Welcome to APEC. October is a very special month for Thailand this. Thailand Board of Investment October 16, Special Edition

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1 Thailand Board of Investment October 16, 2003 Welcome to APEC October is a very special month for Thailand this year as it hosts a number of important meetings of the Asia-Pacific Economic Cooperation (APEC). These include the 15th APEC Ministerial Meeting, the 11th Informal APEC Economic Leaders Meeting, the APEC Business Advisory Council, a CEO Summit, and, not to be missed, APEC Investment Mart 2003, which welcomes visiting heads of states, ministers, investors from APEC economies and CEOs of many Fortune 500 companies. The Investment Mart is the only multilateral investment exhibition during APEC Thailand 2003, and it comprises exhibitions, trade fairs, seminars, matchmaking services, cultural shows and factory visits. This is the fourth event of its kind, following previous ones in Russia, the People s Republic of China and Korea. The primary objectives of the event are to promote investment cooperation within the Asia-Pacific region, provide investment and business networking opportunities, and to showcase the myriad manufacturing capabilities of the region. The event provides the 21 economies of APEC a perfect forum to highlight their industrial capabilities and investment promotion schemes and incentives. These economies are: the United States, Russia, Canada, Chile, Peru, the Philippines, Mexico, Japan, the People s Republic of China, Hong Kong China, Chinese Taipei, Australia, the Republic of Korea, New Zealand, Papua New Guinea, Vietnam, Brunei Darussalam, Singapore, Indonesia, Malaysia, and Thailand. Related government organizations, investment and trade promotion agencies, embassies, chambers of commerce, state officials and the private sector will represent the APEC economies in special national pavilions, as well as Continued on Page 2 From October 16-21, the Thailand Board of Investment hosts the Asia-Pacific Economic Cooperation (APEC) Investment Mart 2003 at the IMPACT Exhibition and Convention Center in Bangkok from BY NATTINEETTINEE NETRAUMPAI AI

2 Automotive and parts (Toyota, Ford, Honda, Summit Auto, Thai Summit, Narimune, PCS, and Thai Nam) Electronics (Sony, Toshiba, Samsung, OKI, Minebea, and the Thailand Institute of Science and Technology Research) Software (Software Park) Agro-industry (OISHI, Ajinomoto, Saha-Farm s Golden Line, Nestle, CPF, and the Rubber Industry Pavilion) Services (Thai Airways and Bangkok Air) Entertainment (Kantana) Communications (Communication Association of Thailand) Printing and packaging (Thailand s Association of printing and packaging). Honda, above, and Toshiba, below, are just two of the many multinationals to display their products at the Investment Mart. Continued from Page 1 participate in individual investment presentations. The Industrial Showcase focuses on product displays and production technology from renowned companies, industrial supporting services from state enterprises and government agencies, and industry associations. All of these are broadly grouped into eight key industries; The Ministry of Finance s Thailand Investor Service Center, the Office of SME Promotion, UBC, the Tuxila Institute of Fashion Design and the City of Yokohama (Japan) also have stands in the stan- Continued on Page 4 BOI Investment Review 2

3 All the best at the Thai pavilion Visitors to APEC Investment Mart 2003 are invited to tour the Thailand Pavilion, which goes under the theme Thailand, Land of Investment. Overview The pavilion s 2,000 square meters have been designed to showcase five target industries: agro-industry; fashion, including textiles and garments, leather and jewelry; value-added services for entertainment and tourism; automotive; electronics and information and communications technology. The strength of each industry s entire value chain will be highlighted, in terms of clusters in both upstream and downstream production, as well as forward and backward linkages. Another 500 square meters will house an BY KRONGKANOKE MANAGITJONGGOL Investors Consulting Center which will provide information and consultation services for entrepreneurs, investors and visitors in the form of a one-stop center for investment, technology, finance, production, markets and exports. Communication facilities will also be provided within the Business Meeting Center, such as meeting rooms, Internet connections, faxes, and both domestic and international telephone lines. Matchmaking activities will be housed in this area. Gateway to Thailand Visitors will be impressed from first entering the pavilion with the foyer s elegant main stage and a Panorama theater. The stage will feature daily activities and shows against a background of colorful lights and a water display. Many leading fashion designers, food processing entrepreneurs and film producers will be on hand to meet with visitors. In addition, the stage will also be used as a catwalk for fashion shows. The theater, with a huge projection wall, can seat a maximum of 40 people at one time. Multimedia presentations will enable visitors to better understand the underlying theme of the pavilion, Thailand, Land of Investment. The presentation begins with an overview of Thailand s social, economic and lifestyle environment. It then takes a closer look at the investment environment, such as the country s diverse resources, Continued on Page 6 BOI Investment Review 3

