Automotive Industry in Thailand

     The net value of BOI investment applications reached 277.2 billion baht (US$ 6.9 billion) in the first half of 2005, representing a 7% increase over the same period in 2004. Japan remains the largest investor in Thailand, contributing up to 45% of total investment value.

     The metal, machinery and transport equipment sector, which includes automotives, accounted for 38% of all new investment, followed by services and public utilities with 26% and chemicals, plastics and paper with 13%.

     In the first six months, the number of net investment applications totaled 614, up 6% from the same period last year. Of the total applications, 39% represented joint ventures, while 32% were wholly Thai-owned and 29% were foreign-owned entities.

     The metal, machinery and transport equipment industries attracted investment of 105.7 billion baht (US$ 2.6 billion), up five-fold from 24.5 billion baht (US$ 612.5 million) in 2004. Ninety-six percent of investment in this sector consisted of auto assembly and auto parts manufacturing projects, totaling 101.7 billion baht (US$ 2.5 billion).

     Services and public utilities rank second with a net investment application value of 72.1 billion baht (US$ 1.8 billion). Most applications in this sector cover high value projects for developing sea freight facilities, power generation plants, and industrial zones.

     The chemical, paper and plastics sector ranks 3rd with 36.5 billion baht (US$ 912.5 million) in net investment, led by production of chemicals, body care products and plastics, as well as oil refinery expansion.

     The electrical appliances and electronics industry received net investment applications valued at 31.4 billion baht (US$ 785 million). High value semiconductor manufacturing projects represent investment of approximately 22 billion baht (US$ 550 million).

Foreign Direct Investment

      Foreign direct investment (FDI) surged by 56% to 178 billion baht (US$ 4.5 billion) in the first half of 2005, led by Japan. Japanese FDI tripled to reach 115 billion baht (US$ 2.9 billion), accounting for 65% of total FDI. Japan’s major investments are in auto and auto parts manufacturing and international procurement offices.

      Europe follows Japan with a 21% FDI share at 22 billion baht (US$ 550 million). Major European investments are in natural rubber products and electronic parts and equipment.

      Other FDI sources include ASEAN and the U.S., with respective investment values of 17 billion baht (US$ 425 million) and 15 billion baht (US$ 375 million).