Office of Industrial Economics Ministry of Industryopac.tistr.or.th/Multimedia/Web/0032/wb0032062.pdf · The climate is tropical with long hours of sunshine and high humidity. There

March 2002AUTOMOTIVE INDUSTRY IN THAILAND

Ministry of IndustryOffice of Industrial Economics

AUTOMOTIVE INDUSTRY IN THAILANDSECTORAL INDUSTRIAL POLICY DIVISION I, OFFICE OF INDUSTRIAL ECONOMICS

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TABLE OF CONTENT

I COUNTRY IN A BRIEF 3

II THE AUTOMOTIVE INDUSTRY IN THE PAST 6

III CHANGES AFTER THE YEAR 2000 10

IV RELATED POLICIES & REGULATIONS 12

V INDUSTRY OVERVIEW 15

VI CURRENT SITUATION OF THE INDUSTRY 18

VII PROSPECTS FOR 2001 23

APPENDIX 24


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Automotive Industry in ThailandBy Office of Industrial Economics March 2002

I Country in a Brief

The Kingdom of Thailand is situated in the heart of Southeast Asia and viewed as agateway to Indochina. It is surrounded by Laos to the north and north east, Myanmar tothe north and west, Cambodia to the east and Malaysia to the south. Thailand covers theland area of 513,115 square kilometers. It extends approximately 1,640 kilometers fromNorth to South and 780 kilometers at its widest point from east to west. It has a coastlineof approximately 1,840 kilometers along the Gulf of Thailand and 865 kilometers alongthe Indian Ocean.

Thailand can be divided into five regions. The Northern region of Thailand, which is amountainous region, is characterized by natural forest ridges and deep, narrow andalluvial valleys. The leading city of this region is Chiang Mai. The Central region, thebasin of the Chao Phraya River, is a lush and fertile valley. It is the richest and mostextensive rice-producing area in the country and has often been called the "Rice Bowl ofAsia." The capital of Thailand, Bangkok, is located in this region. The Northeasternregion, called the Korat Plateau, is an arid region characterized by a rolling surface andundulating hills. Harsh climatic conditions often result in this region being subjected tofloods and droughts. The Eastern region, or eastern seaboard, is a prime location ofmany new industries. The Southern region is a hilly to mountainous area with thickvirgin forests and rich deposits of minerals and ores. This region is the center for theproduction of rubber and the cultivation of other tropical crops.

The climate is tropical with long hours of sunshine and high humidity. There are threeseasons which are Summer, Rainy, and Cool. The summer season starts from March toMay. The period from June to October is considered rainy season. The cool seasonstarts from November to February. The average temperature is 28 degree Celsius, andthe humidity ranges around 73 - 82 percent. The geographic and climatic conditionsmake the country suitable for cultivation of a wide range of tropical and semi-tropicalagricultural crops.

The country has a population of 62.2 million, of which around 10 million live in thecapital city, Bangkok. The major ethnic group is Thai, along with strong communitieswhose ethnic origins lie in China. Other minority groups include Malaysians,Kampucheans, Mon, Lao, India and various hill tribes. Buddhism, the national religion,is the professed faith of 90 percent of the population. There is total religious freedom,and all major religions can be found in practice. The national language spoken by almost100 percent of the population is Thai. English, a mandatory subject in public schools, iswidely spoken and understood, particularly in Bangkok and other major cities. VariousThai dialects are spoken in rural areas. Other languages include Chinese and Malay.

Thailand is constitutional monarchy, with His Majesty the King as Head of State. PrimeMinister is usually electeded from among the members of the House of Representatives.General elections are held at least every four years.


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Thailand total work force is approximately 33.2 Million (2000 est.). The employment isdivided into Agricultural (51.97%), Manufacturing (19.24%), and Services (28.79%).The minimum daily wages in the industrial areas are: 168 Baht for Phuket; 165 Baht forBangkok, Nakhon Pathom, Nontaburi, Pathum Thani, Samut Prakan and Samut Sakhon;148 Baht for Chonburi; 143 Baht for Chiang Mai, Nakhon Ratchasima, Phangnga,Ranong and Saraburi; 138 for Ang Thong; 137 for Chachoengsao; 135 for Sing Buri andNarathiwat; and 133 Baht for all other areas. The lower cost of labor and the moreplentiful supply are encouraging many labor-intensive industries to relocate to the lessdeveloped regions of the country.

The Thai population is highly educated. All Thai children are required to attend schoolbetween the age 7 and 141. A standard curriculum is taught at the primary and secondarylevels in both private and government schools. Thailand also has a well-developedhigher education program which includes 45 institutes of higher education throughoutthe country. The government budget spent for education is priority2. The governmentalso supports a continual education program in addition to the normal curriculum inpreparation for the expansion of high technological industrial development.

Thailand has electrical generating capacity of 23 GW and plan to increase to 44 GW by2011. There are also plans to increase the minimum power reserve from 15% to 25% toraise energy supply security. The supply is on the whole reliable, although in severestorms of the monsoon season, interruptions may occur, but usually not for long. Thewater supply is reliable, and running water is available in most areas of the country.

The quality of the communication network has improved beyond recognition over thepast few years, especially in Bangkok, with a bundle of fixed phone lines and moreconvenient international calls. Mobile telephones are easily available at reasonableprices. Getting on line is easier with much improved internet infrastructure. Theefficient and reliable postal services, including a global express courier service (EMS),are also available through out the nation.

Road transportation system in Thailand is generally considered one of the best in Asia.It accounts for approximately 90 percent of transportation in the country. The countryhas developed a solid 170,000 km. network of roads. The more than 25,000 km ofhighways link all provinces and serve as gateways to neighboring countries. InBangkok, over 100 km of expressway are also available to general traffic.

Thailand has seven international airports and more than 29 domestic airports. Thelargest airport, Don Muang, provides service to all major carriers in the world. It handlesmore than 17 million international and domestic passengers a year. These volumes areexpected to expand over 100% by the end of the decade. Major air transportationinfrastructure projects include the Second Bangkok International Airport and the HeavyAircraft Maintenance Centers. There are also various other projects including theexpansion of existing international and domestic airports as well as the development ofnew airports in many provinces.

1 The compulsory education is being changed from 6 to 12 years.2 Universal and free public education is compulsory for a period of 6 years. Education accounts for 25% oftotal government expenditures.


