Thailand's investment promotion scheme for the first half of 2023 was up by almost 70pc from a year earlier to 364.4bn Thai baht ($10.37bn) of proposals, led by the growth in targeted industries like the electronic and auto sectors.
Investment promotions in targeted industries was around Bt286.9bn and accounted for around 79pc of the total, said the country's Board of Investment (BOI). Investment in the electrical appliances and electronics industry constituted the main share, which was up by more than sevenfold from a year earlier to about Bt160bn. Another targeted industry, power generation, attracted Bt26.2bn of investment promotion applications, with about Bt8.3bn in renewable projects like solar, wind, biomass and biogas.
Thailand's investment promotion strategy aims to identify industries and sectors that are essential to Thailand's long-term development and competitiveness. Successful projects are granted tax and non-tax incentives by the Thai government.
The BOI cited inflow of large-scale investment projects in printed circuit boards, semiconductors and solar cells among others, attributing the rise to the "ongoing relocation trend by electronic component makers seeking to reduce risk from the trade war" and investors' confidence in Thailand's potential of being a "risk-free base".
But Thailand is among a host of countries under investigation by the US for potential circumvention of US solar duties. An investigation was launched by the US Department of Commerce in response to a petition filed on 8 February 2022 by California-based photovoltaic panel assembler Auxin Solar, alleging imports from Cambodia, Malaysia, Thailand and Vietnam are allowing Chinese solar components to avoid duties imposed by the agency in 2012.
US President Joe Biden then in June 2022 directed the US Commerce Department to suspend enforcement of the potential tariffs, which could have applied retroactively to November 2021 and been set as high as 250pc, until June 2024. The pause remains in force, following the House of Representatives in May failing to override his veto of a proposal to implement duties sooner.
The latest spat in the increasingly tit-for-tat semiconductor competition saw the Chinese government impose export controls on gallium and germanium effective 1 August. This followed Japan saying it will strengthen its semiconductor export controls, which it denied was aimed at China. They are due to come into effect from 23 July. The Netherlands in March said it would join US in imposing restrictions on the export of advanced semiconductor equipment.
Auto investment
Investment in the automotive and parts industry was Bt19.6bn, according to the BOI. The applications for promotion by Chinese electric vehicle (EV) manufacturer Changan Automobile of Bt9.8bn and Chinese EV manufacturer GAC Aion of Bt6.4bn are expected to be gradually submitted in the second half of the year. Chinese state-owned auto producer Chery Automobile may also set up a production base in Thailand and is in talks with BOI, according to the secretary general of BOI Narit Therdsteerasukdi.
Around 14 battery EV projects with a total investment value of Bt33.9bn and 276,640 units/yr of production volumes have been granted investment promotion benefits, it said.
Thai EV firm Arun Plus, a subsidiary of state-controlled conglomerate PTT, in June announced that it is partnering with China's largest power battery manufacturer Contemporary Amperex Technology to build a cell-to-pack lithium-ion battery assembly plant in Thailand. The two firms will jointly invest more than Bt3.6bn to build the battery assembly plant in the Chonburi province that is within Thailand's Eastern Economic Corridor. The plant is expected to be ready for production in 2024, with a production capacity of 6 GWh/yr.
Chinese battery manufacturer SVOLT's module pack factory in Thailand broke ground on 5 July and is expected to finish its construction by the end of 2023. The factory is expected to produce 60,000 module packs/yr and SVOLT plans two production lines to produce hybrid EV and plug-in hybrid EV/battery EV modules.
Thailand is aiming to cut its greenhouse gas emissions by 20-25pc by 2030, while targeting a 7-20pc emissions reduction from its energy and transport sectors against a business-as-usual scenario. It is also aiming to become an EV powerhouse and has a target for zero emissions vehicles to reach 30pc of the country's total auto production by 2030 under its 30@30 policy.
