Interview with
New TAI President

The robust Thai automotive industry is roaring down the road toward annual production of 3 million units by 2015. Helping to pave the way is the Thailand Automotive Institute (TAI). Established in 1998 as an independent organization, the TAI promotes development of the industry by serving as a cooperation bridge between the government and private sectors. With more than 100 employees and a membership of several thousand vehicle makers and parts producers, the institute does everything from recommending national policies to consulting automakers on product testing, personnel training and R&D.

Thailand’s vibrant industry features nine passenger car assemblers, seven pickup truck makers, five commercial vehicle makers, eight motorcycle producers, and 2,300 automotive parts suppliers. With strong fundamentals and untiring optimism, the automotive industry is a key driver of the country’s economy, accounting for 12% of the GDP.

For insight into the TAI’s role and the industry’s prospects, the Thailand Investment Review (TIR) interviewed Dr. Patima Jeerapaet just one month after his installment as the new president of the TAI. In the following, he discusses why the country is a leading global production hub, investment opportunities such as the eco-car and environment-friendly fuels, and exciting new projects at the institute.

TIR: What is the TAI’s mission and which sectors in particular does it serve?

TAI President Patima: The institute’s overall task is to help Thailand’s automakers and auto spare parts producers sharpen their competitiveness. While this involves providing assistance in a lot of areas, a key effort right now is to upgrade the technical skills in the industry so as to boost the productivity of each maker.

The TAI serves manufacturers of passenger cars, commercial vehicles, pickup trucks, motorcycles and parts for all types. It has been doing this very effectively since its establishment 14 years ago. Adding to that, right now we have an exciting new campaign at the institute. My long-term vision is to expand the TAI’s work to include parts for other types of vehicles such as airplanes, trains and even boats. Actually, the institute’s name in the Thai language has the words “yan” and “yont,” which translates as vehicles that have motors. This could be of great benefit to Thai parts suppliers. An example crossover product would be seatbelts. Local car seatbelt makers could utilize their production technology to also make seatbelts for airplanes, trains and boats, lifting their revenue.

I recently submitted this expansion proposal to the permanent secretary of the Ministry of Industry and received a very positive response. So now the institute has approval to explore the concept by starting research. As part of the studies, I have held meetings with various companies, including aviation engine manufacturer Rolls-Royce.

TIR: What factors make Thailand an excellent operating base for automotive manufacturers? What are its competitive strengths that attract investors from the region and around the world?

TAI President Patima: Thailand’s automotive industry has a deep history, and over time it has built up a strong infrastructure and high capability. About 50 years ago, Japanese automakers did their research and decided that Thailand was the best place for locating plants outside of Japan. That was the starting point. After that, carmakers from Europe and America also chose Thailand as the place for their expansion into Asia.

Besides the good production infrastructure, Thailand offers ample raw materials, including rubber and steel, and a huge network of parts suppliers. Moreover, take a look at the map. Thailand is located at the heart of Southeast Asia, making it convenient and cost-effective for investors to export to markets throughout the region and across Asia.

The Thai people are another attractive point for foreign investors. Thais are hard-working and reliable. They focus on doing their job. We have a very good education system here with many universities teaching technical skills and even automotive engineering.

As for challenges, one is to make sure that the number of technicians keeps up with the local industry’s fast growth. Chinese carmakers are coming here, Japanese and American and European firms are expanding their operations here. We need to make sure that the workforce remains sufficient.

Another challenge, one that involves most Thais, is a weakness in speaking English. As English is the international business language, the improvement of local English skills will remain an emphasis heading toward the launch of the ASEAN Economic Community in 2015.

 

TIR: How helpful is the Board of Investment (BOI) in promoting development of the Thai auto industry?

TAI President Patima: Certainly very helpful. Automotive has long been in the top five of Thailand’s exporting industries. With offices all over the world, the BOI works hard to convince foreign investors to locate plants in Thailand. The amount of foreign direct investment in the country has grown substantially because of the efforts of the BOI and other authorities.

TIR: Has the local automotive industry returned to 100% capacity after the flood of 2011?

TAI President Patima: For cars and motorcycles, capacity is back to 100% now. Auto parts production is at 80% and should recover fully by the third quarter of this year. It will not take long for them because support from banks and the government is helping them. As carmakers have backlogs, the auto parts makers will need to double or triple their production.

TIR: When do you expect Thailand to achieve the goal of reaching the global top 10 of automakers?

TAI President Patima: Thailand celebrated the milestone of its one millionth car in annual production seven years ago, and we expect to produce 2 million units this year. If targets continue to be met, we will achieve 3 million units in 2015 to enter the top 10 of the world’s auto producing countries.

Actually, Myanmar could play a role in reaching this goal even before 2015. Many people in that country have been driving around in cars that are 30 years old. Now that the Myanmar government is opening up imports by lowering duties, more people there will be purchasing imported cars. Makers in Thailand can benefit from this opportunity because of proximity to Myanmar.

TIR: The eco-car is seen as a champion product of the Thai auto industry. It is part of the TAI’s master plan and the BOI also offers incentives to promote the manufacture of these environment-friendly and energy-saving vehicles in Thailand. Why is the eco-car important to the industry’s growth?

TAI President Patima: Yes, this will be the “year of the eco-car” in Thailand. Production and sales are good, and the feedback from buyers is very good. Currently, there are four companies with eco-car production in Thailand: Nissan, Honda, Mitsubishi and Suzuki. Their total output from March 2010 to April 2012 was about 200,000 units. I also expect to see other companies launch eco-cars here, perhaps at Bangkok’s big auto show this December. If you are a businessman and see the success of the eco-car locally, then you would be joining that sector.