4 Continued from Page 2 dard booth area. Exhibitors in the Industrial Showcase are more than prepared to explore business networking opportunities, and access to new markets. Highlights in the Industrial Showcase include a 400 square meter traditional Thai-style twostorey craft paper house in the Printing and Packaging Zone, which has the capacity to hold 300 visitors. The houses are made entirely of craft paper, including the furniture inside and garden area, to showcase the printing process from upstream to downstream. The finished products demonstrate the high manufacturing capabilities of the Thai printing industry, which contributes 35 billion baht to the country s export earnings. The Rubber Industry Pavilion will showcase the rubber industry, from the planting of trees and the extraction of latex to the manufacturing of rubber products, such as latex thread, retread rubber, rubber sheets, conveyor belts, tires, gloves and floor mats. Like the previous APEC Investment Marts, this year s incorporates investment exhibitions, investment presentations and cultural shows from the APEC economies. However, for the first time the event includes a Thai Goods Fair. Products include automotives and parts, electronics and electrical products, e-businesses, software, agroindustry machinery, ICT and consumer products. Also on show are products representative of Thai culture, such as Thai silk, textiles, leather products, gems and jewelry, frozen food, canned products, snacks, beverages, and products from the One Tambon One Product (OTOP) program, in which Thai communities (tambons) introduce products representative of their localities. OTOP products include natural dyed silk, batik, jewelry, carved wood, small Thai classical puppets, copper products, artificial flowers, scented candles, liquor and winery products and gifts. Also on show are services from hospitals, industrial estates, consulting firms, and much more. Three-hundred companies will be at hand, including Toyota, Isuzu, NEC, Pioneer, ABATEC Computers, Sahaphat Group, CP Inter Food, CP Meiji, Thai Agri, Betagro, Uni President, Thai Union Frozen, Oishi, TIPCO, Malee, Vita, S&P, European Foods, Shinawatra Thai Silk, Asia Books, Samittivet Hospital, Bangkok Hospital, Gemopolis, Krabinburi Industrial Estate, and 304 Industrial Zone. The Sahaphat Group s exhibition spans 648 square meters, occupying 54 booths in the consumer products zone, in which the highlighted products include Mama and 4me Instant Noodle, Essence, Kodomo baby products, Breeze, Colgate, Palmolive, La Coste and Arrow men s wear, BSC Fashion, Pias Cosmetic, Guy Laroche, Grand Slam men s wear, and Pop Line lingerie. The Thai Heritage zone includes authentic Thai products, such as cosmetics, home decoration items, hand- Continued on Page 5 Investment Mart 2003 program October Opening ceremony chaired by Thailand s Prime Minister, Dr. Thaksin Shinawatra (RSVP only) October International Conference on APEC Strategies Towards a New Investment Paradigm, Grand Diamond Ballroom Welcome Remarks by Mr. Somphong Wanapha, Secretary General, Thailand Board of Investment Opening Remarks by Dr. Somkid Jatusripitak, Deputy Prime Minister Toyota Strategy in APEC by the Senior Managing Director, Toyota Motors Corporation (Japan) Coffee Break APEC: Where Are They Moving To? by Dr. Narongchai Akaraseranee, Chairman, Seranee Holdings October 21 Closing Ceremony and Best Stand Award: Grand Diamond Ballroom Thai Classical Dance Bangkok Fashion City Show Receptions and cultural shows October Thai Classical Puppet Show from Joe Louis Theatre, Grand Diamond Ballroom October Cultural Performance from APEC economies, Grand Diamond Ballroom October Band from the Department of Arts and Culture, Grand Diamond Ballroom October Band from the Royal Thai Navy, Grand Diamond Ballroom BOI Investment Review 4