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At present, there are five international ports in operation: Bangkok Port, Laem ChabangPort, Mab Ta Phut Port, Songkhla Port and Phuket Port. The two most important onesare Bangkok Port, which is a river port, and Laem Chabang Port, which is a deep seaport located in the Eastern Seabord. The Bangkok Commercial Port is the largest port inThailand and can handle approximately 14 millions tons per year.

The State Railway of Thailand has the rail network of approximately 4,000 km, andserves almost every region in the country. The Thai railway system also links with theMalaysian network to transport passengers to Kuala Lumpur and Singapore. There areplans to improve the railway service and network, with more double-track projects arebeing implemented. New railway lines which require more locomotives and rollingstocks are also planned.


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II The Automotive Industry in the Past

The automotive industry is viewed by most developing countries as a major factor fortheir goal of industrialization, often due to a considerable sum of its related businesses.Thailand is among those countries whose domestic auto-assembly has been supportedand encouraged. In fact, it could be said that the first industry, of which the Ministry ofIndustry has played a crucial role in the development, is the automotive industry. Suchdevelopment can be chronologically described as follows:

1961 The Thai automotive industry commenced, when Thai Motor Industry Companywas established. However, during that time, only a limited number of auto partswas domestically produced. This includes rubber parts, batteries and leaf springs.

1962 The Office of the Board of Investment, established under the 1962 InvestmentAct, approved a support for motorcycle assembly, starting in 1964.

1969 The Ministry of Industry became more directly involved in the automotiveindustry by forming the Automotive Industry Development Committee under theCabinet Resolution of August 26, 1969, in order to impose policies and measureswith an aim for auto-assembly establishment.

1971 The Ministry of Industry announced its first motorcycle-industry policy. Itrequired that, within two years, at least 50 percent of motorcycle-assemblingparts would be locally produced. Furthermore, the Ministry disallowed any newestablishment of motorcycle-assembly factories, on a permanent basis, for fiveyears, in order to encourage appropriate competitiveness.

1972 The Ministry of Industry announced a car-assembly policy. It introduced anabolishment of limitation of car models assembled domestically. Besides, itrequired assemblers, from January 1st, 1975, to use at least 25 % of locallyproduced contents. However, it later required that 15% of the parts used for truckand bus assembling (with chassis and engine) shall be locally produced. A 20%of local contents was also required for truck and bus assembling (with chassis andwindshield).

1977 The Ministry of Industry announced an amendment of the motorcycle industrypolicy. Amended requirement on the amount of assembled local contents wasthen introduced, i.e., the required quantity of local contents would be calculatedin fixed percentage (in the same manner as that of auto assembling.) In addition,it required domestic motorcycle-assembling factories to increase their percentageof local contents to 70% within 2 years. Furthermore, the preceding policy thatdisallowed the registration of any new motorcycle-assembling plants waseventually called off.

1978 The Ministry of Industry announced a standard matrix on percentage of localcontents required for passenger-car assembling. In addition, the requiredpercentage was raised from 25 to 50 percent within 5 years. It also disallowedany registration for new auto assembling plants. Likewise an assembly of anynew passenger-car series, other than the ones that had previously been assembled,was disallowed.


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In the same year, the Ministry of Commerce disallowed CBU3 imports of car andmotorcycle, in order to reduce national trade deficit.

1979 The Ministry of Industry announced a standard matrix on percentage of localcontents required for truck and bus assembling. It also required themanufacturers to increase their use of local parts by 5 percent per annum for thenext 5 years.

1980 The Automotive Development Committee announced regulations for van andjeep assembling. The passenger-car assembling policy was applied to vanassembling. Likewise, CBU imports of van and jeep also fall into the car-assembling policy, while CKD4 imports of jeep and van, called “chassis withwindshield” or “chassis with engine”, were in compliance with the truck-and-buspolicy. Seven required parts for truck assembling were later announced, namelyradiator, exhaust pipe set (including muffler), battery, leaf spring, tire and innertube, safety glass and drum brake.

1982 In 1981, the Industrial Restructuring Committee was formed, pursuant to the 5th

National Economic and Social Development Plan, which regarded the automotiveindustry as one of the sectors that needed to be restructured. The IndustrialRestructuring Committee and the Automotive Development Committee agreedthat the required percentage of local contents for passenger-car assemblingshould be limited at 45, as the locally-produced contents were much moreexpensive than the imported ones. Consequently, in 1982, the Ministry ofIndustry stated the 45% local content limitation on passenger-car assembling.The Ministry also announced that a compulsory part list might be applied to therest of the overall contents, apart from that of 45%, used for passenger-carassembling.

1984 The Ministry of Industry announced that, regarding passenger-car assembling,only up to 42 series could be produced by the whole industry, and only 2 modelswere allowed for each series. In addition, any series that was not assembledwould not be entitled to an assembling-concession renewal, and there would beno replacement concession of those series in order to reduce the number ofproduced passenger-car series. The Ministry also required domestically producedcars to use exhaust-pipe systems certified by Thailand Industrial StandardsInstitute. The objectives were to reduce pollution, to upgrade quality andcapability of domestic cars, and to enhance the country’s economic benefit.Annual local content list for passenger-car assembling for 1986-1988 was alsoannounced, in order to increase the use of identical parts, which would result in adecrease in parts-manufacturing capital.

The Ministry of Industry also announced a motorcycle policy concerning a list ofcompulsory parts in addition to the existing policy.

3 Completely Build Up unit4 Completely Knock Down set of parts for auto assembling


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1985 The Ministry of Industry announced annual lists of required local contents forpickup assembling for 1986-1988 in order to comply with passenger-car policy.

1986 The Automotive Development Committee replaced the annual lists of therequired local contents for passenger-car assembling by Parts List A and PartsList B. Part List A was compulsory to all assembling, while assemblers wereable to choose the rest from contents stated in Part List B. Total percentage oflocal contents in compliance with both List A and List B shall be at least 54 inorder to suit current economic recession. In addition, passenger-cars assembledfrom July 1st, 1987 were required to use locally produced engines in order topromote and support auto parts industry.

1989 The Automotive Development Committee required the assembly of pickups withengine capacity up to 2,500 cc. to use locally manufactured engines. TheMinistry of Industry announced a new passenger-car policy, the essence of whichconcerned disallowance of new assembly registration. Nevertheless, enlargementof plants was allowed. Domestic car assembling was required to use localcontents according to List A., in addition to that of List B which could be chosenfreely. The total amount of local contents used shall be at least 54 % of theoverall assembled parts, and total series assembled could be up to only 42, withup to 2 models allowed for each series.

