Thailand as the Southeast Asian Hub for the Automotive Industry - The Detroit of Asia

Mariana Pires Rito

Student thesis: Master thesis

Abstract

This thesis studies the emergence and development of the Thai automotive industry, which includes both vehicles assembling and components or parts manufacturing. It investigates the determinants that influenced and led Thailand to become nowadays the hub in Southeast Asia for the automotive industry, also known as the Detroit of Asia.
It has been argued that the reputation that Thai automotive industry has nowadays is based on a cluster model and government intervention. Indeed, the Thai government has had an important role not only in creating a conducive environment and promoting the industry but also influencing the direction of the industry expansion and regions through both direct and indirect incentives. For instance, it started to promote the industry by offering economic incentives while under a highly strict regulatory with high import tariffs and local content requirement (LCR) policies aiming to develop local manufacturers and suppliers. Even though one can say these measures were successful, because the automotive industry expanded and, also supporting industries emerged in the country, they were also problematic to some extent. Therefore, Thailand quickly understood the need for liberalizing its market and created an attractive environment for foreign direct investment. The industry grew along with an industrialization strategy. Throughout its development, trade tariffs were gradually reduced, free trade agreements (FTAs) were signed and the automotive industry gained importance not only nationally but also internationally.
An overview of the general investment structure, related policies and incentives is presented followed by a systematic discussion of the dynamics of interactions between the Thai government, multinational enterprises (MNEs), local firms and supporting industries along with the growth and expansion of the cluster. Furthermore, a discussion if the automotive sector has brought value to the Thai economy and a long-term sustained competitive advantage has been accomplished.

EducationsMSc in International Business, (Graduate Programme) Final Thesis
LanguageEnglish
Publication date2017
Number of pages88
SupervisorsAri Kokko