Industrial Estate Drive Thai Production and Exports
Manufacturing platforms and services help companies compete
Source: Thailand Board of Investment's Investment Review Publication
The BOI Investment Review is a monthly publication of the Thailand Board of Investment. www.business-in-asia.com and Runckel & Associates believe that much of this information needs wider dissemination. We are therefore working with the BOI to help promote these useful articles and index them into categories that are easy to find.
Over the past ten years, Thailand has developed a vibrant public-private partnership to promote the advantages of industrial estates as platforms for Thai and foreign investment in assembly and manufacturing. Private-sector developers are encouraged by the Industrial Estates Authority of Thailand (IEAT) to join in building and managing estates, producing a beneficial grouping of industries. This clustering reduces unwanted industrial "sprawl." It also optimizes both environmental management and tenants' utility supplies. Today there are 30 diversified industrial estates throughout Thailand, with three key sectors in the lead: auto, consumer products and electronics.
Why Industrial Estates?
Foreign companies operating in Thailand win decisive advantages by locating in an industrial estate. BOI sweeteners include tax incentives, reduced import duties, and one-stop visa and work permit privileges. Importantly, the IEAT allows foreign investors to own land "free-hold," whereby foreign investors obtain a land title, which can be used to secure local financing.
Another advantage of Thai industrial estates is that the multinational investor is not required to take a local partner. This is not always true in other Southeast Asian countries. For example, BMW's fully-owned assembly and manufacturing facility at Amata City in Rayong is the only plant in all of Asia in which the elite German automaker enjoys 100% ownership. Its plants elsewhere in the region are joint ventures, due to national regulations.
However, estates are not just for big players! Many smaller Thai and multinational firms move to industrial estates to act as secondary and tertiary suppliers. Their clients demand these SMEs be close to their manufacturing facilities to minimize inventories and supply disruptions. This "just-in-time" or lean manufacturing trend allows the clustering SMEs to "hitch a ride" on industrial estate investments, enjoying the same quality services and facilities that help their clients, thus allowing Thai SMEs to compete on the world manufacturing stage.
Toward Virtual Industrial Cities
IEAT sets quality IE standards for roads, land development, utility supply and environmental controls in all estates. To guarantee tenants get market prices, IEAT oversees rate-setting for power, water, wastewater treatment, natural gas, and facility maintenance.
Thai Industrial estates are gearing up for expansion, continuing the march toward becoming virtual "industrial cities" by acquiring more land, upgrading infrastructure, and enhancing support services to meet client demand. Becoming more sophisticated as they evolve, today, some estates offer facilities for training and education, shopping, healthcare and recreation.
Thai Estates Power Exports, and Vice Versa
Thailand is emerging as an export manufacturing hub for the region and the world. To encourage this trend, the BOI is considering new incentives and services in order to continue to attract multinational investment to Thailand. Government and industry both expect foreign investment inflows to increase, thanks to growing Thai strengths in export production.
Thailand, along with China and India, is emerging as Asia's investment destination of choice, and as the clear leader in Southeast Asia. Thailand's stability and safety are assets for investors, as are increasing skill levels of the hard-working Thai labor force. Thailand's remarkably hospitable culture and high quality of life are also tough to beat.
All these factors are attracting the kind of foreign projects that create quality jobs, raise incomes and improve living standards in Thailand. This is why the development of quality industrial estates is ultimately about human development - helping improve the lives of Thailand's people!
Author: Tom Reese is President of Amata Corporation PLC, incorporated in 1989 and listed on the Stock Exchange of Thailand (SET) in 1997. Amata currently operates two industrial estates on Thailand's Eastern Seaboard, Amata Nakorn in Chonburi and Amata City in Rayong, serving over 400 local and multinational clients. For more information, visit www.amata.com.
Copyright, 2005 © Runckel & Associates
Search our Website by Topics