Project work is very essential part of MBA, and project work endorses the practical work of the students. As a part of curriculum of Gujarat Technological University (GTU) in second year the management students are required to prepare a Global Country Report on Particular Country by selecting a specific industry which helps students to develop knowledge regarding particular country and the conditions which are prevailing in the country can also be known with the help of this report.
In this project we worked in a group of six students and worked on the specific industry of a particular country. In which we studied different type of sectors and overall market conditions which are prevailing in the market of Thailand. The project was helpful in knowing the actual market condition of the Automobile Business and the opportunity in the business.
The project is based on the up-to-date detail regarding the Automobile industry of Thailand. In spite of our best efforts there may be errors or omissions and commissions, which may please be excused.
ACKNOWLEDGMENT
Apart from the efforts of the student, the success of any project depends largely on the encouragement and guidelines of many others. We would like to take this opportunity to express our gratitude to the people who have been instrumental in the successful completion of this project.
We would like to show our greatest admiration to S.V. Institute of Management, for allowing us to practice a project. We would like to show a feel of gratitude towards Prof. Mital Thakor (Assistant Professor) for being a support to our project and for guiding us in throughout the project, without whose support the project was powerless to accomplish.
We are also very thankful to the other teaching & non-teaching staff of the institute for extended their help; co-operation and support which have greatly ease our work and made our report unproblematic.
We would like to thank our group members who equally participated in the completion of project and had a team spirit. We would like to express a sense of gratitude and love to beloved parents for their manual support, strength and help for everything.
At Last but not least we would like to thank all those who helped directly or indirectly for preparation of this Global Country Report, their efforts have not gone unnoticed.
Thanks for being there.
EXECUTIVE SUMMARY
This report containing in two parts: - the one part is containing Import and Export of Thailand and another part is containing analysis of automobile industry.
We have begun with understanding the Import and Export of the Thailand in detail. In the Import and Export we have analyzed about foreign investment, trade restriction and Transportation and Telecommunications. In this report the data relating to import export is of last five years.
In Thailand foreign investment has been segregated in to three zones. Each zone has different import and export duties category. Government has imposed some restrictions on import and export to control the economy.
The Second part of this country report containing automobile Industry Analysis of Thailand. In the automobile industry we have
INDEX
Sr. No.
Title
Page No.
I
Preface
II
Acknowledgement
III
Executive Summary
1
Import and Export
1.1
Thailand's Export & Import at a Glance
1
1.2
Foreign Investment
3
1.3
Trade Restriction
7
1.4
Transportation and Telecommunications
9
2
Automobile Industry
Overview of Thailand
11
2.1
List of Companies In Automobile Industry
11
2.2
GDP Contribution
11
2.3
Labor Force Contribution
11
2.4
Raw Material Available
11
2.5
Supplier Details
12
2.6
Political Factor Effect
12
2.7
Economical Factor Effect
12
2.8
Culture Factor Effect
12
2.9
Technological Factor Effect
12
2.10
Environmental Factor Effect
13
2.11
Legal Factor Effects
13
2.12
Import and Export Restriction From Government
13
2.13
Present Position and Trend of Business with India
13
2.14
Trade Norms of Indian Govt.
14
2.15
Trade Barriers
14
2.16
Potential for Import/ Export in India
15
2.17
Presence Gap in Existing Market
15
2.18
Business Opportunity in Future
15
2.19
Conclusion
16
Ch. 1 IMPORT AND EXPORT
Thailand's EXPORT AND IMPORT at a Glance
Overview of Export
Exports have been the prime mover in Thailand's drive towards prosperity. In 1972, the first year the government shifted toward export promotion as a core policy, they accounted for only 13% of the country's GDP. By 1987, the ratio had risen to 23% and by 1998, it was 50%. Thailand has long been famous as an exporter of food and tradition commodities. The government's initiatives to promote foreign investments, improved business infrastructures and emerging local entrepreneurs have helped Thailand to expand beyond its traditional export patterns. Large investments from multi-nationals have helped Thailand to become an important Southeast Asian production center for many manufacture of computers, electronic integrated circuits, automobiles, auto-parts, air conditioners etc. Thailand is the No 1 rice exporter in the world and the only, net food exporter in Asia. Thailand leads the world in exports of tapioca, rubber, canned pineapples and frozen shrimp while being a major player in sugar, corn and poultry.
