Thailand, the ASEAN production hub for pick-up trucks and small cars, has been for some time now trying to position itself as a hub for green car production. Now, Bangkok Post reports that the government has pledged further investment privileges and full support for finance, R&D, human resources and infrastructure in the effort to promote Thailand as a hub for hybrid, electric and hydrogen vehicles.

Thai prime minister Prayut Chan-o-cha met with country CEOs from Toyota, Isuzu, Nissan and Honda earlier this week. The four Japanese car brands accounted for 58% of Thailand’s automotive shipments last year, totalling 1.25 million units worth US$17.58 billion, led by trucks and eco-cars. Including equipment and parts, total export value amounted to US$25.6 billion in 2015.

According to Chutima Bunyapraphasara, the permanent secretary for commerce, the PM ordered the industry ministry to team up with the finance, commerce, labour, natural resources and environment and transport ministries to map out details of supporting plans covering investment privileges, tax incentives and other benefits to continue drawing in investment from the auto sector. Related industries have also been ordered to jointly prepare the country’s automotive development roadmap for the next five and 20 years.

Mazda 2 Sedan Thailand 21

A sign of not standing still, Gen Prayut confirmed that Thailand will continue to support eco-car production, but urged players to apply higher technology and alternative energy, including biodiesel and ethanol. The government also pledged additional privileges for pick-up trucks that use biodiesel, in a push to support B20. The PM also encouraged the four Japanese CEOs to invest in setting up a battery production facilities.

Responding to this, the Japanese carmakers promised to continue investing in Thailand, and for future vehicles too if the government offers clear-cut policies, Chutima said. They also asked about Thailand’s current and future strategies to support car exports, particularly through more free trade agreements (FTAs).

It was previously reported that carmakers based in Thailand are keen for the country to join the Trans-Pacific Partnership (TPP) agreement, a US-led 12-nation trade pact that Malaysia is a part of.

thailand traffic

“At present, Thailand has yet to lose much competitiveness against four ASEAN countries (Brunei, Malaysia, Singapore and Vietnam) that joined the TPP. The pact will deliver a huge impact to Thailand once they develop their own automotive industries to support TPP members or Indonesia decides to join the trade pact,” said Pitak Pruittisarikorn, CEO of Honda Automobile Thailand, who added that only 70% of Thailand’s total production capacity of 2.9 million vehicles a year is currently being utilised.

While Thailand is not currently in the TPP, Chutima said the government has been proceeding with talks under the framework of existing FTA pacts, and new ones with the likes of Pakistan, Turkey, Russia and some countries in the Middle East and Africa.

All three major car producing countries in ASEAN – Thailand, Indonesia and Malaysia – have initiatives for eco-friendly vehicles, but ours is considered the most advanced for energy-efficient vehicles (EEVs), Frost & Sullivan VP for Asia-Pacific Vivek Vaidya told a seminar hosted by the Electric Vehicle Association of Thailand late last year.

Volvo and Mazda export cars from Malaysia to Thailand; both have benefited from EEV incentives

One good thing about the Malaysian package is that manufacturers can localise EEV production into a variety of car segments including hybrid and electric with small production volumes, it was noted.

Vaidya suggested that the Thai government push for hybrid and electric production by providing investment incentives, and not focus on production volume in the initial stage. Waiving import duties on CBU imported units and subsidising prices would be effective in the short term, he said.

Malaysia, ahead of the curve?