foreign Joint Venture Assemblers 12 Companies LEs Tier 1 Foreign Majority 287 Thai Majority 68 Pure Thai 354 709 Companies SMEs Tier 2&3 LOCAL SUPPLIERS 1,000 Companies

  8. Contribution of Auto Industry to Thai Economy Auto Industry Auto Industry GDP EMPLOYMENT Manufacturing Sector

  9. 1.5 Production, Domestic sales and Exports Unit

  10. 1.6 Thai Export Value (Ranking compared with other products) Million US$ No.1 Computer 9,320 No.2Vehicles & Parts 5,681 No.3Circuit Board 4,974 No.4 Rubber 3,432 No.5 Plastic 3,132

  11. 1.7 World Productions & Sales Ranking in 2004 In 2005 Thailand will rank No.14 in Production and No.17 in Domestic sale and will celebrate One Million Productions in December

  12. 1.8 Productions, Domestic Sales and Exports in 2005 FORCASTING, 2005 EXPORT FORCAST 2005

  13. II. Where will we go?

  14. Detroit of Asia’s Target Production 1.8 million units with export 40% in 2010 Being 1 ton P/U production base of the world Being the production base of motorcycle Being the production base of OEM andREM parts

  15. III. How to go?

  16. 3.1AHRDP (Automotive Human Resource Development Project) Objective : To enhance competitiveness in term of price, quality and delivery : To Improve the following: - Engineering capability - Mould & Die-making capability - Manufacturing capability (Plastic/ rubber, Casting, Machining,Stamping) (Joint project among Jetro, JCC,TAI, FTI)

  17. 3.2 R&D and Training Fund • Car assemblers • withdraw for • Oversea & Domestic training • Scholarship • R&D • SOURCE OF FUND • CAR ASSEMBLERS • PART MAKERS 90% R&D TRAINING FUND • SMEs withdraw for • Training • R&D 100% 10% R&D and Training fund will be managed by term committee

  18. 3.3 Free Trade Agreements To expand additional market INDIA (Pop~ 1,000 million) CHINA (Pop~ 1,300million) PERU (Pop~ 28 million BAHRAIN (Pop 0.9 million) AUSTRALIA (Pop ~ 20 million) THAILAND (Pop ~ 64.8 million) AFTA (Pop ~ 500 million) NEWZEALAND (Pop ~ 4 million) BIMSTEC JAPAN (Pop~127 million) AMERICA (Pop~292 million)

  19. 3.3 Free Trade Agreement : Australian Tariff Reduction 10 % increase In export Tariff reduction 30 % increase in export Tariff reduction

  20. The opportunities for Automotive Industry I. Enhancing trade in vehicles • The Australian and Thai vehicles are complementary. There are global platform similarities and both use the right hand drive format. • Thailand is a centre for light commercial vehicles production (Detroit of Asia). • Australia has a competitive advantage in large car production. • The trade expansion would be expected to affluent rise as a result of the tariff reduction.

  21. The opportunities for Automotive Industry II. Enhancing trade in Auto components • There will be trade exposure potential for exports and sales under TAFTA. • Improving the economies of scale via production increases as well as cost reduction from cheaper raw material ex: steel, copper, aluminum etc.

  22. The opportunities for Automotive Industry III. Enhancing in Services and Investment • Enhancing in the service in the area of training, technology transfer, Design & Engineering Alliance, Mold & Die making or plastic injection ,etc. • Labor and services are able to move easier under the TAFTA. Leading to export engineering, design and technical expertise. • There are motor vehicle service, repair opportunities in the aftermarket sector and also auto part reconditioning . • BOI offers more privilege for the auto industry.

  23. Japan-Thailand Economic Partnership Agreement I. Automobiles 2006 2005 2007 2008 2009 Passenger car Exceed 3,000 cc. 80% 75% 70% 65% 60% Passenger car less than 3,000 cc. Renegotiation will commence on a date to be agreed upon before signing A political declaration on automobile will be issued at the time of signingJTEPA

  24. Japan-Thailand Economic Partnership Agreement II. Auto parts The tariff rate will be reduced to 20% and maintained before eliminate in 2011 Tariff over 20% Tariff at 20% and below The tariff rate will be maintained and eliminated in 2011 The tariff rate will be maintained and eliminated in 2013 Sensitive (5 items)

  25. Japan-Thailand Economic Partnership Agreement III. Iron and steel products Some products will be eliminated on the effective date. The others will be abolished, at latest, by the first day of the 11th year after the entry into effect. For some specific hot rolled coils and plates, zero tariff quota scheme will be established and their Quantity will be reviewed annually.