In 1996-97, exports are decreasing due to lower cost competitors such as India, China, and Vietnam in low-end labor intensive manufacturing. It increased in 1999, showing a 4% gain over the previous year with strong gains made in automobiles and parts, electrical circuits and plastic industries. Agriculture based products did not fare as well with low commodity prices affecting exports of rice, rubber, seafood and tapioca. [1]
Total value of Exports of Thailand is US$191.3 billion in 2010.
Primary exports are textiles and footwear, fishery products, rice, rubber, Jewellery, automobiles, computers and parts, electrical appliances etc.
Mainly exports partners are US (10.9%), China (10.6%), Japan (10.3%) out of total exports.
Imports
Total value of imports is US$156.9billion.
Primary imports are capital goods, raw-materials, consumer's goods, fuels etc.
Primary imports partners are Japan (18.7%), China (12.7%), Malaysia (6.4%).
Foreign Trade in Figures
Foreign trade in USD
Foreign trade indicators
2007
2008
2009
2010
2011
Imports of goods
139966
179225
133668
182400
228498
Exports of goods
153867
177778
152422
195319
228822
Imports of services
38173
46033
37541
44592
50490
Export of services
30124
33056
29677
34058
40484
Source: WTO - World Trade Organization - Last Available Data. [2]
Export-import data of Thailand
Sr. No.
Year
2007-2008
2008-2009
2009-2010
2010-2011
2011-2012
1
EXPORT
727,877.20
872,399.50
822,762.26
1,034,625.66
1,425,353.49
2
%Growth
19.86
-5.69
25.75
37.77
3
India's Total Export
65,586,352.18
84,075,505.87
84,553,364.38
114,292,192.18
146,595,939.96
4
%Growth
28.19
0.57
35.17
28.26
5
%Share
1.11
1.04
0.97
0.91
0.97
6
IMPORT
926,400.41
1,235,265.25
1,388,850.94
1,945,991.14
2,578,747.79
7
%Growth
33.34
12.43
40.12
32.52
8
India's Total Import
101,231,169.93
137,443,555.45
136,373,554.76
168,346,695.57
234,546,324.45
9
%Growth
35.77
-0.78
23.45
39.32
10
%Share
0.92
0.9
1.02
1.16
1.1
11
TOTAL TRADE
1,654,277.61
2,107,664.75
2,211,613.20
2,980,616.80
4,004,101.27
12
%Growth
27.41
4.93
34.77
34.34
13
India's Total Trade
166,817,522.10
221,519,061.32
220,926,919.14
282,638,887.75
381,142,264.41
14
%Growth
32.79
-0.27
27.93
34.85
15
%Share
0.99
0.95
1
1.05
1.05
16
TRADE BALANCE
17
India's Trade Balance
-35,644,817.75
-53,368,049.58
-51,820,190.38
-54,054,503.39
-87,950,384.49
Note: The country's total imports (S.No.6) since 2000-2001 does not include import of Petroleum Products (27100093) and Crude Oil (27090000). [3]
1.2 Foreign Investment
Overview
Thailand's government maintains an open, market-oriented economy and encourages foreign direct investment as a mean of promoting economic development, employment and technology transfer. Foreign investment in Thailand significantly influence the bounty economic growth of the last 15 years, spurring Thailand's transformation from an agriculture-based economy, to one balanced with industry and manufacturing.
The government promotes foreign investment in Thailand through the board of investment, which was established in 1977. The Boy lists seven categories of economic actives, covering hundreds of types of business that are eligible for investment incentives. Potential investors who meet any or all following criteria are eligible for boy incentives.
significantly strengthen Thailand's balance of payments position, especially through production for export
support the development of the country's resources
increase employment
locate operations in provinces outside the Bangkok metropolitan area
conserve energy or replace imported energy supplies
establish or develop industries that form the base for further technological supplies
are considered important and necessary by the government
Many aspect of Thailand's economy have slowed considerably since the economic meltdown, including foreign investment. The value of projects approved by the BOI in 1997 was us$ 9.2 billion, falling 6.4 billion in 1998 and reduces further the following year to 4.2 billion. Leading foreign investors in Thailand include Japan, the USA, the Singapore, the UK and Netherlands.