5 Continued from Page 4 icrafts, textiles and leather goods, food and beverages, and covers a total of 21 booths. The Special Exhibition includes the 200 square-meter OTOP showcase in the foyer area, located in front of the Grand Diamond Ballroom and the Royal Projects Exhibition in the lobby area, in front of the Thai Goods Fair. The Sai Jai Thai Foundation under Royal Patronage and the Phu Fah Royal Project are also represented. For the matchmaking activities, which are services to facilitate investment and business partnerships covering requests for joint venture, technology transfer, management cooperation, licensing arrangements, subcontracting and sourcing of parts and components, 500 companies, mostly parts and components manufacturers in the electronic and automotive industry, have registered. Participants include Thai Toshiba Electronic, Samsui, Thai Rung Union Car, European Food Public Co., Ltd., Fiat Auto Thailand, Lenso Terminal, Mitsushita Electronic Consumers, Matsushita Electronic Components, Philips Electronic Thailand, Philips Semiconductor, and Phuket Air Catering. An estimated 300,000 visitors are expected to visit the event, including media from around the world, for whom special facilities are provided in the Press Centre, with computers, Internet access and telephone lines. Shuttle buses to the exhibition center are available for the press at the Queen Sirikit National Convention Center and the Shangri-La Hotel. We at the Thailand Board of Investment extend our heartfelt welcome to visitors and guests at this prestigious event, which, as stated, has drawn full participation from all 21 APEC economies and related parties. If ever there was an opportunity for one-stop investment shopping, this is it. Schedule of seminars October 17 Individual APEC economy presentations Thailand Meeting Room Canada Meeting Room 6 Automotive seminars Meeting Room Challenges of Automotive Industry in the Next Decade Mitsubishi Motors Corporation (Japan) Key Success Factors to Thai Automotive Industry Thailand Automotive Institute BUILD seminar Meeting Room Business networking Meeting Room 4 October 18 Individual APEC economy presentations Hong Kong, China Meeting Room Peru Meeting Room Chinese Taipei Meeting Room Mexico Meeting Room Papua New Guinea Meeting Room The Republic of Korea Meeting Room BUILD seminar Meeting Room Business networking Meeting Room 4 October 19 Individual APEC economy presentations Russia Meeting Room Chile Meeting Room Japan Meeting Room Singapore Meeting Room BUILD seminar Meeting Room Business networking Meeting Room 4 October 20 Individual APEC economy presentations Malaysia Meeting Room Vietnam Meeting Room Indonesia Meeting Room New Zealand Meeting Room Philippines Meeting Room Australia Meeting Room 5 Agriculture industry seminars Thailand: Kitchen of the World Meeting Room Thai Food: To Meet Global Demands Meeting Room 6 Fashion industry and high value-added services seminars En Route to Success in the Fashion Industry Meeting Room The Road to Create Thai Brand Identity Meeting Room Modern Medicine in Thailand: Health Tourism Hub of Asia Meeting Room BUILD seminar Meeting Room Business networking Meeting Room 4 October 21 Individual APEC economy presentations China Meeting Room 5 Electronics industry Digital World of Tomorrow Meeting Room The Rapid Change in the Electrical and Electronics Industry Meeting Room BUILD seminar Meeting Room Business networking Meeting Room 4 BOI Investment Review 5

6 Thai Pavilion: Gateway to Thailand Continued from Page 3 both human and natural; its innovative, creative and modern valueadded production technology; overall competitiveness; availability of extensive research and development resources; as well as a highly developed infrastructure, among other factors. The presentation runs four times every hour, and seats can be reserved in advance at the information counter. Kitchen of the World From the theater, we lead you to the ranked in the top 10 in the world, justifying its billing as a Kitchen of the World. One highlight of this zone will be a daily demonstration of ready-toeat-food from leading exporters, which visitors will be able to taste for themselves as they interact with representatives of the food companies. These include CP, Surapon Foods, Thai Agri Foods, Chiang Mai MT Foods, Golden Line Business, J.M. Food, and many others. World of Fashion Our next stop is the fashion zone, where visitors can brief themselves through a video presentation and a Hall of Fame featuring the best products in the business. These include designs incorporating Thai textiles, leather goods and jewelry from leading exporters whose products have already made a name for themselves in such com- Continued on Page 7 agro-industry zone. This exhibition, which features a computer touch screen and video presentation, will convey the message that Thailand is blessed with abundant supplies of raw materials, especially for the food processing industry. With its advanced technology and high quality food products, Thailand is BOI Investment Review 6

