Thailand Board of Investment's Super Cluster Policy Supports Growth In Big Bike Industry

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Foreign Investors Look to Thailand for Motorcycle Manufacturing as Kingdom Announces Big Bike Super Cluster Criteria

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Thailand remains one of the top choices for foreign investors to locate their "Big Bike" manufacturing operations.

Thailand Board of Investment (BOI) unveiled the Thai Government’s Super Cluster Policy, which is underpinning growth in the Kingdom’s manufacturing industries. One of the growing sectors supported by the policy is the motorcycle manufacturing industry. As demand for motorcycles in the Asia-Pacific region and Southeast Asia continues to gain momentum, Thailand remains one of the top choices for foreign investors to locate their ‘Big Bike’ manufacturing operations.

On August 29th, 2016, the Board of Investment announced that companies manufacturing motorcycles with engine sizes larger than 248CC and those that manufacture at least two of the six key engine parts in Thailand, can benefit from incentives under the Kingdom’s Super Cluster Policy.

Classified as a mature manufacturing market for motorcycles, Thailand is home to seven of the world’s largest motorcycle producers, which include Suzuki, Honda, Yamaha, BMW, Ducati, Kawasaki, and Triumph. Thailand’s dominance in the industry has been fueled by foreign investment in manufacturing and the supply chain. These seven foreign motorcycle manufacturers have a combined production capacity of over 2.67 million units per year.

Many of Thailand’s Big Bike producers are clustered in the Central and Eastern regions of the country, close to their supply chains and seaports, as many of these vehicles are exported throughout Southeast Asia. Thailand generates between 90 per cent and 95 per cent of the components used in manufacturing these motorcycles, which underscores the strength and depth of the Thai supply chain.

In 2013, Thailand ranked fifth in the world for motorcycle production and growth in its production outputs is expected to increase further. Since 2013, Thailand’s outputs have grown from 3,997 per month to 5,866 units per month, increasing at a rate of 46.7 per cent.

In response to growth in demand in Thailand’s motorcycle manufacturing industry, the Thai government has implemented programs and policies focused on skills based incentives and workforce development to ensure its foreign investors have access to the skilled workers they need and a competitive operating environment.

The Thai government has developed the COE, the institute for automotive and human resource development, which addresses the workforce needs of the manufacturers by upskilling existing workers and developing a pipeline of new employees.

Companies manufacturing motorcycles with engine sizes larger than 248CC and those that manufacture at least two of the six key engine parts in Thailand, can benefit from incentives under the Kingdom’s Super Cluster Policy.

Tax incentives under the Super Cluster Policy include:

  •     8-year corporate income tax exemption and an additional 5-year reduction of 50%;
  •     Import duty exemption on machinery;
  •     Import duty exemption on raw materials and components for re-export products;
  •     For future industries with significant importance, the Ministry of Finance will consider granting a 10 to15 -year corporate income tax exemption;
  •     Personal income tax exemption for renowned specialists who work in the specified areas, both Thais and foreigners;
  •     Non-tax considerations include potentially granting permanent residence to leading specialists and permission for foreigners to own land to implement promoted businesses.

The Thai government also has approved, in principle, a US$269 million fund which would include matching grants to encourage and support investors in the high-value added activities in Super Cluster such as such R&D and training.

About BOI
The Thailand Board of Investment (BOI) is the investment promotion agency for Thailand that facilitates foreign direct investment. BOI’s services are free of charge and customized to help business succeed in Thailand. For more information, please visit http://www.boi.go.th and http://www.thinkasiainvestthailand.com

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David Margolis
Conway, Inc.
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