Thailand decides to provide incentives for auto parts joint ventures

Thailand has announced a new set of incentives aimed at promoting joint ventures (JVs) between Thai and foreign companies in the manufacturing of automotive parts. This move by the Thai Board of Investment (BOI) is part of the government's broader efforts to position the country as a hub for the production of vehicles using all types of propulsion systems, including electric vehicles (EVs).

Thailand is already Southeast Asia's largest automotive production centre and a major export base for some of the world's top carmakers. With the introduction of these new incentives, the government is looking to further strengthen its position in the automotive industry, particularly in the growing EV market.

The key highlights of the incentive program are as follows:

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1. Additional tax exemption: Both new projects and existing parts manufacturers that are already enjoying BOI promotions, but are transforming into a JV, can now qualify for an additional two years of tax exemption. This tax exemption is capped at a total of eight years, provided the companies apply for the incentives before the end of 2025.

2. Investment requirements: To be eligible for the incentives, a new JV must invest at least 100 million Thai baht (approximately USD 2.82 million) in the manufacturing of automotive parts. The JV must also comprise a Thai company and a foreign company, with the Thai firm being required to hold at least 60 per cent ownership and contribute a minimum of 30 per cent of the JV's registered capital.

This move by the Thai government is a clear indication of its commitment to promoting investments in the automotive industry, particularly in the realm of alternative propulsion systems. By offering these attractive incentives, Thailand aims to attract both domestic and foreign companies to establish joint ventures and expand their manufacturing capabilities in the country.

The approval of Hyundai Motor Company's investment of 1 billion Thai baht (approximately USD 28 million) to set up a facility for EV and battery assembly in Thailand further reinforces the government's efforts to position the country as a hub for the production of cutting-edge automotive technologies.

Overall, these new incentives from the Thai BOI demonstrate the government's strategic focus on fostering a thriving automotive industry, with a particular emphasis on the development and manufacturing of vehicles powered by alternative propulsion systems, including electric vehicles. This move is expected to attract more investments, drive technological advancements, and solidify Thailand's position as a leading automotive production and export hub in the Southeast Asian region.