7 Continued from Page 6 petitive markets as Italy, France, the United States and Japan. Of special note here is the original master cloth that was used in crafting the tailor-made outfits that leaders of the 21 APEC economies attending the APEC Leaders meeting will wear. Moreover, visitors will be able to meet with the cream of Thailand s award-winning designers for interviews and to hear their views on the frequent fashion shows. The topics will cover fashion trends, design concepts, and production and marketing strategies. Well-known speakers will include the President of Taxila, young designers from Taxila, the president of the Thai Leather Goods Association, the CEO of Gemopolis IE, as well as the General Manager of Lucky Seide. Enjoy Thai Hospitality The next stop takes us to the entertainment and tourism industry in Thailand. Through a video presentation and exhibition board, visitors will be able to discover Unseen Continued on Page 8 BOI Investment Review 7

8 Continued from Page 7 Thailand, in addition to popular tourist spots, famous hotels and resorts, and spa activities. In the spa section, visitors will immediately sense the mood of relaxation, and experience the aromatic atmosphere in which they can consult with expert Thai therapists. In addition, there will be daily demonstrations of aromatherapy, manual lymphatic drainage, shiatsu, head massages and reflexology. To learn about the film industry in Thailand, visitors can meet with famous directors, while a multimedia presentation will explore Thailand as the Hollywood of Asia, given its premier locations and excellent pre- and post-production expertise and high-tech facilities. For those interested in computer graphics and animation technology, there will be interactive discussions with experts and professional technicians in these fields. Guest speakers will share their ideas and pass on their experience in applying animation technology to create games, movies, cartoons, music videos and advertising material. The BOI Investment Review Automotive and ICT/Electronics A light and sound presentation will acquaint visitors with Thailand as the Detroit of Asia, and as a hub for the auto industry by virtue of its well-established parts and components sub-contracting sector. After visiting this zone, guests will be left in no doubt as to why investors select Thailand as their production base for the automotive and electronics industries. Continued on Page 9 Working group Mrs. Chutaporn Lambasara Dr. Atchaka Brimble Mr. Vittaya Praisuwan Mr. Chokedee Kaewsang Mrs. Booskorn Vutivijarn Mr. Narit Therdsteerasakdi Editorial consultants Joseph Feinstein Tony Allison Kim Maire Layout and design JLF Associates Ltd. Printing Future Graphics The BOI Investment Review is published every two months by the Thai Board of Investment BOI Investment Review 8

9 Continued from Page 8 Investors Consulting Center Besides all of these exhibitions, the Thailand Pavilion also provides information and consultation services for potential investors. In the Investment Consulting Center, officers from the BOI will present the most current information on investing in Thailand, backed up by representatives of relevant government agencies. 1. Investment Zone: One Stop Service Center for Investment where one will find everything one needs to know about investment. 2. Ministry of Science and Technology: Technology Clinic with advanced technological support for investors. 3. Ministry of Finance: One Stop Shop with a fully integrated financial service center. 4. Ministry of Industry: Industrial Clinic, serving as a consulting center for industry insights. 5. Ministry of Commerce: One Stop Export Service Center with full support for exporters. BOI Investment Review 9