Industrial estate focus
Thailand has created a network of industrial estates, which operate as free trade Zones, in order to promote export, foreign investment and economic decentralization from Bangkok. The industrial Estate Authority of Thailand, which is attached to the ministry of industry and whose adjective is to ensure orderly planned industrialization, administrates the numerous estates in the kingdom.
There are mainly two categories of estate with the first being general industrial zone, which is the area reserved for the location of industries manufacturing for domestic and / or export consumption. The other is export processing zone, which is the area reserved for location of industries manufacturing
Firm located in an EPZ or GIZ received benefit that include
Corporate tax exemption
Reduction or exception of import duties on machinery or materials used in factory manufacturing.
Permission to own land
Permission to use foreign consultants, skilled technician and exports
EPZ's will usually contain a customs clearing house fast clearance of good
The extent of the benefits grated toa company operating in an EPZ or GIZ depend upon the area of the country it is located in. Thailand Board of investment created three investment promotion zone in the country with projects I each zone receiving additional incentives, tax and duty reduction as well as allowances for infrastructure investment.
Zone 1 - includes Bangkok, Samut Prakan, Samut sahon , Nakhon patham, Nothaburi and Pathum thami.
Zone 2- include samut sangkhra, ratchaburi, kanchanabari ,suphanburi anghong, ayutthaya, saraburi. Saraburi, nakhon nayok, chachoengsao, and chonburi (10 provinces)
Zone 3: encompasses the remaining 61 provinces plus laem chabang industrial estate
For project in zone1
NO TAX Exception or tax reduction on machinery, except project which export not less than 80% of total sales or locate their factories in industrial estate or promoted industrial zones. Such project will receive a 50% import duty reduction on machinery which is notion include in the tariff reduction notification of the ministry of finance and which is to import duty greater than to10%.
No corporate income tax exemption, except for project which export not less than 80% of total sales and located their factories in industrial estate or promoted industrial zones, in which case a three year exception will be granted.
Exception from import duties on raw or essential material used in export products for a period of one year.
For project in zone 2
50% import duty reduction on machinery, which is not include in the tariff reduction notification of the ministry of finance and which is subject to import duty greater than or equal to 10%
Exception from import duties paid on raw essential material used in export products for a period of one year
For project zone 3
Exception from import duties paid on machinery
Corporate income tax exception for 8 year.
Exemption from impart duties on raw material used in products for a period of 5 years
75% reduction of import duty on raw materials used in production for domestic sales
For 5 year , renewable on an annual basis , provided that raw or essential material comparable in quality are not being produced or do not originate within the kingdom in sufficient quantity to be acquire for used in such activity
Special privileges are granted as follows:
A reduction in corporate income taxes paid by 50%, available for 5 years after the exemption period.
Double deduction from the taxable income of water, electricity, and transport costs for 10 years from the date of first sales.
Deduction from net profit of 25% of the costs of installation or construction of the project's infrastructure facilities is given.
Special privileges are granted as follows
A reduction in corporate income tax paid by 50%, available for 5 years after the exemption period.