1990 In order to comply with the current economic situation, international trade, andconsumer benefit, the Ministry of Industry announced an additional passenger-car-assembling policy to call off the limitation on the number of allowed series(42).

1991 The Ministry of Industry announced a new pickup truck policy. In essence, alllocal-contents lists shall be used, and a locally manufactured engine was requiredfor an assembly of a pickup truck with engine capacity more than 1,000 cc.Furthermore, the Cabinet launched a new structure for passenger-car tariffs,including a commercial tax. In fact, a tax burden for imported and domesticallyassembled cars was reduced. Consequently, it resulted in a car-price decrease,which was for consumers' benefit. In addition, the Ministry of Industry requiredthat an emission-reducing device in exhaust pipe was to be installed indomestically assembled cars with gasoline engine. The emission-reducing deviceshall comply with Thailand Industrial Standard Institute’s standards.

In the same year, the Ministry of Commerce announced an abolishment ofpassenger-car-import restriction, while an import of used car was prohibited.

1992 The Ministry of Industry required that any car equipped with emission-reducingdevices must install restricted filler pipe for unleaded gasoline.

1993 The Ministry of Industry stated that locally produced motorcycles were requiredto comply with motorcycle safety standards, especially regarding emission.

1994 The Ministry of Industry allowed any new registration of car-assembly plant inorder to increase investment and competitiveness on productivity in the industry.


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The Board of Investment Promotion granted rights and privileges concerning thePromoted Area Policy for automotive industry.

The Ministry of Finance allowed 50% special reduction on normal import duty,pursuant to the Brand-to-Brand Complementation Scheme (BBC Scheme.)

1996 The Ministry of Commerce eventually allowed free import of motorcycles.

1997 The local-parts requirements on motorcycle assembling were abolished.Nevertheless, those with engine capacity up to 150 cc. were required to uselocally manufactured engines.

The Ministry of Finance applied an excise tax of 3 percent on all types ofmotorcycles.

1998 The Cabinet agreed to abolish the local-content-requirement policies that havebeen applied on automotive assembling. The abolishment would be enforced byJanuary 1st, 2000.

The cabinet also agreed to revise the automotive-tariff, as proposed by theMinistry of Finance. The new automotive-tariff structure was effective onJanuary 1st, 2000.

The Ministry of Industry has established Thailand Automotive Institute (TAI) asthe principal organization responsible for supporting and promoting developmentof the Thai automotive industry, with the primary goal of enhancing globalcompetitiveness.

1999 The Ministry of Industry formally announced the abolishment of "local contentrequirement policies" that had been applied on automotive assembling since1972. This abolishment has been enforced since January 1st, 2000.

The Ministry of Finance formally announced the new automotive-tariff structureto supplement the abolishment of "local content requirement policies". This newstructure has been effective since January 1st, 2000.


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III Changes after the Year 2000

Over the past 30 years, the development of Thai automotive industry had been based on import-substitution policies. On the contrary, at present, the interest has shifted toward more liberalized policies to correspond with the current global trend. These include loosening tariff barriers, abolishing local content measures, promoting investments and exports, and also cooperating with international communities, such as ASEAN, APEC, and WTO. To be more specific, since January 1st 2000, the abolishment of the local-content-requirement policy that had been applied on automotive assembling since 1972, has been put to use. At the same time the revised automotive-tariff structure along with the CKD definition, intended to supplement the abolishment of the local-content-requirement policy, has also been enforced. This revised package is considered to be the country’s giant step toward the liberalization scheme. Nevertheless, systematic and step-by-step transition is much preferred so as to ensure that the local industries will have adequate amount of time to adapt themselves to the increasingly competitive environment.

The details of the new package could be described as follows.1. Automobile assemblers are no longer obligated to the minimum percentage of

locally manufactured parts that were previously required to be used in alllocally assembled automobiles.

2. The new “CKD definition”5 has been introduced. This definition is based onthe current practice in the auto-assembling industries to avoid any businessinterruption where possible. The CKD definition is intended to replace thetwo obsolete regulations, namely the Local Content Requirement and theCustoms Department Announcement No. 2/2542.The CKD definition aims toward:

a. Maintaining and increasing local value addedb. Retaining and creating jobs, as well as transferring skill and

technology, andc. Promoting investment by being consistent and fair among:

• New entries that have just started their investment and arelooking for a piece of local market share form those who havecame before, and

• Those companies that have established their market, haveinvested heavily, have been well prepared, and have beenoperated within the previous regulation for some time.

However, there might be an exception to the rule (on a case-by-case basis) forthose who can demonstrate their essentiality.

5 The “CKD Definition” specifies the characteristics of a CKD set to determine if it is allowed to receivethe special CKD tariff rate.


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3. The recently revised automotive tariff structure is based on the objective ofpromoting efficient developments of local auto industries while minimizingnegative effects on consumers. Therefore, while the CKD’s special tariff ratehas been raised, the Excise tax rates have been lowered in the attempt to keepthe cost to consumer unchanged. (Due to the difference in calculationmethods, a small change in the Excise tax rates can offset a larger change inthe Import tariff rates.)

As regard to the ASEAN Economic Cooperation, Thailand has given, and will continueto give, its support on the cooperation. As it is believed that the liberalization underAFTA and AICO schemes would create a large integrated market that would enhance thecompetitiveness of ASEAN’s exports and lower production costs through improvedeconomies of scale. Concerning the AFTA implementation, Thailand has reduceautomotive tariffs to 0-5% and has transferred all products from the TemporaryExclusion List, or TEL, into the Inclusion List, or IL, on January 1st, 2000. As forAICO, the National Authority has approved most submitted applications. This means allproducts under these applications can receive, or have already enjoyed, full AFTAtreatments.

Thailand has also introduced the new Excise Tax structure for the one-ton pickup truckand its derivatives. Depending on the type of final products, different tariff rates will beapplied. The new rates are ranging from 3 percent for standard pickup trucks, to 18percent for the so called “Pickup-Passenger Vehicle or PPV”.

In addition, a number of custom tariff rates for automotive sub-parts has also beenaltered. There are 74 tariff rates for automotive sub-parts that have been reduced to 10%.In addition, for 21 automotive sub-parts, which are necessary for producing seatbelts andairbags, their tariff rates have been reduced to 5%.

(See Table 3-1 in Section III “Auto Industry Policies” for more detail on tax and tariffrates.)