10 Building stronger ties with Korea The Office of the Board of Investment and the Office of the Thai Trade Representatives organized a mission to South Korea from August to establish a network with South Korean investment promotion agencies and to promote investment in Thailand, especially in the automotive and electronic and ICT industries. The mission was led by Mr. Supat Limpaporn, the BOI s Deputy Secretary General and Mr. Prachuab Chaiyasan of the Thai Trade Representatives office. The Thai delegates met with top Missions executives from the Korea Investment Service Center (KISC) and the Korea IT Industry Promotion Agency (KIPA) to be briefed on their investment promotion strategy and to discuss the possibility of future cooperation in promoting investment in both countries. The Thai delegates suggested that the countries should cooperate in providing a matchmaking service to increase mutual levels of investment. Ahighlight of the mission was a round-table meeting, which provided potential investors with information on Thailand s current economic condition, an overview of its automotive and electronic and ICT industries, the BOI s investment promotion packages, and experiences of doing business in Thailand. Participants included guest speakers, representatives from Samsung Electro-Mechanics Co., Ltd. and Maxon Telecom Co., Ltd. The meeting attracted 29 South Korean investors. The mission concluded with a meeting with top executives from two of South Korea s largest firms, Continued on Page 11 READER RESPONSE FORM 12-2 Name: Position: Company: Activity: Address: Country: Postal Code: Tel: Fax: The Following Study Reports are available as a service to investors. Please fill in the information above, and send your reply form together with payment as follows: Items 200 baht/overseas US$20 (shipping and handling included) Item 2,500 baht/overseas US$130 (shipping and handling included) Please make money orders payable to Board of Investment Welfare and send them to the The Investment Services Center address below 1 Medical Equipment and Supplies in Thailand (Jan. 1999) 2 Packaging and Packaging Equipment in Thailand (Jan. 1999) 3 Selected Environmental Technologies in Thailand (Jan. 1999) 4 Quality Management Systems and Technical Services in Thailand (Jan. 1999) 5 Food Additives in Thailand (Jan. 1999) 6 Selected Energy Efficient Technologies in Thailand (Jan. 1999) 7 The Machine Tool Industry in Thailand (Jan. 1999) 8 A Private Sector Guide to Thailand s Expanded Role in the ASEAN Region (Jan. 1999) 9 Computer Software in Thailand (1998) 10Profiles of BOI Promoted Companies and Sectors (1999) Head Office, Office of the Board of Investment 555 Vibhavadi-Rangsit Road, Chatuchak, Bangkok 10900, Thailand Telephone: (66) , (66) ; Facsimile: (66) BOI Information Center (66) Internet Home Page head@boi.go.th New York Thailand Board of Investment 61 Broadway, Suite 2810 New York N.Y U.S.A. Tel: (212) Fax: (212) boiny@aol.com Paris Thailand Board of Investment Ambassade Royale de Thailande 8, rue Greuze, Paris, France Tel: (33 1) , (331) Fax: (33 1) boiparis@mail.club-internet.fr par@boi.go.th Frankfurt Thailand Board of Investment Bethmannstr. 58, 5. OG Frankfurt am Main Federal Republic of Germany Tel: (49 69) Fax: (49 69) fra@boi.go.th Tokyo Thailand Board of Investment 8th Floor, Fukuda West Building , Akasada, Minato-ku Tokyo , Japan Tel: (81 3) Fax: (81 3) tyo@boi.go.th Shanghai Royal Thai Consulate-General 2nd Fl. Zhong Shan Dong Yi Lu, Shanghai, PR China Post code: Tel: (86-21) (86) BOI Investment Review 10

11 Continued from Page 10 Samsung Co., Ltd. and Maxon Telecom Co., Ltd. The purpose of this meeting was to encourage further investment in Thailand, particularly in the areas of research and development and human resources development. Both companies responded that they planned to invest more in Thailand, some of which would be channeled to these areas. Singapore connection The inaugural meeting of the Singapore-Thailand Enhanced Economic Relationship (STEER) was held from August in Singapore. Mr. George Yeo, Singapore s Minister for Trade and Industry and Dr. Somkid Jatusripitak, Thailand s Deputy Prime Minister, officiated. The BOI signed a memorandum of understanding (MoU) with the International Enterprise Singapore Board aimed at promoting business and investment relations between the two countries. The MOU highlighted the desire of both organizations for greater collaboration in a range of activities of mutual interest. In terms of investment, Singapore was Thailand s second largest investor in 2002 with 40 projects granted investment incentives with total investment of 13.1 billion baht. Board of Investment activities Projects receiving promotion certificates: 2001 to 2003 (Jan June) (Jan-June) Number Value of Number Value of Number Value of of Investment of Investment of Investment Projects (mil. baht) Projects (mil. baht) Projects (mil. baht) TOTAL , , ,200 By Sector Agricultural products , , ,800 Minerals & ceramics 22 3, , Light industry 90 14, , ,100 Chemicals & paper 87 44, , ,400 Metal processing , , ,200 Electronics & electrical , , ,100 Services , , ,100 By Country Japan , , ,022 United States 28 10, , ,679 East Asian NICs Taiwan 44 5, , ,816 Hong Kong 12 2, , ,040 Korea 20 2, , ,062 Singapore 56 17, , ,015 Europe United Kingdom 20 4, , ,469 Germany 27 14, , ,488 Switzerland 8 1, , France 6 1, Netherlands 20 6, , By Zone 1: Bangkok & vicinity , , ,700 2: 10 provinces around , , ,300 Zone 1 3: Rest of country , , ,100 Notes: Projects receiving promotion certificates must have already registered a company and paid up a percentage of registered capital. The data in the section by country does not add up to the total as projects with more than one foreign shareholder are counted twice. Country statistics generated by International Affairs Division of the BOI. BOI Investment Review 11