Double deduction from the taxable income of water, electricity, and transport costs for 10 years from the date of first sales
Deduction from net profit 25% of cost of installation or constructionof the project's infrastructure facilities is given
Restricted Occupations for Foreigners
Restricted occupations for foreigners
labor
Work in agriculture. Animal breeding , forestry, fishery or general farm supervision
masonry , carpentry or other construction work
wood carving
driving motor vehicle or non-motorized carrier ,except for piloting international aircraft
Shot attending ant
Auctioneering
Gem cutting and polishing
Hair cutting ,hair dressing and beautician work
Hand weaving
Mat weaving or making from reed rattan kenaf straw or baboon pulp
Manufacture of manual fibrous paper
Manufacture of lacquer ware
Thai musical instrument production
Manufacture of nielloware
Goldsmith , silversmith and other precious metal work
The doll making
Hat making
Manufacture of mattresses and padded blankets
Alms bowl making
Manual skill product
Shoemaking
Paper and cloth umbrella fabrication
Hawking business
Tourist guide or tour organizing agency
Architectural work
Civil engineering work
1.3 Trade Restriction
Import Regulation by Thailand custom
Free import
For over 20 year olds:
200 cigarettes or 250gm cigars 250gm of tobacco
1L of alcohol
Non-commercial amount of gifts and other items for personal use of up to 10,000 local currency (Baht)
Prohibited
Narcotics and other controlled substances
Pornography
Counterfeit items
Goods with Thai flag on them
Fake Royal or other Official seals
Copyright infringing items
Local currency
Restricted
Live animals - health certificate required along with complete and valid inoculations. Contact nearest embassy to obtain permission.
Plants, foodstuff and seeds- health certificate require. Check with the nearest embassy.
Weaponry and ammunition - permission obtainable from Ministry of Interior. Check with the nearest embassy.
Medication
Foreign currency - any amounts need to be declared. [4]
Export Regulations by Thailand customs
Prohibited
Narcotics
Pornography
Counterfeit items
Goods with Thai flag
Fake Royal or other Official seals
Restricted
Foreign currency - up to the amount declared upon arrival [5]
1.4 Transportation and Telecommunications
Transportation
Overview: Where topography allows it, Thailand has an extensive network of roads and railroads. Rapid transit is burgeoning in an otherwise gridlocked Bangkok. Tourism and improved economic development led Bangkok to become a major regional air hub. New technology development has brought some improvements to the nation's telecommunications network.
Roads: Estimates vary on the length of roads in Thailand. According to a U.S. government estimate in 2000, Thailand had 57,403 kilometers of roads, of which 56,542 kilometers were paved and 861 kilometers, unpaved. Other sources indicate a lower total of fewer than 45,000 kilometers. Streets in Bangkok are frequently gridlocked, with an overabundance of motor vehicles flowing into the central city via expressways.
Railroads: Railroads are operated under the auspices of the State Railway of Thailand. In 2003 the system totaled an estimated 4,071 kilometers of narrow-gauge (1.000-meter gauge) track. The system currently has some 270 diesel locomotives and nearly 250 diesel railcars or multiple-unit cars. According to figures provided for 2002, 55.7 million passenger journeys occurred, and the rail system hauled 9.9 million tons of freight. Freight traffic is considered an important part of Thailand's domestic container transport to and from seaport and inland terminals.
Rapid Transit: The Mass Rapid Transit Authority of Thailand operates a full metro service on a 21-kilometer-long, 18-station line that opened in Bangkok in July 2004. The inaugural line will be extended in phases totaling 27 kilometers, and two future lines, totaling 67 kilometers, are planned.
Ports: Thailand's ports in order of size are Bangkok, Laem Chabang, Pattani, Phuket, Sattahip, Si Racha, and Songkhla. The Thai merchant fleet comprises 386 ships of 1,000 gross registered tons or more, including 142 cargo carriers, 89 petroleum tankers, 57 bulk carriers, 30 refrigerated cargo ships, 25 liquefied gas ships, 21 container ships, 12 chemical tankers, 4 passenger/cargo ships, 3 passenger ships, 1 combination ore/oil ship, 1 roll on/roll off ship, and 1 specialized tanker.
Inland and Coastal Waterways: Thailand has some 4,000 kilometers of navigable inland waterways, of which 93 percent are navigable by boats with drafts up to 0.9 meters. Thailand's long coastlines lend themselves to inter coastal trade.