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IV Related Policies and Regulations

Current automotive policies are as follows:

1. The limitation of the number of automotive firms was abolished. Consequently, newautomotive companies enjoy free entry into the automotive industry.

2. The Board of Investment may grant rights and privileges for the production ofautomotive assemblies and automotive parts.

3. Incentive measures for automotive exports are as follows:

3.1 Tax reimbursement on imported materials for export production, as articlebis 19 of the Customs Act

3.2 Tax redemption on exported parts and vehicles, as announced by theMinistry of Finance

3.3 Tax reduction on imported materials, as regulated in article 30 of theInvestment Promotion Act, by redemption of import duty

3.4 Permission given in order to establish stock warehouse and import-taxexemption for imported materials

3.5 The Introduction of Export Promotion Zone (EPZ) in order to helpexporters on governmental procedures, including financial matters

3.6 Encouragement of cooperation among ASEAN countries, especially onindustrial matters such as AICO and BBC

3.7 Establishment of Free Trade Zone Area (FTZ) in order to support export-related investments in terms of customs procedures, including production,trade and services. The introduction of import-and-export tax exemption.

4. The Ministry of Industry announced emission and safety standards for automotiveproducts. These standards apply to both domestically produced and importedpassenger vehicles, commercial vehicles, motorcycles, as well as auto parts. Atpresent, all the compulsory standards are as follows:

4.1 TIS 370-2525 (1982): Liquefied petroleum gas cylinder for internal combustion enginesEffective Date: May 2, 1983

4.2 TIS 1040-2534 (1991): Two-stroke gasoline engine lubricating oilEffective Date: March 21, 1992

4.3 TIS 341-2528 (1985): Motorcycle exhaust mufflerEffective Date: June 7, 1994

Revised version (TIS 341-2543)Effective Date August 25, 2001

4.4 TIS 196-2536 (1993): Automotive safety glasses: laminated glassEffective Date: September 21, 1994


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4.5 TIS 197-2536 (1993): Automotive safety glasses: tempered glassEffective Date: September 21, 1994

4.6 TIS 198-2536 (1993): Automotive safety glasses: zone temperedglass

Effective Date: September 21, 1994

4.7 TIS 369-2539 (1996): Protective helmets for vehicle usersEffective Date: February 28, 1997

4.8 TIS 721-2539 (1996): Seat Belts for AutomobilesEffective Date: September 15, 1997

4.9 TIS 1295-2541 (1998): Heavy duty diesel-engine vehicles: safetyrequirements; emission from engine, level 3

Effective Date: May 23, 2000

4.10 TIS 1650-2541 (1998): Motorcycles: safety requirements; emissionfrom engines, level 4

Effective Date: July 30, 2001

4.11 TIS 1875-2542 (1999): Light duty diesel-engine vehicles: safetyrequirements; emission from engine, level 5

Effective Date: August 25, 2001

4.12 TIS 1870-2542 (1999): Gasoline-engine vehicles: safetyrequirements; emission from engine, level 6

Effective Date: August 25, 2001.

4 Tariffs on vehicles, including import duty, excise tax, municipal tax and value addedtax, are divided into two groups: assembled vehicles – Completely Built Up (CBU),and Completely Knock Down sets (CKDs) as shown in Table 3.1.

10/7/02

Harmonized System 4

Digits87.01 87.02 87.04 87.04

(87.05) 87.06

Chassis with Engine Chassis with Wind Shield

Pick-Up Passenger

Vehicle (PPV)

Big truck, Bus, Truck

tractor,

Special

purpose

truck

Pick Up, Passeng

er car, and

Blind

All type

CKD vs CBU CKD CBU CKD CBU CKD CBU CKD CBU CKD CBU CKD CBU CKD CBU CKD CBU CKD CBU CKD CBU CKD CBU CKD CBU

Import Duty 30% 30% 20% 40% 20% 40% 33% 80% 33% 80% 33% 80% 33% 80% 33% 60% 33% 60% 33% 60% 20% 40% 10% 20% 33% 30%

Number of Seats n/a n/a n/a n/a >10

seats>10

seats n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a

Engine Power (HP) n/a n/a n/a n/a >220 >220 n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a

Engine Capacity (cc.)

n/a n/a n/a n/a <=2400

>2400

<=2400

>2400

<=2400

>2400 and <=30

00

>3000

<=2400

>2400 and

<=3000

>3000 n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a

Excise Tax 3 - - - - 35% 41% - 35% 41% 48% - 29% - 18% - 12% - 3% - 18% - - - - -

VAT 7% 7% 7% 7% 7% 7% 7% 7% 7% 7% 7% 7% 7% 7% 7% 7% 7% 7% 7%Excise Tax after assembly (When

- - - - 35% 41% - 35% 41% 48% 29% - 18% - 12% - 3% - 18% - - - - - -

VAT (Sales Time) 7% 7% 7% 7% 7% 7% 7% 7% 7% 7% 7% 7% 7% 7% 7% 7% 7% 7% 7%

Remark:

1. "Standard Type" Pick-Up Trucks are those that meet the following specifications * CKD of chassis with winshield that was, later, assembMinimum Loading Capacity 1 ton - Pick Up is subjected to 3% Excise Tax"Bed Length" not less than "Passenger Compartment length" - Passenger Car is subject to an Excise Tax

Use Leaf-Spring Type Rear Suspension depending on its engine capacity and hor

2. "Light Pick-Up" TruckBed is suitable for load carrying2 wheels drive onlyMinimum Loading Capacity is greater than 50% of curb vehicle weightMaximum Loading Capacity is less than 1 ton

3. E/tax = [(CIF + I/D + Other fee)* E/Tax rate]/(1-1.1*E/Tax Rate)

Interior Tax = 10% of E/Tax(Will be calculated automatically when paying E/tax)

VAT = (CIF + I/D + Other fee + E/Tax + Interior Tax)*7%

87.03

Big Truck (Special Purpose

Truck with Cab)

7% 7%

--

7%

7%

7%

--

n/a n/a <=220

7%

7%

<=220

Truck Tractor Bus Glass Van (>=10 seats)

Passenger Car (various types) including

Jeep & Station Wagon

7%

7%

= 10 Seats = 10 Seats

n/a

-*

-

7%

Table 3-1. Automotive Tariff Structure(Custom tariff in harmonized system)

n/a

n/a

Types of Vehicles

n/a n/a

Off Road Vehicle (OPV) with

Double Cab

Pick-Up Truck (gross vehicle weight

<=4 tons)

Blind Van

Pick-Up Truck (gross vehicle weight

<=4 tons)

"Standard Type"1

and "Light Pick-Up"2

All Other Type


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V Industry Overview

Among ASEAN, Thailand has one of the largest automotive assembling capacity, andpossibly the highest quality parts manufacturing capability. These, combined with thegood domestic market size, market growth potential, stable political atmosphere, liberaltrade and investment policy, absence of ethnic conflicts, and the lack of "national carprogram", have made Thailand one of the most attractive country for automotiveinvestments. As the Thai auto industry has matured, the industry has grown from beingan import-substitution to become an export-oriented industry. At present, the automotiveindustry is Thailand's third largest industry, employing an estimated total workforce ofabout 200,000 employees, and establishing the total production capacity of more thanone million cars and trucks per year.

