Thailand’s Electrical and Electronics Industry
Constituting a nearly US$60 billion sector, Thailand’s electrical and electronics industry has thrived and expanded continuously for almost three decades. Throughout the years, the electrical and electronics industry has not only played an increasingly important role in the nation’s economy as a major export earner, but has also positioned Thailand as the regional leader in Southeast Asia. Recognizing the sustainable development of the electrical and electronics industry as a priority for the Kingdom, the Thai Government has launched proactive investment policies and measures, which have attracted investments from many multinational companies and led the industry to prosperity in Thailand.
In 2011, the electrical and electronics industry contributed almost 24% of Thailand’s annual export revenues, generating US$55 billion. Major export destinations were ASEAN (17%), the EU (14%), China (14%), the US (13%), Hong Kong (12%), and Japan (11%). According to the Thailand Electrical and Electronics Institute, Thailand’s electrical appliance industry is predicted to increase 5%-7% in 2012, while Thailand’s electronics industry is forecasted to expand about 10%-12% in 2012.
Electrical Appliance Industry
Thailand is ASEAN’s largest production base in the electrical appliances sector, and is the world’s 2nd largest producer of air conditioning units and 4th largest producer of refrigerators. In 2011, Thailand’s electrical appliance exports were valued at US$22.1 billion, 9% higher than the previous year. On the other hand, imports increased by 10% to a total of US$18 billion from 2010 to 2011.
The Thai electrical appliance industry has been experiencing steady growth in the past few years, and this trend is expected to continue in the coming years. Thailand’s robust manufacturing base and well-developed infrastructure, including an efficient road and ports system, make Thailand an ideal place for electrical and electronics operations. Currently, almost all of the major electrical appliance manufacturers are represented in Thailand. The Kingdom is not only a regional leader, but also a leader on a global level as Japanese, Korean, European and American multinational companies manufacture electrical appliances in Thailand.
With over 800 electrical appliance factories across the country, Thailand has attracted numerous world-renowned foreign and joint-venture companies from across the globe. Japanese manufacturers constitute half of the industry: JVC, Sony, Orion, Nikon, Pioneer, Panasonic, Canon, Sharp, Hitachi, Mitsubishi, Toshiba, TDK, NEC, Stanley, Rohm, Alps Electric, Epson, Alpine, Minebea, NHK, Seiko, Sanyo and Fujitsu, among many others are represented in Thailand. Additional prominent international investors include Tatung and Acer from Taiwan; LG and Samsung from South Korea; Western Digital, Seagate, Hutchinson, Honeywell, Carrier, Emerson and Spansion from the US; as well as Europe’s Electrolux, Philips, Stiebel Eltron, Schneider, BHS, ABB and Fasco.
Based on the export values in 2011, Thailand’s major electrical appliance products were air conditioners, refrigerators, and digital cameras & video camera recorders. Air conditioners, which accounted for 15% of the electrical appliance industry, had the highest export value in the industry; while the export of refrigerators and digital cameras & video camera recorders increased by 10% and 12%, respectively, from 2010.
The major export destinations for Thailand’s electrical appliances in 2011 were ASEAN (19%), Japan (14%), the EU (13%), the US (11%), China (6%), and Hong Kong (5%). ASEAN was the largest market for Thailand’s electrical appliances, with orders worth US$4.3 billion in 2011, a 13% growth from the previous year; followed by exports to Japan, which had an export value of US$3.2 billion, an increase of 10% from 2010.
Electronics Industry
The electronics industry is one of Thailand’s most prominent industries within the manufacturing sector. In 2011, Thailand’s overall trade in the electronics industry alone was worth approximately US$56 billion, an increase of 10% from 2007. Its export revenues accounted for nearly US$31 billion.
In 2011, Thailand’s main electronics exports were hard disk drives (HDD) and integrated circuits (IC), which accounted for approximately 34% and 26% of total electronics exports, respectively. Thailand is ranked as the world’s number #1 HDD and components manufacturing base, commanding 40%-45% share of the worldwide HDD production. Major HDD producers – Western Digital, Seagate, Hitachi GST and Toshiba – have production bases in Thailand. The country holds a similarly remarkable reputation in the IC and semiconductor industries, and boasts one of the largest assembly bases for these products in Southeast Asia.
Considering the increase in global demand for high-technology consumer electronics, including computers, flat panel displays, tablets, gaming consoles, and wireless devices, Thailand is the ultimate investment destination for the sector. Electronics investors will undoubtedly be able to benefit from this strong growth in demand, as well as the comprehensive support from the government of this global hub, in the electronics world.
Thailand’s roster of manufacturers in this fast-growing sector is marked with numerous world-class companies, including Fujitsu from Japan, LG Electronics from Korea, Seagate from the US, and Philips Electronics from the Netherlands. These companies have established facilities for a diverse scope of purposes, from production and assembly to testing and R&D.
