published : 7 May 2020 at 10:05
Lifestyle changes are driving new demands for a growing array of intelligent products. Decreasing birthrates and increased urbanization are contributing to an aging population, smaller working age population, smaller families, and solo living. People are more concerned by health and wellbeing. Modern consumers increasingly care about environmental impact of their product choices. At the same time importance of connectivity and mobility is growing. These global trends are driving demand for consumer electronics products such as health promoting electronic devices, care robots, mobile communication devices, and small but smart home appliances. These products are more energy efficient and environmentally friendly. Moreover, they are equipped with smart technologies that use computation and connectivity to access and share information in real time in almost any place.
The modern economy is driven by data, and that trend is being accelerated by the spread of IoT. This has spurred a rise in smart electronics, which can be defined as any intelligent device with integrated sensors that is connected to the internet. These devices, which can include the capabilities of sensing, actuation, and control, are used in everything from smart traffic management systems, to smart building solutions, energy automation systems, smart farming, healthcare service management, and many other systems.
The industrial sector is quickly adopting these technologies to become “smarter” and more efficient in managing resources, improving productivity and reducing costs. The electrical and electronics (E&E) industry is the foundation for all smart industries.
NATIONAL INDUSTRY AGENDA
Thailand’s E&E industry is already the world’s second largest air conditioner exporter1, as well as a major producer of refrigerators, cellphones, electronic integrated circuits (IC) and microassemblies, and hard disk drives. In 2019, Thailand’s forecasted E&E export value was US $59.52 billion1, equaling 24 percent of Thailand’s total exports2. The E&E industry, and its supporting supply chain, employ more than 750,000 workers, making it one of the largest industrial employers in Thailand.
The government selected Smart Electronics to be one of the 12 targeted growth industries under the Thailand 4.0 economic model because it is a fundamental building block that enables many other growth industries. Smart Electronics is indeed a “National Industry Agenda” as described by The Electrical and Electronics Institute (EEI). The institute, supervised by the Ministry of Industry (MOI), has proposed three key pillars of sustainable smart E&E development. First a collaborative platform among designers, programmers and marketers must be created. Second, a data science center needs to be established to analyze and make use of industrial and behavioral data efficiently. Lastly, an industry’s innovation lab must be set up to research and test product standards as well as user design. In line with the EEI strategy, the MOI has formed measures to enhance the capacity of the E&E industry in four key areas;
- capacity enhancement of potential and existing operators such as manufacturers of hard disk drives and electrical appliances, as well as promoting IC design, wafer fab and embedded software businesses;
- enhancing system developers, including establishing an IoT Platform, Center of Smart E&E, and standards of smart E&E products;
- market stimulation by tax incentives and other support; and
- disposal of electronic waste. Ultimately, the MOI aims to promote new growth industry subsectors that require advanced technologies and developer skills, such as smart home, smart appliances, wearable electronics, and electronics design3.
STRONG E&E INDUSTRY
Thailand is well positioned to be a prominent manufacturing base of smart E&E products. The Thai E&E industry is highly proficient in the production and development of sophisticated E&E products. Thai manufacturers, as well as MNC’s such as Bosch, Siemens, Daikin, Samsung, Seagate, and Western Digital that have manufacturing operations in Thailand, are trusted by global partners because of their skill in precision manufacturing, as well as electronic manufacturing services such as IC design. Thailand has an extensive E&E supply chain, and companies are equipped with well trained technicians and engineers who are capable of harnessing the benefits of factory automation systems.
In the consumer electronics segment, major opportunities lie in the rise of IoT-embedded electrical appliances. Backed by strong supply chains and trends in digital services, the market value of Thai IoT is forecasted to leap from only US $120 million in 2018 to US $2.19 billion by 20304. Cloud services and mobile devices are also substantial parts of the Smart Electronics trend10. Various government targeted growth industries, from next-generation automotive to the digital industry, are creating large market opportunities for providers of electronic industrial parts and systems with applicationsranging from private smart factories to government smart city initiatives. In addition to the domestic consumer and industrial markets, Thailand has convenient links to ASEAN, China and Japan, providing easy access to a large regional demand.
BOI INCENTIVES FOR SMART E&E
Committed to facilitating investors business success, the BOI constantly works with ministries and industry experts to enhance policies and incentives. Investment in the manufacturing of E&E products, parts or equipment used for E&E products, including material for microelectronics, may be granted corporate income tax exemption up to eight years. The more advanced embedded software developer and electronics design business, including microelectronics design and embedded system design, could also receive the generous eight-year holiday on corporate income tax with 8-year CIT exemption (No CIT exemption ceiling)
Opportunities for investors in the smart electronics industry go far beyond the E&E sector. The smart technologies will also transform other growth industries, including the digital, robotics, aviation, automotive, agriculture, food, and healthcare industries. With supportive incentives from the BOI, along with the existing expertise of the domestic E&E supply chain, Thailand is an excellent choice for investors in this industry segment.
- Office of Industrial Economics. (2020). Thailand Economic Outlook and Forecast 2019. Retrieved from http://www.oie.go.th/2019annualreport
- Ministry of Commerce. (2020). Thailand Trading Report 2020. Retrieved from http://www.ops3.moc.go.th/tradereport
- Ministry of Digital Economy and Society. (2019). Thailand Technology Foresight 2035. Retrieved from https://www.depa.or.th/database
- Ministry of Industry. (2020). Smart Electronics in First S-Curve. Retrieved from http://www.industry.go.th/database