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Mon, Mar 25, 2002 - Page 21 News List

Thailand carves out an auto niche

CARMAKERS Bangkok will host the region's second-largest auto show this week as the Southeast Asian country gradually establishes its car-building industry

AFP , BANGKOK

With Asia's auto market in full expansion mode, Thailand is cementing its status as the "Detroit of Southeast Asia" -- an export-focused manufacturing platform for the world's top carmakers.

This week the Thai capital will host the 23rd Bangkok International Motor Show, Asia's second-largest auto fair after the Tokyo show.

Organizers are expecting some 1.5 million people to visit Bangkok's International Trade and Exhibition Center for the March 25-April 7 event which will involve 130 companies from 11 countries.

Despite the after-effects of the 1997 economic crisis, car sales are showing impressive growth in Southeast Asia, rising 8 percent last year in its four main markets -- Indonesia, Malaysia, the Philippines and Thailand.

Some 1.07 million units were sold in the four countries last year, according to the Bangkok-based Automotive Resources Asia institute.

In Thailand, domestic sales leapt an astonishing 40 percent over the first two months of this year compared to the same period last year.

With 297,000 units sold last year, the industry is tipping a 15 percent increase this year, with Japanese manufacturers' models continuing to maintain their stranglehold and a 90-plus percent market share.

But despite its healthy domestic sales figures, Thailand's real significance lies in its status as a production platform aimed at supplying regional markets.

Japanese automakers Toyota and Nissan pioneered the industry in the 1960s and 1970s, helping establish an auto-making industrial belt in the provinces around Bangkok.

They were joined in the 1990s by American firms General Motors and Ford, with BMW heralding the European presence.

Among the factors that lured them were Thailand's central geographical position, good infrastructure, generous tax and legal incentives, and a plentiful supply of equipment and spare parts.

It was a winning combination that has given the kingdom the competitive edge over its neighbors in the Association of Southeast Asian Nations (ASEAN) as the group moves to establish a common market.

The ASEAN Free Trade Area (AFTA) which came into force on January 1 envisages a tax reduction from five to zero percent on 85 percent of goods traded between Brunei, Indonesia, Malaysia, the Philippines, Singapore and Thailand.

Malaysia, anxious to protect its Proton national car, secured an extension that exempts it from the new tax structure until 2005.

"Thailand's status as the region's automobile centre is confirmed," says Bangkok-based industry consultant Eric Durand.

"The manufacturers want to consolidate their presence here from a regional point of view."

Industry sources say Toyota will shortly announce a colossal 27 billion baht (US$627 million) investment to establish one of its major worldwide production centers for pick-up trucks in the Bangkok region.

Some 140,000 units could be assembled there annually.

The decision is in line with a trend started in 2000 by Ford and and its partner Mazda, as well as Mitsubishi, which have all shifted to Thailand production of the pick-up, an extremely popular model in Southeast Asia.

General Motors is due in mid-2003 to begin production of a pick-up for its Japanese partner Isuzu at its ultra-modern factory of Rayong, southeast of the capital. Some 45,000 units are due to be exported to the region annually.

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