Every current maker here has back orders for thousands of eco-cars. The government’s first-car-buyer scheme has helped stimulate demand. Our projection is for Thailand’s eco-car production in 2012 to reach 300,000 units, with domestic sales accounting for 180,000 units and exports 120,000 units.

Other “green” investment opportunities are emerging. For instance, many auto brands are also exploring production of cars that can run on environment-friendly fuels.

Concern for the environment and social care are important to the TAI. Green industry is also a major campaign of the Ministry of Industry.

 

 

Software Park Thailand Firm
Hand of Help for Industry

Software Park Thailand is the hard- working partner for companies that are accelerating into the digital age. The organization provides software enterprises small and large with vital assistance on everything from research to technology to business development. The park’s expert guidance grows more important every day with the digital content universe changing constantly.

The mission of Software Park Thailand, under the National Science and Technology Development Agency, is to help create a world- class software industry that would build up the competitiveness of the entire Thai economy. The park’s assistance to software firms covers areas such as human resources procurement, securing of technology, quality improvement and marketing. Supporting the software industry in turn bolsters the efficiency of all industries, from manufacturing to services and even agriculture. Industry enrichment would also encourage more overseas operators to invest in Thailand.

Established in 2001, Software Park Thailand has 30 employees and 10,000 sqm of space. About 55 companies are currently operating at the facility. Another 50 or so entrepreneurs are nurturing startups in its incubation center.

A major campaign at Software Park Thailand is to strengthen the local industry by forging partnerships. Involving companies both inside and outside the park, this ranges from doing business matching to hammering out memorandums of understanding (MOUs). As part of this, a group of software businesses from Malaysia will visit Thailand in July, and Korean firms have come in the past.

Visits by Japanese software firms are also becoming frequent. This is because the vendors want to deal with the many Japanese manufacturers in industries such as automotive and electronics that are operating in Thailand.

In a recent development, Software Park Thailand has joined hands with the Made in Japan Software Consortium, Association of Thai ICT Industry and Thai Software Export Promotion Association to boost collaboration between the two countries’ software industries. The MOU signed by the parties targets generating 30 million baht in software exports to Japan. Software Park Thailand will play the role of coordinator for the countries’ industries.

Dr. Thanachart Numnonda, the new director of Software Park Thailand since October 2010, emphasized the importance of such agreements. “Thailand software organizations need to do more collaboration with other countries. We have some Thai companies that want to do business overseas but they cannot make it alone. You need a business partner over there,” he said.

Partners in the overseas localities can especially provide marketing insight that helps new investors get past hurdles such as cultural differences, Thanachart said in a 29 May 2012 interview with the Thailand Investment Review.

The Software Business Enabling program is among the many services that the park extends to Thai digital entrepreneurs. Efforts include the opening or expansion of marketing channels for Thai software products, cultivating local or overseas business alliances for software entrepreneurs, and pushing the general usage of information technology among various business sectors such as tourism. This is accomplished through consultation, seminars, trade shows and business matching.

 

 

Companies and their personnel gain assistance on software process improvement and management under another of the park’s programs, IT Advisory Services. Support from this resource center enables them to achieve quality standards and business excellence. It also serves as a forum for sharing knowledge and best practices through the Thailand Software Process Improvement Network and the International Association of Software Architects.

The park’s Technology Enabling Service concentrates on leading-edge technologies so that Thai software entrepreneurs can keep pace with dazzling changes in the industry. Activities include technical consultancy, coordination with providers in platform preparation, and holding showcases to inspire developers, all of which enables companies to improve their products.

The Technology Transfer program pushes the industry’s sustainable development. Through its network of partners in governments and private organizations domestically and overseas, the park offers information-technology professionals and organizations high-end courses and seminars on various subjects. Among these are information management, security risks and value-creating business strategies. Others include courses on software architecture and design, and a training track for application development on mobile platforms such as iOS, Android, Blackberry and Windows Phone 7.

To help companies sharpen competitiveness, the facility consistently launches new services. Two recent ones involve Java technology programming and cloud computing. Software Park Thailand is also cooperating with the Software Industry Promotion Agency and local universities under a measure to enrich the country’s programming capability. The focus is on incorporating what is needed by the Thai software industry into the school curriculums.

A facility management service is also part of the park’s business development efforts. Software companies are offered use of the facility’s high-performance computer training labs, 50-seat seminar rooms and state-of-the-art auditorium that seats 285. The entire area is covered by wireless LAN access points and special presentation equipment can be obtained at reasonable prices, greatly reducing entrepreneurs’ event costs.

Software Park Thailand works diligently so that Thai entrepreneurs can get ahead with opportunities becoming so abundant. “Everything is more exciting now. The industry is really moving along,” Thanachart said.

Technology by its nature is always evolving but it made a quantum leap in the past couple of years with the explosion of mobile computing. Online consumerism is skyrocketing as the industry’s fastest growing sector due to the popularity of mobile devices such as the iPod and tablet PCs. This creates a need for more applications.

“It has become very important for people in all walks of life to consume online content,” Thanachart said. “The result is that more and more companies would like to invest in software targeting the new mobile applications and social networking for consumers.” Demand is soaring for all sorts of applications, including mobile banking and mobile booking. Enterprises, organizations and even hospitals realize they must jump onboard. “Information technology is now seen as a way to gain a competitive advantage by providing better services for your customers,” he added.

Thanachart said this is all making the software industry even more important to Thailand’s technological, economic and social development.

 

 

 

Subscribe   Unsubscribe        Previous Issues        BOI: http://www.boi.go.th