In the Association of Southeast Asian Nations (ASEAN), an automotive manufacturing region, Thailand is the leading automotive production base in the region, offering great investment potential. The country has developed into a top export hub and automotive manufacturer from an assembler of auto components. Thailand has earned the spot of the 6th largest commercial vehicle manufacturer in the world, the largest in ASEAN, and the 13th largest exporter of automotive parts. The auto parts and automobile industry in Thailand have pride in employing more than 500,000 people and contribute nearly 12% of the country’s economy.
All of the world’s leading component manufacturers, automakers, and assemblers are virtually in the country. With an approximate production of two million vehicles in the country each year, companies such as Nissan, Honda, Toyota, Mitsubishi, BMW, and Isuzu together account for a lion’s share of the massive production. Located in the central provinces of Bangkok, most of these parts suppliers and manufacturers offer easy access into leading markets of India, ASEAN, and China.
Nevertheless, the used car market in Thailand is interesting too. Although they have produced world’s leading brands, there are still lots of second hand cars in this country. If you are interested in an opportunity in the second car market, Thailand could be the right place for you too.
In this article, we will mainly focus on the opportunity in the overall automotive industry as a whole since there are a few regulations that could be beneficial to investors.
Foreign investors opportunities
Opportunities from the EEC
To produce green vehicles, Thailand is keen to expand its automotive manufacturing industry despite the world’s tightening emission standards.
The Eastern Economic Corridor (EEC) initiative greatly supports this vision that is greatly important in bringing the next-generation automotive industry to Thailand, moreover, the electronic vehicle (EV) industry. To support 10 target industries, the automobile included, to promote emerging technology, creativity, and innovation within each sector through government investment and policies are the main reasons why the EEC’s framework was designed. The EEC aims to focus on prototyping and surface integration design as it expands the value chain of the automotive industry. Also, it plans to enhance and expand the manufacturing process of automotive parts and electronic accessories. The benefits that are available to EEC’s automobile investors include:
- Facilitation of foreign work permits and workers’ visas
- Financial incentives for investment in Research and Development (R&D)
- Permit to own land used for Board Of Investment (BOI) promoted projects
- Corporate income tax exemption of up to 15 years
- Human resources or innovation developments
BOIs investment promotion scheme
The supportive government policies are one of the key factors that give Thailand’s automotive industry a competitive edge. To encourage foreign investment in the industry, the Thai government offers substantial backing in the form of non-tax and tax incentives. Foreign investors have the following benefits available to them:
- Permit to own land
- Import duty exemption on machinery
- Permit to remit money or take out in foreign currency
- Raw materials used in manufacturing export products have an import duty exemption
- For up to eight years Corporate Income Tax (CIT) exemption
- Permit to bring skilled experts and workers to work in investment promoted activities
For companies that are investing in the supercluster automotive zones in Thailand, they enjoy other additional benefits. These include:
- Personal income tax for specialists both foreign and Thai
- 50% reduced CIT for five years
- You may get a permanent residence permit
- Tax-exempt period of up to 8 years under BOIs general promotion scheme
- A probability of extension to 10-15 year CIT exemption
Free Trade Agreements (FTA)
Thailand’s investors and auto manufacturers can greatly benefit from the country’s FTA. Today, Thailand has six FTAs with New Zealand, the 10 member states of ASEAN, Australia, India, and China. The FTAs provide investors an opportunity to gain competitive advantages in other production inputs by eliminating and reducing import duties, in the importation of components and raw materials, and expanding their supply chain. Some of the FTAs speed trade flows, harmonize product standards and customs codes. In Thailand, the auto manufacturers use FTAs to enforce restrictions to protect their intellectual property and investments, gain greater market access in Southeast Asia, expand business and market development, business opportunities in terms of price competitiveness, government procurement, and investment expansion.
Whether you are looking for a used car or a new one, Thailand has more to offer in the automotive industry. Depending on your reasons to get a car and your supposed budget, opting for a new car is more advantageous for many reasons. Thailand offers tremendous opportunities for auto manufacturers now, with the end of the first-time buyer scheme.