Civil Aviation and Airports: In 2004 Thailand had an estimated 109 airports and three heliports. Sixty-five of the airports had paved runways, including seven of more than 3,047 meters in length. Bangkok International Airport at Don Muang, 24 kilometers north of the capital, is an important regional hub for pass-through flights and as a destination. About 80 airlines provide service to the Bangkok International Airport and carry a reported 25 million passengers and 700,000 tons of cargo a year. Ground was broken for a new Bangkok international airport at Suwannabhumi, 30 kilometers east of Bangkok, in January 2002, with a new projected opening in 2006. When Suwannabhumi opens, Don Muang will be used for domestic flights only. Other major airports are at Chiangmai, Hat Yai, and Pattani. There are two Thai flag carriers. Thai Airways International, founded in 1960, offers domestic and worldwide coverage with a fleet of 81 passenger and cargo aircraft. Since 1977, Thai Airways has been fully owned by the Thai government. Bangkok Airways is a privately owned company founded in 1968 as an air taxi company; since 1986, it has served primarily as a domestic carrier. It also flies to Phnom Penh, Cambodia, and offers charter flights to Burma; it has a fleet of 11 aircraft.
Pipelines: In 2004 Thailand had 3,112 kilometers of gas pipelines and 265 kilometers of refined products pipelines.
Telecommunications:
In October 2002, the Thai government formed a new Ministry of Information and Communications to oversee all aspects of telecommunications. The ministry is responsible for liberalizing the provision of telecommunications services under World Trade Organization guidelines by 2006. However, the proposed privatization of the state-owned Telephone Organization of Thailand and Communications Authority of Thailand remains controversial. The ministry also will be responsible for implementing the country's information technology policy, called IT 2010, which is designed to strengthen Thailand's telecommunications infrastructure as a means of promoting overall economic development.
Thailand's telecommunications network suffers from delays and other shortfalls in the provision of telephone services as a result of inadequate investment. The quality and availability of telephone service are much better in Bangkok and other cities than in rural areas. Mobile telephones (26.5 million in 2005) are much more prevalent than landline phones (6.6 million in 2003). As of November 2004, Thailand had almost 7 million Internet users, representing less than 11 percent of the population, and 18 commercial Internet service providers.
The government owns most television and radio stations and plays an important role in determining programming content. The government's Public Relations Department requires that all Thai radio stations carry 30 minutes of official news prepared by Radio Thailand, the national radio network, twice daily. Radio Thailand has seven networks that specialize in such areas as news and information, public affairs, social issues, education, and foreign-language broadcasts. Thailand has five television channels, of which two are run by the central government, two by the army, and one by a private enterprise. Altogether, Thailand has 204 AM radio stations, 334 FM radio stations, 6 shortwave stations, and 5 television broadcast stations. Additionally, there are more than 2,000 community radio stations, some of which are being investigated by the Public Relations Department for violating the requirement that they limit their transmission range to 15 kilometers. Thailand has about 14 million radios and 15 million television sets. [6]
Ch. 2 AUTOMOILE INDUSTRY
Overview of Thailand Automobile Industry
Thailand is a global player in the world's automotive industry, exporting automotive products to 130 countries worldwide. Since its first automotive assembly plant in 1961, the sector's continuously high growth has made Thailand the world's largest producer of one-ton pick-up trucks, the seventh largest automotive exporter, and the fourteenth largest automotive producer in 2007, producing 1.3 million vehicles. Ford, General Motors, BMW and Daimler Chrysler, in addition to all the major Japanese manufacturers - Mitsubishi, Mazda, Toyota, Isuzu, Honda and Nissan - have all established presences in Thailand.
List of Company in Automobile Industry
Toyota, Isuzu, Nissan, Mitsubishi, Chevrolet, Mazda, Ford, Hino, Honda, Suzuki, Hyundai, Proton, Tata, Mercedes, BMW, Volvo, DFM, Mitsufuso, Kia, Volkswagen, General Motors.
Contribution in GDP
The auto industry is Thailand's third largest industry, making up about 12% of GDP. Thailand at 25 ranks in purchasing power $609800000000 out of it Agriculture: 13.3%industry: 34%services: 52.7% (2011 EST.) [7]
Labor force available for Automobile Industry
The local auto industry employs 520,000 workers involved in everything from parts manufacture to final assembly. Thailand has quite low unemployment rate (lower than 2%) for 6 consecutive years. Labor available for industry is 13.2%. In April 2012, the new minimum wage rate at 300 baht per day will be imposed in 7 provinces in Thailand, namely Bangkok, Phuket, Nakornpatom, Nonthaburi, Patumthani, Samutprakarn, and Samutsakorn.