12 Thailand s economy at a glance e A: Population/Demographic (2) (Jan-June) Population (million) Labor force (million) Unemployment rate (% of labor force) B: Economic growth (1) (Jan-Jun) GDP at current prices (US$ billion) GDP at constant 1988 prices (US$ billion) Growth rates (%) Overall (%) Agriculture (%) (1) 4.1 Manufacturing (%) (1) 11.0 Construction (%) (1) 0.1 Services and others (%) GDP per capita (US$) 2,482 1,827 1,982 1,962 1,831 1,992 1,063 C: Price indicators (6) (Jan-Aug) Consumer prices (% change) Whole Kingdom Bangkok Metropolis (Jan-June) D: External account (2) Exports (US$ billion) (% change) Imports (US$ billion) ,5 (% change) Trade balance (US$ billion) Current account balance (US$ billion) (% of GDP) Net capital movements (US$ billion) Balance of payments (US$ billion) (% of GDP) Official reserves (US$ billion) Total debt service ratio (%) Public (%) Private (%) E: Money and banking (2) (July) Money supply (M2) (US$ billion) (% change in baht terms) Commercial bank loans (% change) n/a 3.7 Commercial bank deposits (% change) Interest rates (end of period) Prime rate Minimum Overdraft Rates (MOR) Minimum Loan Rates (MLR) Deposits Savings deposits (2) (Jan-July) F: Public Sector (Fiscal Year Oct-Sept) (2) Government revenue (US$ billion) Government expenditure (US$ billion) Fiscal balance (US$ billion) (% of GDP) BOI Investment Review 12

13 G: Exchange rate (2) e (June) (baht per US$) H: Investment (3) BOI approved applications (Jan-July) No. of projects , Investment (US$ million) 11,277 6,714 3,788 6,520 6,219 3,795 2,792 BOI projects starting up No. of projects Investment (US$ million) 6,387 6,628 4,784 7,121 6,259 4,757 1,242 Corporate securities (end of period) (Jan-Aug) SET index (4) No. of quoted companies Average monthly turnover (US$ million) 2,399 1,694 3,473 1,862 2,895 3,972 3,583 I: Tourist arrivals (5) (Jan-May) Number of tourists (in thousands) 7,221 7,765 8,651 9,579 10,133 10,873 3,743 (% change) Total revenue (US$ million) 7,037 5,854 6,686 7,103 6,723 7,530 n/a J: Net foreign direct investment (US$ million) (2) (Jan-June) Total 3,627 5,143 3,562 2,813 3, By country USA 780 1, Taiwan Japan 1,348 1, , UK Germany Hong Kong Singapore ,563 1, Others 469 1,128 1, By sector Industry 1,820 2,209 1,268 1,813 2, Trade and services 1,325 1,326 1, ,055 1, Construction Mining and quarrying Agriculture Financial institutions Others Economic Asia Key GDP 2002 Inflation 2002 Total trade % of GNP 2002 Cambodia 5.5** 3.3** 101.8** Hong Kong 1* -3.1** 250.2** Indonesia 3.6* 11.9** 53.7** Laos 5.9** 13** 46.7** Malaysia 3.9* 1.8** 195.6** Myanmar n/a 43.5 n/a Singapore 1.1* ** Thailand 4.7* 0.7** 107.4** Philippines 4* 3.1** 85** Vietnam 7** n/a 103.9** China 8* -0.8** 50.8** Taiwan 3.5** -0.2** 84.1** Korea 6.3** 2.7** 65.9** * Economist Intelligence Unit ** ADB, Asian Development Outlook 2002 Sources: Board of Investment except as indicated (1) National Economic and Social Development Board (2) Bank of Thailand (3) Board of Investment (4) Stock Exchange of Thailand (5) National Statistical Office (6) Bureau of Trade and Economic Indicies In its latest projections, the Economist Intelligence Unit (EIU) predicted that gross domestic product (GDP) in the Asia-Australasia region excluding Japan will enjoy the fastest average annual expansion rate of 5.5% in compared with other areas. The 10-member Association of Southeast Asian Nations (ASEAN) grouping is likely to grow by an average of 3.9% in 2003 and 4.9% in 2004 Compiled by the Board of Investment and JLF Associates Ltd. BOI Investment Review 13

