Despite a change of promotional strategy at the Board of Investment (BoI), Thailand's automotive industry is expected to remain robust over the next seven years.
The BoI has set new criteria for investment in Thailand's car and motorcycle production.
"The Thai automotive production trend needs to change in line with the new strategy," said BoI deputy secretary-general Chokedee Kaewsang. "Fuel efficiency, safety and environmental friendliness with electric vehicles and plug-in hybrids will be the next milestones for Thailand's automotive industry."
Prime Minister Prayut Chan-o-cha has laid out a strategy to promote foreign direct investment during the seven years through 2021, taking effect Jan 1.
The new strategy will focus on technology to support the government's digital economy drive, as the country needs to strengthen its competitiveness and overcome its reliance on low-cost labour.
Current promotional privileges from the BoI fall under zone-based incentives.
The new strategy will base privileges on the type of project, favouring those that support the digital economy such as high technology, research and design.
Activities eligible for BoI privileges under the new strategy have been categorised as Group A.
These will receive an exemption from corporate tax for engaging in knowledge-based investments, high-tech activities, complicated production processes and capital-intensive projects.
Group B investments are not exempt from corporate income tax but can qualify for duty exemptions on imported machinery and raw materials for the manufacture of exported items as well as non-tax incentives such as permission to own land.
All vehicle production will be in Group B, while auto parts projects will be in Group A.