BOI machinery industry overview F
or the past quarter century the economy of Thailand has experienced tremendous growth and diversification. The country has become more “international” and now finds itself being mentioned consistently in world rankings that cover sectors such as tourism, agricultural output, foreign investment, and auto manufacturing. Thailand is a global player that possesses economic weight and has positioned itself to lead ASEAN to the next level of regional integration. Yet it must be pointed out that Thailand’s transformation has been driven and sustained by the utilization of industrial machinery whether in the rice fields, in factories, or in high-rise office buildings. The country’s machinery and metalworking sector currently employs a labour force of around 400,000 people and comprises approximately 50,000 enterprises. Today, Thailand is a global leader in machinery and there are numerous opportunities to invest in this industry. As the country continues to modernize Thai industry has progressed forward in order to keep pace with economic expansion, but it is still dependent upon the importation of foreign industrial machinery for the immediate future. Yet there exists high demand for farm and food processing machinery, alternative energy usage/energy conservation equipment, textile machinery, automotive machinery, and moulds and dies. While Thailand is certainly a large producer of agricultural goods, it also has shifted to being a producer of packaged and processed foods. Due to this change, there are ample opportunities available for both local and foreign investors/ businesses in the manufacturing of a number of different types of agro-machinery. For instance, there is a high demand for drying, cooling and purifying machines; fruit, vegetable and cereal processing machines; and for animal feeding. 30
The Brief
Issue 2/2013
Presently, there are more than 10,000 food-processing companies that have created a soaring need for packaging machinery, like filling, closing, sealing, wrapping and labeling machines. Furthermore, the Government of Thailand recently has placed more importance on both alternative energy usage and energy conservation, thereby opening additional investment opportunities in this area. Nonetheless, Thailand is still dependent on a number of types of imported machinery, such as textile machinery for bleaching, dyeing, printing, and finishing. Additionally, machinery is needed not only by the burgeoning Thai recycling business and well-established metal industry sectors, but also for the assembly of electrical control systems and large plastic injectors. Similarly, CNC (computer numerical control) machines for metal works are in demand for high precision machining processes, namely cutting, milling, turning, grooving, shaving, grinding, polishing, and threading. As such, further investment opportunities exist in standard production machinery like packaging and test and control equipment. Thailand’s manufacturing base is widening and deepening
thereby necessitating the proper machinery, whether imported or locally produced, to maintain the country’s economy on an upward trajectory. With this in mind, the manufacture of agro-machinery, alternative energy usage/energy conservation machinery, mould and die machinery are regarded as priority activities by the Board of Investment and thus eligible for promotion. Under the privileges, investors and businesses will enjoy exemptions of machinery import duties and an 8-year corporate income tax holiday. The food industry is among Thailand’s most important economic engines. Its commercial earnings of US$32 billion in 2011, positions the Kingdom as the largest exporter of food products in the Asia-Pacific region but ranks 7th in the world. The main strengths of Thai agriculture lie in the country’s climate, abundance of natural resources, land availability and farming traditions. It must be highlighted that agriculture now absorbs less than half of Thailand’s labour pool, compared to 80% in the early 1960s and 70% as recently as the 1980s. Just as in its drive to transition to a knowledge-based economy, the country is ever more turning to innovation and technology to increase yields and production. Now, Thailand increasingly depends on high-quality machinery to meet food safety standards required by major markets like the European Union, Japan and the United States. Every year, food processing and packaging machinery valued at approximately Bt62.17 billion is imported. Of particular importance is how the overall value of Thai agriculture to the