At the current market situation, locally assembled vehicles account for 95% of thedomestic market. The most popular type of automobile in the Thai market is the one-tonpickup truck. Sales of the pickup trucks account for more than one half of the overallvehicle market. And, as in many other ASEAN countries, Japanese-make automobileshave dominated the local auto market, with nearly 90% market share. The six bestselling automobiles in Thailand are Toyota, Isuzu, Nissan, Mitsubishi, Honda and Mazdarespectively. Most of existing vehicle manufacturers have increased their investments tofortify their business position in the Thai market. In recent years, Daimler Chrysler(Mercedes-Benz) and BMW have also increased their investment to gain completecontrol on local manufacturing and marketing operations. Moreover, some vehicle brandowners that have no local assembling operations are expected to officially introduce theirassembling plan to take advantage of the CKD duty. Also, numbers of new global partsmanufacturers are expected to establish their operations in the country.

Domestic Production and Joint Venture

The Thai auto part industry incorporates approximately 600 Original EquipmentManufacturers (OEMs) and Replacement Equipment Manufacturers (REMs) combined.Since around 80% of the country's overall auto assembling capacity belongs to Japanesemakers, most of these OEMs are mainly members of Japanese keiretsu groups supplyingtheir own customer base. These companies can be categorized into three groups: amember in Japanese family companies, a joint venture with Japanese technology owners,and a company having technical assistance or licensing agreements with Japanese firms.However, in recent year, many new investments from non-Japanese 1sttier suppliersentered the country. The majority of pure Thai (PT) companies are in the 2nd tier, 3rd tierand in the REM business.

According to the Japan Automobile Manufacturers Association (JAMA), quality ofautomotive parts in Thailand is rated the best among ASEAN countries. The local partmanufacturers supply approximately 80% of all the parts used for the assemble of pickuptrucks, approximately 55% for passenger cars and nearly 100% for motorcycle. Locallyproduced or assembled parts include engines, suspension control and spring, axles, hubs,propeller shaft, brakes, clutches, steering systems, body parts, electronic parts, airconditioning, tires, wheels, internal and external trim components and glass.


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In recent years, the number of parts manufacturers for non-Japanese assemblers hasincreased considerably as a result of Auto Alliance (Ford) and General Motorsestablishment in the Thai automotive industry. The American assemblers have brought anumber of their own 1st tier suppliers to Thailand. Although European assemblers haveentered the market earlier, they tend to have fewer local part suppliers due to their smallassembling volume. Thus, they tend to have a much higher import content and in-housepart manufacturing.

Technology Transfer and Development

Technology and new management strategy can be transferred efficiently from the parentcompany to the Joint Venture company (JV). Financial support from the parentcompany is common in the Joint Venture company. The supports are normally for hightechnology machines, research activities and development programs to continuouslyimprove products and production quality. Also, Joint Venture companies can takeadvantage from having very low interest funding from their parent company. However,management problems among partners in some cases might have led to a high-costproblem due to the higher expenses in management.

Some local part manufacturers have technical assistance agreement (TA) with foreigncompanies. Foreign companies offer technical support in which the agreement will bemade on a product-by-product basis. This technical assistance usually not covers anyfunding or management issue. Effective management style needs to be self developed bythe local company without any support from foreign companies. Management costs forthis kind of company is relatively cheaper than that of Joint Venture companies.

Pure Thai Companies are Thai manufacturers without any supports from any foreigncompany. Production technology and management style are originated within theorganization. Recently, many of the pure Thai companies have been transferred into JVand TA companies due to the financial crisis and inadequate technical capability. Someof the remaining pure Thai have opted for foreign technical support for helping themimprove their technical know-how. Pure Thai companies are appropriate formanufacturing parts for which high technology is not required. Costs in these companiesare relatively inexpensive due to the less-expensive production technology whichrequires cheaper machines, and lower salary for workers. However, managementproblems can sometimes make production cost higher. The quality of their productsmight be an issue in some cases. Although most of the PT companies do make goodquality products, some may not meet a global standard because of the outdatedtechnology and management problems. Nowadays, PT companies need to improve theirtechnical and research capabilities to meet the global market requirements, asmanufacturers tend to buy parts in a more complex module or a complete set. Theyshould also catch up with the information technology trend.

Market Access Factor

As the regulation that limitation of the number of automotive firms and the LocalContent Requirement Regulation were abolished, Thailand no longer has any specificmeasure set up to obstruct any entry of new companies or imported vehicles and


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components. However, imported vehicles and parts are required to meet safety andemission standards. Also, assemblers importing parts for local assembling are prohibitedfrom importing certain fully assembled system as part of their CKD imports, and arerequired to make certain that their imported parts are in compliance with the CKDDefinition6.

Regarding product quality, end users are the principal enforcer of products standardswhile intensified competition in the market is the forceful obstruction to market entry inThailand. For parts and components exporters to succeed in Thailand, they must meetthe international quality standards (ISO, QS) set by their potential clients who are mainlyglobal vehicle manufacturers.

On the import side, the majority of local importers have good knowledge and experiencein handling customs procedures, and it is in their best interest to advise foreignmanufacturers on the issue.

6 In order to be eligible for CKD import duties and for local assembling.


18

VI Current Situation of Automotive Industry in Thailand

As a result of the Asian economic turmoil, the automotive and auto parts industries weredramatically and continuously affected during the period of 1997-1998. The productionand sales in 1998 declined sharply, when compared with those in 1997. Yet, from 1999until 2001, there were signs of ongoing economic recovery. The domestic auto markethas gradually been enlarging due to strategic alliances between auto companies, andpartly due to the government’s promotion-and-support policies on automotive industry.

