Thailand offers new incentives for joint ventures to boost auto sector

Thailand has approved a raft of incentives for joint ventures (JV) between Thai and foreign companies to manufacture automotive parts for cars using all types of propulsion systems, according to Thailand's Board of Investment on Thursday. In an effort to attract big companies, Thailand, the biggest automotive production hub in Southeast Asia and an export base for leading global carmakers, is aggressively embracing EVs to attract investments in EVs.

According to the BOI, new projects and existing parts makers are already receiving incentives, but moving to a JV will allow an additional two years of tax breaks, capped at eight years. However, applications must be filed prior to the end of 2025.

In order to be eligible for any type of incentive, a new JV shall invest at least 100 million baht ($2.82 million) in the manufacturing of auto parts production. There must be a venture consisting of a Thai and a foreign firm wherein the local company has to be at least 60 per cent Thai-owned and provide a minimum of 30 per cent of the JV's registered capital, it said.

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The BOI approved on Wednesday an investment of South Korean Hyundai Motor Company worth 1 billion baht ($28 million) for the assembly of electric vehicles and batteries in Thailand.

These incentives are, in sum, targeted at establishing the strategic drive of the country to position itself at the core of the global auto industry, especially in the fast-growing EV market. Under this move, the government would enhance cooperation between Thai and foreign companies for technological development to sustain its competitiveness in the regional auto sector.