Raw material available for Automobile Industry
In conjunction with Thailand's huge automotive industry, Thailand has a developed a sizeable, auto parts and accessories industry. Exports of auto parts grew by 386% and were valued at over USD 4 billion. The Japan Automobile Manufacturers Association (JAMA) states that the quality of automotive parts in Thailand is the highest among ASEAN countries. Locally produced or assembled parts include engines, suspension control and spring, axles, hubs, propeller shaft, brakes, clutches, steering systems, body parts, electronic parts, air conditioning systems, tires, wheels, internal and external trim components and glass. However, considering that there are more than 3,000 parts and components in a typical vehicle. Imported parts and accessories include fuel injection pumps, transmissions, aluminum casting, injection nozzles and anti-lock braking systems, are all imported. Local part manufacturers supply about 100 percent of parts used in the assembly of motorcycles, 80-90 percent of parts used in the assembly of pickup trucks, and 30-70 percent of parts used in the assembly of passenger cars.
Supplier Details
The BOI estimates that Thailand has over 2,300 part suppliers in comparison with Malaysia with 700 suppliers and Indonesia with 500 suppliers
. Thailand automobile assemblers have created three-tier suppliers networks. With regards to Tier 1 suppliers (690 companies), 47 percent are foreign majority JV companies, 30 percent are Thai majority JV companies and 23 percent are pure Thai companies. And in tier 2 and 3 there are also approximately 1,700 companies, which are locally, owned small and medium enterprises (SMEs).The Thai Automotive Industry Association (TAIA) estimated that the automotive industry generates approximately 700,000 jobs in Thailand - automobile assemblers employ approximately 50,000 workers, auto part producers 350,000 workers, car distribution networks (e.g. dealers) 200,000 workers, and raw material suppliers 100,000 employees.
Political factors affect
Political climate in a different country producing and buying automobiles regarding policies on import, export and manufacture of automobiles and automobile components. This will also include policies on allowing setting up of manufacturing plants by foreign companies.
Stability of governments this may affect the future conditions in a country.
Taxation policies
Economic factors affect
The population figures and automobile buying capacity of people.
Level of economic activity that affects need for commercial use of automobiles
Cultural factors affect
Lifestyle and preferences of people that impact their choice of types of automobiles.
Social norms that impact the decision to own and use automobiles versus other means of transport.
Technology factors affect
Technology relating to automobile designs
Technology of automobile manufacture
Technological developments that may increase or decrease use of automobiles.
Environmental factors affect
Fossil fuels greatly harm the environment.
Most of Car manufacturers are use Ethanol instead of gasoline.
Manufacturers like Honda, Toyota and General Motors have designed hybrid vehicles that run on electricity and Ethanol which is very harmful the environment.
Legal factors affect
Legal provision relating to environmental population by automobiles.
Legal provisions relating to safety measures.
There are explicit contracts with contractors and subcontractors.
If parties other than the original manufacturer can supply spares for a system, the issue of shoddy spares is an important one.
12. Import and Export restriction of Govt. for Automobile Industry
In the automotive sector, the EU industry has voiced concerns about Thailand's very high import (80% for cars and 5-30% for parts & components) and excise duties (30-50% for auto parts and components) which result in high production costs. Thailand's excise tax structure and its calculation remains complex and heavily favours locally produced vehicles. The industry wishes to re-establish equal treatment with Japan via a Thailand-EU FTA.
As developing country Thailand get free trade zones with Australia, New Zealand, China, India and certain south East Asian countries with the agreement of Asian free trade zone. So Thailand does not get any benefit in import and export duties with other country it has to bear import and export duties according to other counties.
13. Present position and trend of business with Gujarat/ India during last 5 years
Rs. in Lacs
Year
Exports
2007-08
22,282.82
2008-09
33,161.31
2009-10
49,526.78
2010-11
91,923.29
2011-12
115,664.67
The export of automobile and its parts is increasing every year. In the last year (2010-11) total export is 91,923.29 Lacs Rs. and in this year (2011-12) the total export is 115,664.67 Lacs Rs. which is increased by 25.83%.