1. Production7

(1) Cars

There are 14 vehicle assemblers in Thailand with the total capacity of1,073,700 units per year.8

By reason of the economic improvement in addition to the government’sefforts and private’s business strategy adaptation, the automotive industry in2001 has distinctly proliferated when compared to that of crisis in 1998. Theproduction in the 2001 was 459,418 units, a 11.58% increase from theprevious year. This includes the growth of 60.68% in passenger cars. The2001 auto production growth is expected to continue at the comparableannual rate as that of the year 2000.

Total production volumes in 2000 and 1999 are 411,721 and 327,233 unitsrespectively, a significant increase of 25.82%.

(2) Motorcycles

There are 5 assemblers yielding the total annual production capacity of2,080,000 units per year9. The volumes produced in the 2001 and 2000 were1,209,995 and 1,125,723 units respectively. This represents a 7.49% increase.Moped motorcycles and sport motorcycles production were 94.63% and5.37% of total motorcycle produced in the 2001 respectively.

Total production amounts in 2000 and 1999 were 1,125,723 and 846,426units respectively, or a 32.99% increase.

7 See table A-38 See table A-19 See table A-2


19

(3) Auto parts

There are approximately 1,700 automotive parts suppliers in Thailand.About 700 of those are OEM suppliers and 1,000 are others. Locallyproduced parts include engines, suspension system, brakes, clutches, steeringwheels systems, body parts, electronic parts, accessories, tyres, plastics andglass, etc. It could be said that the production volume of the auto partsindustry has always correlated to that of the automotive industry. However,this may no longer be true, as the Local Content Requirement Regulation hasbeen abolished. Foreign investments in this industry are expected to belimited for the next couple of years.

Figure 6-1: Unit Production Volumes of Thai Automotive Industry from 1993 to 2001, excluding Motorcycles

144,449109,830127,242138,579112,04132,008 72,716 97,129

156,066245,903287,284

346,790357,802

223,243121,963

244,223299,435291,747

420,071525,680547,312

360,303

158,130

327,233411,721

459,418

434,001

0100,000200,000300,000400,000500,000600,000

1993 1994 1995 1996 1997 1998 1999 2000 2001 Year

Units

Passenger CarsPick-Up TrucksTotal

Figure 6-2: Unit Production Volumes of Motorcycles

1,122,6561,413,890

1,797,0721,437,794

1,081,044

600,497846,426

1,125,7231,209,995

0500,000

1,000,0001,500,000

2,000,000

1993 1994 1995 1996 1997 1998 1999 2000 2001Year

Unit


20

2. Sales10

(1) Cars

Sale in domestic market is on ongoing recovery from the economic crisis in1998. It had been growing in 2001, as indicated by the sale volume for theyear, which was 297,832 units, or a 13.59% increase when compared with262,189 units in the previous year. The sale can be classified into 2 types,namely passenger cars and commercial cars; 104,502 units of passenger carsand 168,639 units of one-ton pickup truck were sold in 2001, or a 25.75% and11.16 % increase respectively, when compared with those of 2000.

(2) Motorcycles

The domestic motorcycle market had been constantly growing during theperiod of 1993-1996; then, it was drastically shrunk, given the economiccrisis starting in 1997. This can be seen from the 1997 and 1998 salevolumes, which were 907,584 and 526,735 units respectively, or a 41.96%decrease. However, the sale volume in 1999 and in 2000 bounced back to598,541 and 788,854 units.

Motorcycles sale in 2001 totaled 900,925 units, a 14.21% increase from theprevious year. Four-stroke models were accounted for 82% market share withthe total of 735,527 units. The remaining of 165,398 units with 18% sharewere two-stroke models.

The family segment was accounted for 96.69% of all motorcycles with thetotal of 871,077 units, and the sport segment was 3.31% with 29,848 unitssold in 2001.

10 See table A-4


21

Figure 6-3: Unit Sale Volumes of Thai Automotive Industry from 1993 to 2001, excluding Motorcycles

174,162 155,670 163,371 172,730 132,06046,300 66,858 83,106 104,502

224,388 258,091323,813 327,663

188,32481,263 132,922 155,483 171,325

456,461 485,678571,580 589,126

363,156

144,065218,330 262,189 297,832

0

200,000

400,000

600,000

800,000

1993 1994 1995 1996 1997 1998 1999 2000 2001 Year

Unit

Passenger CarsPick-Up TrucksTotal

Figure 6-4: Unit Sale Volumes of Motorcycles

1,009,5651,246,3221,466,051

1,235,000907,584

526,735598,541788,854900,925

0500,000

1,000,0001,500,0002,000,000

1993 1994 1995 1996 1997 1998 1999 2000 2001 Year

Unit


22

3. Exports11

International auto giants have established their Thai manufacturing plants as strategicregional bases for their businesses in view of crucial advantages of Thailand beingthe largest and the most quality sources of auto parts in Southeast Asia. To reach theeconomies of scale, they not only increase production to serve the domestic market,but also to propel in exports. Thai automotive exporters have also enjoyedadvantages deriving from the devaluation of Baht. This has led to a strong increase inexport values of cars and auto parts.

The 2001 export of CBU was 175,299 units, a 14.70% rise when compared with thatin the previous year, and valued approximately 83,895 million Baht. The motorcycleexport (CBU &CKD) in 2001 was 272,301 units, a 1.89% up from that of 2000, andvalued 7,833 million Baht.

Major car export (CBU) markets were Belgium, Japan and Australia while car partswere mostly exported to Japan, Malaysia and South Africa. Vietnam, Cambodia,Laos, Philippines and Japan were those export markets for motorcycles and parts.

The expected amount of total car export in 2002 is 200,000 units, compared with175,299 units in the previous year.

11 See table A-5

Figure 6-5: Unit Export Volumes of Thai Automotive Industry from 1996 to 2001

14,020 42,218 67,857125,702 152,835 175,299177,635

244,546214,310

267,248 272,301

137,055

0

100,000

200,000

300,000

1996 1997 1998 1999 2000 2001 Year

Units

Cars (CBU)Motorcycles


23

4. Imports12

The quantity of car (CBU) imported in 2001 was 10,079 units, a 19.7% decreasewhen compared with that in the previous year. Parts and components of vehiclesimport value of 2001 was 70,662 million Baht, a 21.32% increase when comparedwith that of 2000.

