Automotive Industry Incentives
Based on the incentive package that was in place to the end of December 2013, support from the Thai government is expected to offer:
• Exemption of import duties on machinery
• 8-year exemption of corporate income tax with no cap
• 5-year, 50 % reduction of corporate income tax on net profit
• 10-year double deduction of transport, electricity and water supply costs
• Deduction from net profit of 25 % of investment in infrastructure installation and construction costs, in addition to normal capital depreciation
• Projects can be located anywhere except Bangkok
Priority sectors with Maximum Tax Incentives( end by 2013)
• ABS brake system, regenerative brake system
• Substrate for catalytic converters
• Electronics for automotive: electronics fuel injection, electronics stability control, electric air conditioning systems for vehicles
• Transmission systems
• Batteries for EVs Traction motors for vehicles( hybrids or fuel cell cars)
• Manufacture and repair of aircraft & parts & accessories
• Machinery with design, mold and die capacity
Thai auto sector by the numbers
• World’ s 10th-largest automobile producer in 2012
• Second-largest producer and market of pickup trucks
• 14 assemblers
• 635 Tier 1 suppliers
• 1,700 Tier 2 and Tier 3 suppliers
• Local content ranges between 80-90 % for pickups, and 30- 70 % for passenger cars
• Domestic car sales 2012 – 1,436,335 units, or 81 % year-onyear growth
• Car manufacturing 2012 – 2,453,717 units, or 68 % year-onyear growth
• Exports: 1,026,671 units, or 40 % year-on-year increase
• Thailand is also a leading motorcycle hub, producing about 2.5 million units in 2012
Eco-car investments
In August 2012 Honda Automobile Thailand announced the official launch of the new Jazz Hybrid, Thailand’ s first Integrated Motor Assist( IMA) hybrid automobile in the sub-compact market segment. This model is designed for“ Thai people who want to live modern and environmentally-positive lifestyles,” according to the company.
Adding a further spark to eco-car production, the BOI is offering tax incentives for investment in the manufacture of the high-tech batteries that are the heart of the EV. Industry experts believe that once mass production commences, local demand for electric cars will increase as economies of scale push down sticker prices.
With lower energy consumption than gasoline or hybridpowered vehicles and a high level of material recycling, EVs could make up 10 % of global automobile output by 2020, according to the Thai Automotive Industry Association. The incentives are supported through stimulation of the local market. Under a fuelefficient transportation initiative, thousands of natural gas-powered taxicabs are going into use. By September 2012 Thailand’ s had around 480 natural gas vehicle( NGV) service stations. The BOI provides incentives for investments in NGV production, including
Thailand is attracting investment in energy saving and alternate vehicles through a number of incentives. To date:
• 5 projects approved
• Production capacity: 585,000 units
• Export prediction: 405,940 units Total employment: 8,081 units
• By the third quarter of 2012, over 200,000 eco-cars had been sold locally
engines, tanks, other parts, and machinery for service stations of such vehicles.
“ A lively domestic vehicle market makes Thailand fertile ground for automotive investment. And as carmakers launch new models to meet rising demand, local auto parts producers are increasing capability to accommodate the upswing,” says the BOI.
According to Pattanapanchai, BOI support for investors includes an investment matchmaking program; 1-stop for visas and work permits – with work permits issued in three hours; a global sourcing program that links suppliers from around the world, access to a database supporting ASEAN producing, and interaction with other government agencies on behalf of investors.“ Thailand has the technology, the skills, the institutional support and the market that global automotive investors are looking for, she says. AI
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