Auto parts makers are calling on the government to exercise caution in mapping out the Board of Investment's new five-year promotion policy.
They warn that the policy could wipe out Thai-owned firms if there are no appropriate protection and assistance measures.
Pramot Pongthong, the president of Wichien Dynamic Industry Co Ltd in Pathum Thani province, said the BoI's revised five-year (2013-17) investment privilege policy should not cover foreign small and medium-sized auto parts companies, as this will lead foreign car makers that have production bases here to favour their own national auto parts makers.
"Only 15% of auto parts companies are wholly owned by Thais, and they engage mostly in original-equipment manufacturing (OEM) for car makers," he said.
"Thai-owned companies normally don't have negotiation powers with trade partners, leading some to succumb to form a joint venture and allow foreign investors as major shareholders."
Under the current Investment Promotion Act, the BoI sets local content requirements of at least 40% of car production.
Mr Pramot, also a former president of the Thai Autoparts Manufacturers Association, said the board should require automakers that claim new promotional privileges to use more parts from Thai-owned suppliers.
He said Thai auto parts makers are in good position to produce replacement-equipment manufacturer (REM) parts under their own brands to meet both domestic and global demand.
REM parts are cheaper than OEM parts and can also serve the old and second-hand vehicle market, said Mr Pramot.
Poolsak Vuthikul, assistant director of Summit Auto Body Industry Co Ltd in Samut Prakan province, said OEM accounts for 80% of auto parts manufacturing.
The BoI's new policy should require car makers to use Thai-made parts for at least 30% of production to help firms remain competitive, he said.
The new regime, which takes effect mid-year, will use industry preference _ the method by which the BoI decides which industries are to be promoted based on the 11th National Economic Development Plan.
The focus of new policies will be on 10 groups.
They are primary infrastructure and logistics; primary industries; medical and science tools; alternative energy and environmental services; industrial promotion services; advanced technology; food and processed agricultural goods; hospitality and wellness; automotive and transportation; and electronic and electrical goods.
These 10 groups cover about 130 industrial sectors in which about 100 types will enjoy a corporate income tax waiver.
Another 30 will see taxes shelved on machinery and raw material imports as well as other incentives.
The BoI will quit supporting about 80 projects that are not good for the environment because they use too much energy, rely on human labour or have low value addition.
Five public hearings on the new policy are being held nationwide before it is submitted to the BoI's board for approval.
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Writer: Piyachart Maikaew