The total amount of motorcycles imported in 2001 was 843 million Baht, which hadincreased by 8500% from that of 2000. The import of motorcycle parts andcomponents in 2001 was valued for 3,011 million Baht, risen by 6.83%, from that in2000.

VII Prospects for 2002

Continuously growth in terms of production and sales is expected for the Thaiautomotive industry in 2002. See projections for vehicles and motorcycles in the tablebelow.

Table 5-1: Projections for 2002 (in units)

Items Vehicles Motorcycles

1. Production 500,000 1,570,0002. Sales 330,000 960,0003. Exports 200,000 488,000

Source: Automotive Industry Association, Thailand.

12 See table A-6

Figure 6-6: Values of Thai Automotive Industry from 1994 to 2001

43,80237,364

18,524

3,898

19,617 18,035 13,843

30 12 41 49 13 7 10 843

44,798

010,00020,00030,00040,00050,000

1994 1995 1996 1997 1998 1999 2000 2001 Year

Millio

n Bah

t

Cars&TrucksMotorcycles


24

List of Tables

Table A-1. Production Capacity of Automotive Industry in 2002(excluding motorcycles)

Table A-2. Production Capacity of Motorcycle Industry in 2002

Table A-3. Unit Production Volumes of the Thai Automotive Industry

Table A-4. Unit Sales Volumes of the Thai Automotive Industry

Table A-5. Export Values of the Thai Automotive Industry

Table A-6. Import Values of the Thai Automotive Industry

APPENDIX

Table A-1 Production Capacity of Automotive Industry in 2002 (excluding motorcycles).

Rank Assembly Plants Units Production Capacity Share1 Toyota Motor (Thailand) Co.,Ltd. 240,000 22.35%2 MMC Sittipol Co.,Ltd. 190,200 17.71%3 Isuzu Motors (Thailand) Co.,Ltd. 180,000 16.76%4 AutoAlliance (Thailand) Co.,Ltd. 135,000 12.57%5 Siam Nissan Automobile Co.,Ltd. 124,000 11.55%6 Honda Automobile Co,.Ltd. 60,000 5.59%7 General Motors (Thailand) Co., Ltd 40,000 3.73%8 Hino Motors (Thailand) Ltd. 28,800 2.68%9 Bangchan General Assembly Co.,Ltd. 20,000 1.86%

10 Thonburi Automotive Assembly Co.,Ltd. 18,100 1.69%11 Y.M.C Assembly Co.,Ltd. 12,000 1.12%12 BMW Manufacturing (Thailand) Co., Ltd. 10,000 0.93%13 Thai Rung Union Car Public Co.,Ltd. 9,600 0.89%14 Thai-Swedish Assembly Co.,Ltd. 6,000 0.56%

Total 1,073,700 100.00%Source: Office of Industrial Economics, Ministry of Industry.

Table A-2 Production Capacity of Motorcycle Industry in 2002

Assembly Plants Units Production Capacity Share1. Thai Honda Manufacturing Co., Ltd. 850,000 40.87%2. Thai Suzuki Motor Co.,Ltd. 550,000 26.44%3. Siam Yamaha Co., Ltd. 420,000 20.19%4. Thai Kawasaki Co.,Ltd. 200,000 9.62%5. International Vehicle Co.,Ltd. 60,000 2.88% Total 2,080,000 100.00%

Source: Office of Industrial Economics, Ministry of Industry

Table A-3 Production Volumes of the Thai Automotive Industry from 1993 to 2001 (in units)Types of Vehicles 1993 1994 1995 1996 1997 1998 1999 2000 2001 Growth

2001/2000Passenger Cars 144,449 109,830 127,242 138,579 112,041 32,008 72,716 97,129 156,066 60.68%Pick-Up Trucks1 245,903 287,284 346,790 357,802 223,243 121,963 244,223 299,435 291,747 -2.57%Vans, Micro-Buses, and OPVs2 1,770 1,738 1,625 3,639 1,977 2,010 5,822 5,960 4,621 -22.47%Buses 1,056 1,146 1,726 609 554 577 81 0 271Medium and Heavy Trucks 26,893 34,003 48,297 46,683 22,488 1,572 4,391 9,197 6,713 -27.01%Motorcycles 1,122,656 1,413,890 1,797,072 1,437,794 1,081,044 600,497 846,426 1,125,723 1,209,995 7.49%Total excluding Motorcycles 420,071 434,001 525,680 547,312 360,303 158,130 327,233 411,721 459,418 11.58%Total 1,542,727 1,847,891 2,322,752 1,985,106 1,441,347 758,627 1,173,659 1,537,444 1,669,413 8.58%Source: The Federation of Thai IndustriesNotes: 1 Pick-Up Truck is truck whose maximum loading capacity is 1 ton or less. 2 Vans and micro buses have been included in OPV since 1996.

Table A-4 Sales Volume of the Thai Automotive Industry from 1993 to 2001 (in units)Types of Vehicles 1993 1994 1995 1996 1997 1998 1999 2000 2001 Growth

2001/2000Passenger Cars 174,162 155,670 163,371 172,730 132,060 46,300 66,858 83,106 104,502 25.75%Pick-Up Trucks1 224,388 258,091 323,813 327,663 188,324 81,263 132,922 155,483 171,325 10.19%Vans, Micro-Buses 11,727 12,672 12,425 12,633 8,353 2,792 4,167 6,492 6,582 1.39%Four Wheel Drive - - - - - - 7,199 7,649 6,370 -16.72%2-4 Ton Trucks 12,717 14,139 16,383 16,683 9,021 2,838 3,750 4,655 4,655 0.00%Heavy Trucks 15,573 22,312 31,766 31,814 11,275 3,756 3,434 4,804 4,398 -8.45%Other Vehicles 17,894 22,794 23,822 27,603 14,123 7,116 - - -Motorcycles 1,009,565 1,246,322 1,466,051 1,235,000 907,584 526,735 598,541 788,854 900,925 14.21%Total Excluding Motorcycles 456,461 485,678 571,580 589,126 363,156 144,065 218,330 262,189 297,832 13.59%Total 1,466,026 1,732,000 2,037,631 1,824,126 1,270,740 670,800 816,871 1,051,043 1,198,757 14.05%Source : The Federation of Thai IndustriesNotes: 1 Pick-Up Truck is truck whose maximum loading capacity is 1 ton or less.