14. Trade norms of Indian Govt. for Automobile Industry
Barriers to entry in this industry is high
The cost of developing high volume production facilities.
The ability to gain access to technology of major global operators.
The relatively high competition between established domestic companies and foreign companies.
Taxation
The main taxes/duties that the Union Government is empowered to levy are: - Income Tax (except tax on agricultural income, which the State Governments can levy), Customs duties, Central Excise and Sales Tax and Service Tax. The principal taxes levied by the State Governments are:- Sales Tax (tax on intra-State sale of goods), Stamp Duty (duty on transfer of property), State Excise (duty on manufacture of alcohol), Land Revenue (levy on land used for agricultural/non-agricultural purposes), Duty on Entertainment and Tax on Professions & Callings. The Local Bodies are empowered to levy tax on properties (buildings, etc.), Octroi (tax on entry of goods for use/consumption within areas of the Local Bodies), Tax on Markets and Tax/User Charges for utilities.
Capital and Labour Intensity
The motor vehicle manufacturing industry requires significant level of capital investment.
Value is added through the automated manufacturing and assembly of costly components.
Labour input is required in the manufacturing, assembly, and finishing processes.
Technology and Systems
Multi Point Fuel injection (MPFI)
Common Rail Direct Injection (CRDI)
Engine Control Unit (ECU).
15. Trade barriers for Automobile Industry
Tariffs:
Motor Vehicles:
Pick-ups are assessed a 40 percent import duty.
Passenger cars are assessed an 80 percent import duty.
Heavy-duty trucks and buses are assessed a 40 percent import duty.
Automotive Parts and Components:
CKD kits (passenger cars, pickups and sport utility vehicles) are assessed a 30percent import duty.
Vehicle components which are not brought in as CKD material (i.e. service parts/missing/damaged parts) are subject to 0- 30 percent duties
The tariff on raw materials ranges from 0-10 percent.
Taxes:
The excise tax is computed under the following formula:
Vehicle Price (including tariff) x Excise Tax Rate
1 - (1.1 Excise Tax Rate)
The municipal tax is 10 percent of the amount of the excise tax.
The VAT is 7 percent times the price including tariff, excise tax and municipal tax
16. Potential for Import/ Export in India/ Gujarat market
Tata motors introduce NANO car replace of eco car in Thailand. Tata motors have plans to introduce the Nano in future for economic segment for the market and probably plan to expand it by taking to the neighboring countries in the Asian. "Tata motors had received a Thai government approval for setting up a Green field manufacturing facility to produce eco cars at a reported investment of 7 billion baht.
Tata motors Thailand currently rolls out the xenon luxury pick-up truck and is targeting to capture 5 per cent of the pickup vehicle market by 2014 in that country. The company has set up a plant in Bangkok for producing the with an annual capacity of 20,000 units.
17. Presence Gap in existing market
Thailand is also lacking of low skilled labor force, it faces an acute shortage of highly skilled automotive engineers. So Thailand is hiring more expensive foreign skilled workers from neighboring countries like Malaysia and Indonesia, increasing their labor cost.
Seeing the technological factors Thailand doesn't produce any machines so has to import it from other countries for which the tax duties will be different and seeing this no company would like invest in Thailand.
18. Business opportunity in Future
Thailand is as an attractive base for automotive parts production. Of the more than 3,000 parts and components in a typical vehicle, many of them still must be sourced from overseas. Opportunities exist for foreign suppliers to manufacture fuel injection pumps, transmissions, injection nozzles, anti-lock braking systems, and central locking systems, among numerous other products. More R&D, design and testing centers are also needed, even though Yamaha, Bridgestone, Maxxis and Michelin already operate such facilities in Thailand.
19. Conclusion
We can conclude hear that it's good to open automobile industry in Thailand because
Cheaper to make parts in Thailand.
Thailand will produce about two million cars this year. And Thai companies already make some car parts for firms including Toyota, Mitsubishi, Nissan and Mazda.
Thailand is much cheaper for labour costs. The nature of Thai, they are very good in technical things, we are very skillful and also easy to handle because of the Thai culture
