Thailand, the largest automobile producer in Southeast Asia, is set to receive a huge boost from Japan’s leading automakers over the next five yearsToyota, Honda, Isuzu, and Mitsubishi have announced plans to invest a total of $4.3 billion in the country, according to the Thai government.
The investment decision is a strategic move by the Japanese automakers to expand their production and export capacity in Thailand, which is a key hub for the regional and global markets. Thailand offers attractive incentives for foreign investors, such as tax breaks, low labor costs, and access to the ASEAN Economic Community (AEC), a free trade bloc of 10 Southeast Asian nations.
According to the spokesperson of the Thai Board of Investment, Chai Wacharoke, Toyota and Honda will invest about 50 billion baht ($1.5 billion) each, while Isuzu will invest 30 billion baht ($900 million) and Mitsubishi 20 billion baht ($600 million). The investments will be used to upgrade existing facilities, develop new models, and introduce new technologies, such as electric and hybrid vehicles.
The spokesperson also said that the Japanese automakers aim to increase their annual production capacity in Thailand from the current 2.4 million units to 3 million units by 2028. They also plan to boost their exports from Thailand to other countries, especially in the AEC, which has a combined population of over 600 million and a GDP of over $3 trillion.
A positive sign for Thailand’s economy and automotive industry
The announcement of the investment plans is a positive sign for Thailand’s economy and automotive industry, which have been hit hard by the COVID-19 pandemic and the political unrest in the country. Thailand’s GDP contracted by 6.1% in 2020, the worst performance since the 1997 Asian financial crisis. The automotive industry, which accounts for about 10% of the country’s GDP and employs over 800,000 people, saw its production and sales drop by 29.1% and 21.4% respectively in 2020.
However, the situation has improved in 2021, as the government has eased lockdown measures, rolled out vaccination programs, and resumed trade and tourism activities. The GDP is expected to grow by 4.1% in 2021 and 5.6% in 2022, according to the World Bank. The automotive industry has also rebounded, with production and sales increasing by 16.3% and 25.5% respectively in the first 11 months of 2021 compared to the same period in 2020.
The investment plans by the Japanese automakers will further enhance Thailand’s economic recovery and competitiveness in the automotive sector. They will also create more jobs, generate more income, and stimulate more demand for related industries, such as parts, components, and services. Moreover, they will help Thailand achieve its goal of becoming a regional leader in electric and hybrid vehicles, which are expected to account for 30% of the total vehicle production by 2030.
A win-win situation for both Thailand and Japan
The investment plans by the Japanese automakers are not only beneficial for Thailand, but also for Japan, which is Thailand’s second-largest trading partner and the largest source of foreign direct investment. Japan has a long history of investing in Thailand’s automotive industry, dating back to the 1960s, when Toyota established its first overseas production base in the country. Since then, Japan has invested over $60 billion in Thailand’s automotive sector, making it the largest foreign investor in the industry.
By investing in Thailand, the Japanese automakers can take advantage of the country’s favorable business environment, skilled workforce, and strategic location. They can also leverage Thailand’s strong network of suppliers, distributors, and customers, as well as its preferential trade agreements with other countries. Furthermore, they can diversify their risks and reduce their dependence on other markets, such as China and the US, which have been affected by trade disputes and geopolitical tensions.
In summary, the investment plans by the Japanese automakers are a win-win situation for both Thailand and Japan, as they will strengthen their economic and strategic ties, as well as their positions in the global automotive industry. They will also contribute to the development and innovation of the automotive sector in the region and beyond.