  26. IV. Why’s Thailand

  27. 4.1 Nine Government policies in 2005 • Poverty Eradication Policy • Human developmentpolicy and quality of life • Economic restructuring policy to create equilibrium and competitiveness • Natural Resources and Environmental policy • Foreign policy and international economic policy • Policy on the development of the legal system and good governance • Policy to promote democracy and civil society process • National security policy • Policy according to directive principles of fundamental state policy

  28. < EUROPE > Citroen, Peugeot,Volkswagen ,BMW, Volvo ,Daimler < USA > Ford + Asia Pacific HQs GM + Asia Pacific HQs Chrysler < JAPAN > Toyota+ R&D Center Honda+ R&D Center Isuzu,Mitsubishi, Mazda,Hino, Nissan, ANNUAL PRODUCTION CAPACITY 1.2MILLION UNITS 4 4.2 Global Brands in Thailand

  29. 4.3 Car ownership Possibility for expansion potential America 2 persons / unit Japan 2 persons / unit Malaysia 5 persons / unit Singapore 6 persons / unit Thailand 10 persons / unit Philippines 30 persons / unit Indonesia 60 persons / unit Vietnam 300 persons / unit

  30. 4.4 Why Thailand • Political stability • liberalization policy • Attractive government incentives Government • Good & Massive infrastructure network ( Electricity ,Telecommunication , Air ports , Ports ) Infrastructure

  31. 4.4 Why Thailand • Considerable market size • Large production base for pick up truck • Gateway to 500 million people of ASEAN Market • Rich pool of supporting industries • Good access to raw materials • Cheaper parts manufacturing cost Supplier

  32. 4.4 Why Thailand • Abundant of quality labor forces • Language proficiency • Hospitality and friendly attitude People • Delicious foods and fruits • Attractive tourist places • Plenty of golf courses Amenity

  33. 4.5 Low Cost & Competitive Market 1. Mirror Set 2.Glass set

  34. 4.5 Low Cost & Competitive Market 3.Stamping part 4. Insulator Set

  35. 4.5 Low Cost & Competitive Market 5.Rubber Set 6. Interior Set

  36. 4.5 Low Cost & Competitive Market 7. Engine Set GASOLINE DIESEL

  37. 4.6 Opportunity for Auto Industry INSUFFICIENT COMPONENTS PRODUCED IN THAILAND • 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 • Training Service • Design & Engineering • Mould & Die Making • Plastic injection Opportunity to invest in Thailand!! * New investment

  38. Engine -Diesels, Motorcycles Engine Components - Starters, Alternators, Pumps, Filters, Hosed, Gears, Flywheels Body Parts - Chassis, Bumpers, Fenders, Hoods, Door Panels Brake Systems - Master Cylinders, Drums, Disc, Pads, Linings Steering Systems - Steering Wheels, Gears, Columns, Pumps, Linkages 4.6 Opportunity for Auto Industry PARTS MANUFACTURERED IN THAILAND • Suspensions -Shocks, Coils, Ball Joints • Transmissions - Gears, Casings, Rear Axles, Drive Shafts, Propeller Shafts • Electrical / Electronic - Alternators, Starters, Speedometers, lamps, Motors, Flasher Relays • Interiors / Exteriors - Seats, Mats, Weather Strips, Console Boxes • Others - Windshields, Seat Belts, Radiators, Wheels, Compressors

  39. 4.6 Opportunity for Auto Industry BRIGHT FUTURE POTENTIAL BUSINESS GROWTH FOR NEW/EXISTING INVESTORS THAILAND GOVERNMENT SUPPORT PRODUCTION VOLUME INCREASE + + EFFORT OF THE PRIVATE SECTOR 100% LOCALIZATION

  40. Vielen vielen Dank

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