Opportunities
HDD and IC
As the world’s largest HDDs and components producer, Thailand’s suppliers benefit from first class industrial clusters. In fact, almost all of the major world players in the HDD manufacturing industries can be found within a 250-kilometer radius of Bangkok.
Over the past years, Thailand has proven itself to be an extremely attractive location for the assembly and testing of HDDs, ICs and electronic subcomponents, such as printed circuit boards (PCBs). Although the electronics market in Thailand is mature and well-developed, there remain areas with high market potential that manufacturers considering to expand their market can explore. For example, many key components of the upstream electronic value chain, including semiconductor devices, ICs, and discrete components such as diodes and transistors, are still currently imported from abroad, primarily from Korea, Japan, Taiwan, and Singapore. Manufactures can easily capture a new market and generate a new source of profit, as they look into manufacturing the above components locally in the country.
In addition, IC design and related activities offers a burgeoning field of opportunity, particularly in wafer design, where there is currently little or no domestic production. The government extends generous support to relevant organizations and institutes by organizing human resource development training programs and conducting research on their behalf.
Why Thailand
Thailand offers a number of unique advantages for electrical appliance and electronics producers. These include: Competitive workforce: Currently, over 400,000 people are employed in Thailand’s electrical and electronics sector. Indeed, the well-qualified,
but extremely affordable workforce is a considerable attraction for many investors.
Over 60 public and private engineering institutes across the country are accredited by the Council of Engineers. In addition, Thailand offers 152,000 certified engineers, with a new inflow of approximately 20,000 engineering graduates joining the workforce each year.
Advancing the competitiveness and technical capabilities of the workforce has always been a main focus of the Thai Government. To ensure an adequate supply of qualified personnel for the industry, the BOI and the Ministry of Education have implemented a Human Resources Development Plan.
Additionally, Thailand offers several other resources for technical training,
including:
• The Thai Microelectronics Center (TMEC), established by the Ministry of Science and Technology in 1998;
• The Western Digital HDD Technology Training Institute (HTTI), an institution established through the cooperative efforts of Thailand’s National Electronics and Computer Technology Center (NECTEC) and Western Digital; and
• NECTEC’s Industry/University Cooperative Research Centers in 3 areas:
1. HDD Advanced Manufacturing – The Institute of Field Robotics (FIBO), King Mongkut’s University of Technology Thonburi
2. HDD Components – The Engineering Faculty, KhonKaenUniversity
3. Data Storage Technology and Application – King Mongkut Institute of Technology Ladkrabang
Access to markets: The Free Trade Agreements between Thailand and various countries, such as Australia, New Zealand, India, Japan and members of ASEAN, gives Thailand, and its foreign investors, a considerable advantage in reaching out to the different markets in the vibrant electronics industry. Under the ASEAN Free Trade Agreements (AFTA), most parts and finished electronics exported throughout ASEAN have been tariff-free since 2010.
The establishment of the ASEAN Economic Community (AEC) in 2015 will only further enhance Thailand’s attractiveness. The AEC will serve as a massive single market that is fully integrated into the global economy with equitable economic development. The 10 member states of ASEAN collectively offer close to 600 million consumers. The AEC will open new doors to manufacturers by transforming ASEAN into a region with free movement of goods, capital, services, investment and workforce.
Excellent logistics systems: Thailand boasts world-class infrastructure, including state-of-the-art ports, airports and communication facilities. SuvarnabhumiInternationalAirport and LaemChabangDeepSeaPort offer manufacturers the transportation foundation they need for their export operations. The 225 km of inter-city motorways – currently in expansion – linking Bangkok to other regions of the country, also facilitate overall domestic transportation. In addition, Thailand is a hub of transportation in the Southeast Asia region; the perfect route through the east-west and north-south corridor that can distribute products to nearby countries including Laos, Cambodia, Vietnam, Myanmar, Malaysia, Singapore and also southern China from the north and northeast of the Kingdom.
Development of electronics clusters: In an effort to promote productivity and efficiency in the industry, the government has been proactive in encouraging the development of electronic clusters. Proximity between firms and their input suppliers within the clusters enhances communication and facilitates flow of goods. At the same time, clustering helps to reduce logistics costs through improved supply chain management. Manufacturers also benefit from shared core technological innovations and human resource development programs.
Board of Investment (BOI) Incentives
Thailand Board of Investment offers a wide range of fiscal and non-tax incentives for investments based on location. Tax-based incentives include exemption or reduction of import duties on machinery and raw materials, and corporate income tax exemption and reduction. Non-tax incentives include permission to bring in foreign workers, own land and take or remit foreign currency abroad.
For further information:
The Thailand Board of Investment (BOI): www.boi.go.th
ASEAN Supporting Industry Database (ASID): www.asidnet.org
Electrical and Electronics Institute: www.thaieei.com
National Electronics and ComputerTechnologyCenter (NECTEC):
Electronic & Computer Employers’ Association: www.eceathailand.com