14 Industry Rosy outlook for the Detroit of Asia Thailand s vehicle boom, sparked by a strong domestic economy, relocation of pickup truck production from Japan to Thailand, and robust exports, creates a very rosy outlook for the automotive industry to consolidate its position as the hub in ASEAN and manufacturing cluster for pickup trucks outside the United States. Triple No. 1 position in Southeast Asia The early 1990s saw the Thai automobile market and assembly grow substantially due to strong economic expansion to record highs of 589,126 units of domestic sales and 559,428 units assembled in Unfortunately, in mid-1997, the country was hit with the worst economic crisis since World War 2, and both the domestic market and production volume suddenly fell to as low as 114,065 and 158,130 units, respectively, in The automotive industry in Thailand has performed very well recently as domestic demand, which contracted sharply during the crisis, has been rapidly recovering while export demand has also been expanding robustly. In 2002, automotive assembly in Thailand reached a record high of just over 584,000 units and Thailand has clearly become the largest assembler in Southeast Asia. However, Thailand s domestic automotive market of 409,362 units was still the second largest in Southeast Asia, behind Malaysia s 434,954 units. In 2003, with continued solid demand coinciding with record low interest rates and a favorable economic climate, Thailand should reclaim its triple No. 1 positions as BY YUTHASAK KANASAWAT the largest market, the largest assembler, and the largest exporter of automobiles in Southeast Asia. Domestic market New vehicle sales in the first seven months of 2003 increased 35.2% to 291,969 units, more than half of which (166,447 units) were one-ton pickup trucks. Domestic demand is expected to increase from 409,362 units in 2002 to 520,000 units in 2003, which will enable Thailand to overtake Malaysia, for the first time since 1997, as the largest automotive market in Southeast Asia. In addition, many experts also predict that total new vehicle sales are likely to top 600,000 units for the first time in 2004, exceeding the existing record high of 589,126 units set in 1996, the year before the Asian financial crisis broke. Assembly Thailand will further consolidate its position as the largest automotive assembler in Southeast Asia as a result of both strong domestic and expanding export demand. Automotive assembly is expected to increase from 584,951 units in 2002 to a record high of 730,000 units in Exports Thailand will also further strengthen its positions as the largest automotive exporter in Southeast Asia and the third largest in Asia after Japan Automotive industry in Thailand and South Korea. In the first seven months of 2003, Thailand exported 130,401 automobiles, a 40.3% increase from the same period of Exports are expected to increase from 180,554 units in 2002 to 220,000 units in 2003 and even further to 300,000 units in Continued on Page 15 BOI Investment Review 14