Table A-5 Export Values of the Thai Automotive Industry from 1994 to 2001 (in million baht)Types of Vehicles 1996 1997 1998 1999 2000 2001 Growth

2001/2000Vehicles (in units) 14,020 42,218 67,857 125,702 152,835 175,299 14.70%Vehicles 4,253 16,227 28,126 50,187 63,349 83,895 32.43%OEM Component Part 602 845 2,288 3,679 9,531 11,749 23.26%Motorcycles (in units) 177,635 137,055 244,546 214,310 267,248 272,301 1.89%Motorcycles 5,311 4,879 8,440 6,330 7,421 7,833 5.56%OEM and Parts of Motorcycles 1609.24 2,169 1,023 2,012 3,180 4,162 30.85%Total 11,775 24,120 39,877 62,208 83,482 107,638 28.94%Source : The Federation of Thai Industries

Table A-6. Import Values of the Thai Automotive Industry from 1994-2001 (in million baht)Types of Vehicles 1994 1995 1996 1997 1998 1999 2000 2001 Growth

2001/2000Vehicles (Passenger Cars, Trucks, Buses) 43,802 44,798 37,364 18,524 3,898 19,617 18,035 13,843 -23.24%Parts and Components of Vehicles 50,040 75,683 78,108 43,799 12,095 27,546 58,243 70,662 21.32%Motorcycles 30 12 41 49 13 7 10 843 8500.00%Parts and Components of Motorcycles 7,201 9,348 6,318 3,563 1,877 1,892 2,819 3,011 6.83%Total 101,073 129,842 121,831 65,934 17,882 49,061 79,106 88,359 11.70%Source: Department of Commercial Economics.

AUTOMOTIVE INDUSTRY IN THAILAND 25

Board of Investment (BOI) Incentive

Regarding the investment incentives, the BOI has made adjustment to thezoning system. Promoted projects locating in these Zones may receiveadditional incentives, including further tax and duty reductions, as well asallowances for infrastructure investments. There are three zones as follows:

Zone 1 includes Bangkok, Samut Prakan,Samut Sakhon, Nakhon Pathom,Nonhtaburi and Pathum Thani (Bangkok and 5 provinces).

Zone 2 includes Ang Thong, Ayutthaya, Chachoengsao, Chon Buri,Kanchanaburi, Nakhon Nayok, Phuket, Ratchaburi, Rayong, SamutSongkhram, Saraburi and Suphanburi (12 provinces).

Zone 3 encompasses the remaining 58 provinces.

Projects in Zone 1 shall be granted:1. 50 per cent reduction of import duty on machinery that is subject to import

duty of not less than 10 per cent;2. Corporate income tax exemption for 3 years for projects located within

industrial estates or promoted industrial zones, provided that such a projectwith capital investment of 10 million baht or more (excluding cost of land andworkng capital) obtains ISO 9000 or similar international standard certificationwithin 2 years from its start-up date, otherwise the corporate income taxexemption will be reduced by 1 year;

3. Exemption of import duty on raw or essential materials used in themanufacturing of export products for 1 year.

Projects in Zone 2 shall be granted:1. 50 per cent reduction of import duty on machinery that is subject to import

duty of not less than 10 per cent;2. Corporate income tax exemption for 3 years, increased to 5 years for projects

located within industrial estates or promoted industrial zones, provided thatsuch a project with capital investment of 10 million baht or more (excludingcost of land and working capital) obtains ISO 9000 or similar internationalstandard certification within 2 years from its start-up date, otherwise thecorporate income tax exemption will be reduced by 1 year;

3. Exemption of import duty on raw or essential materials used in themanufacturing of export products for 1 year.

Projects in Zone 3 shall be granted:1. Exemption of import duty on machinery;2. Corporate income tax exemption for 8 years provided that a project with

capital investment of 10 million baht or more (excluding cost of land andworking capital) obtains ISO 9000 or similar international standardcertification within 2 years from its start-up-date; otherwise, the corporateincome tax exemption will be reduced by 1 year;

3. Exemption of import duty exemption on raw or essential materials used in themanufacturing of export products for 5 years.

AUTOMOTIVE

Projects located in one of the following 40 provinces of Zone 3: Chai Nat,Chaiyaphum, Chanthaburi, Chiang Mai, Chiang Rai, Chumphon, KamphaengPhet, Khon Kaen, Krabi, Lamphang, Lamphun, Loei, Lop Buri, Mae Hong Son,Mukdahan, Nakhon Ratchasima, Nakhon Sawan, Nakhon Si Thammarat, NongKhai, Phangnga, Phattalung, Phetchabun, Phetchaburi, Phitsanulok, Pichit,Prachin Buri, Prachuab Khiri Khan, Ranong, Sa Kaew, Sing Buri, Songkhla,Sukhothai, Surat Thani, Tak, Trang, Trat, Udon Thani, Ubon Ratchathani,Uthai Thani, and Uttaradit, shall be granted Zone 3 tax and duty privilegesand further privileges, as follows:(1) A project located within industrial estates or promoted industrial zones isentitled to the following privileges:

(1.1) 50 per cent reduction of corporate income tax for 5 years after theexemption period;(1.2) Double deduction from taxable income of transportation,electricity and water costs for 10 years from the date of first revenuederived from promoted activity;

(2) For a project located outside industrial estates or promoted industrial zones,a deduction can be made from net profit of 25 per cent of the project'sinfrastructure installation or construction cost for 10 years from the date of firstsales, and net profit for one or more years of any year can be chosen for suchdeduction. The deduction is additional to normal depreciation.

Projects located in one of the following 18 provinces: Amnat Charoen, BuriRam, Kalasin, Maha Sarakham, Nakhon Phanom, Nan, Narathiwat, NongBualamphu, Pattani, Phayao, Phrae, Roi Et, Sakhon Nakhon, Sathun, Si SaKet, Surin, Yasothon, and Yala shall be granted Zone 3 tax and duty privilegesand further privileges as follows:(1) 50 per cent reduction of corporate income tax for 5 years after theexemption period;(2) Double deduction from taxable income of transportation, electricity andwater costs for 10 years from the date of first revenue derived from promotedactivities;(3) Deduction can be made from net profit of 25 per cent of the project'sinfrastructure installation or construction cost for 10 years from the date of firstsales, and net profit for one or more years of any year can be chosen for suchdeduction. The deduction is additional to normal depreciation.

INDUSTRY IN THAILAND 26

tippatai

Source : Sectoral Industrial Policy Division 1 Tel. 0-2202-4367

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