15 Expansion the name of the game Continued From Page 14 of- the- art, Industry Automotive industry in Southeast Asia, 2002 Mecca for pickup truck production On market segmentation, the Thai automotive industry has a product champion, which is the one-ton pickup truck. Up to 65% of vehicles sold domestically are pick-up trucks. In fact, Thailand is the world s second largest pickup truck producer. Currently, Thailand is the main production base for both Mitsubishi and AutoAlliance (Ford/Mazda) for pickup trucks, which in the first seven months of 2003 exported 39,347 and 29,150 units respectively of pickup trucks from Thailand. Two more projects designate Thailand as production bases of pickup trucks. The first is the International Multipurpose Vehicle (IMV) Project, through which Toyota. and its parts and component suppliers plan to invest at least $700 million to make Thailand its global production base for pickup trucks, diesel engines and minivans. The automaker's Thai unit, Toyota Motor Thailand Co., Ltd., currently produces 90,000 pickup trucks and multipurpose vehicles annually and exports 10,000 of those units, mostly to countries of the Oceania region, including Australia. By mid-2004, the company will more than double production at its Samut Prakarn plant to 200,000 units a year, exporting half of them to more than 80 countries and territories in the Middle East, Europe and the Asia-Pacific region. Another unit, Siam Toyota Manufacturing Co., Ltd., which is located in Amata Nakorn Industrial Estate in Chonburi province, will serve as a global production base for diesel engines. Production of state- direct injection diesel engines will rise to 240,000 units per year from the current 150,000 units. In addition, Toyota Motors also selected Thailand as the location for its $90- million Toyota Technical Center Asia-Pacific in Thailand. This project received investment promotion in July this year. The second project involves cooperation between GM and Isuzu Motors to establish a production base for one-ton D-Max pickup trucks in Thailand. Isuzu will be responsible for manufacturing more than 100,000 units per year exclusively for the domestic market. At the same time, GM s Rayong plant will assemble 60,000 pickup trucks per year for worldwide export to more than 100 countries under the Holden, Chevrolet, and Isuzu badges. Isuzu Motors will also invest $40 million to establish a logistics center in order to export another 40,000 units of D-Max pickup trucks in the form of Completely Knocked-Down (CKD) sets. In addition, it also plans to establish a R&D center for oneton pickup trucks in Thailand. Everyone targeting Thailand The country's automotive industry is expected to continue booming on the back of the government's policy to support automotive cluster development and the automakers aggressive business strategies. The Thailand Automotive Institute has set a target of having the country produce one million units by 2006, with exports of 400,000 units. However, competition in the Thai automobile market is likely to get tougher as more international companies set up and expand assembly and manufacturing plants here. As DaimlerChrysler (Thailand) President and CEO Karl-Heinz Heckhausen noted: Everyone is targeting Thailand, so the competition is very intense. Today, without local content requirements, manufacturers are able to source parts globally without restrictions. The automotive sector in Thailand is now entering a new regime of competition where natural selection prevails. Before the year 2000, the target for CIM (cost index manufacturing) was for locallymade parts to be 1.2 times the price of the parts in Japan including Thai import tariffs. Now, the index target is 0.8, as the carmakers say they have to be competitive in exports to many countries. The target for the next two or three years is even tougher, at 0.6, since the Thai part makers will have to prepare for competition with low-cost Chinese parts. BOI Investment Review 15

16 Xiamen opens the door for China BY PAVEENAVEENA SIRISUTHIKUL While the Chinese government on the one hand actively supports foreign investment into the country, it also encourages competent domestic enterprises to explore opportunities abroad, and to participate in international economic cooperation under the slogan Introducing FDI and Going Global. As a result of this initiative, the country stages the China International Fair for Investment and Trade (CIFIT) each year, with comprehensive exhibitions that showcase China s overall investment environment and policies, in addition to those of its various regions. This helps Chinese enterprises to better understand ASEAN and other regional markets, as well as the latest investment policies and investment environments in and beyond China. The 7th CIFIT, sponsored by the Ministry of Commerce, was held from September 8-11 at the Xiamen International Conference and Exhibition Center, and Thailand s Office of the Board of Investment was invited to attend one of the seminars, and was also provided with two free booths. Thailand s delegation, led by Acting Senior Executive Advisor Solos Ngamwongwan, joined this important national event. Mr. Solos made a presentation on BOI Acting Senior Advisor Mr. Solos Ngamwongwan (center) and marketing Division Director Mr. Vittaya Praisuwan (far right) led the BOI mission to the 7th China International Fair for Investment and Trade (CIFIT) in Xiamen. Thailand s investment policy, as well as outlining the Kingdom s economic outlook. After this, participants were able to meet one-on-one, and a number of companies expressed an interest in exploring opportunities in Thailand, especially in the agricultural sector. In addition to the seminar, the BOI also met with Ms. Yan Qi, Vice Chairman of the China Council for the Promotion of International Trade, Xiamen, which represents the economic and trade sectors in China. The BOI delegation also had the opportunity to meet Mr. Sun Xiyou, the Director of the Xiamen Investment Foreign Bureau. In essence, the BOI s message for Chinese investors is that the Thai- Chinese relationship is a long-standing and prosperous one, dating over 700 years, and involving both the private sector and the government sides. The business communities in the two countries enjoy strong bonds through a common culture, heritage, and perhaps more importantly, a common understanding of the way in which business is conducted. Given these advantages, Thailand is an ideal choice for Chinese investors. 555 Vibhavadi-Rangsit Road, Chatuchak, Bangkok 10900, Thailand Telephone: (66) , (66) Facsimile: (66) BOI Information Center: (66) Internet Homepage: Head@boi.go.th