The Board of Investment (BoI) on Thursday approved tax perks for three years for automotive industry businesses investing in automation and robotics to increase their productivity.
Incentives are available to investors seeking to increase manufacturing efficiency for both internal combustion engine, hybrid and plug-in hybrid electric vehicles, said Narit Therdsteerasukdi, the BoI secretary-general.
The incentives apply to existing as well as new investments to improve production efficiency, helping to spur the shift towards making the country a hub for a modern automotive industry that embraces technology, he added.
Qualifying companies investing in automated systems or robotics are eligible for a 50% corporate income tax exemption on the invested capital over three years. For projects in the country using automated machinery to produce at least 30% of total output, a tax exemption of 100% of the invested capital is granted.
Applications for the incentives must be submitted by 2024.
“The automotive industry is a significant sector vital to the country’s economy in terms of exports, job creation and the extensive number of manufacturers in the supply chain, which comprises more than 2,300 entities,” said Mr Narit.
“In 2022, Thailand produced 1.9 million automobiles, making it the largest automotive production base in Asean and ranking 10th globally.
“The industry is undergoing a crucial phase of transformation, necessitating significant adjustments for manufacturers to embrace new technology. These measures to help the industry will empower entrepreneurs to compete and navigate the technological transition.”
The automotive and auto parts industry is the largest sector in terms of exports, with a total value of 1.02 trillion baht in the first nine months of 2023, expanding by 8.2% year-on-year, said Mr Narit.
The sector constitutes 14% of Thai export value and employs 800,000 to 900,000 people.
Of the more than 2,300 manufacturers involved in the supply chain, 20 are automobile manufacturers, 530 are Tier 1 parts manufacturers, and there are numerous Tier 2 and Tier 3 manufacturers, mostly small and medium-sized enterprises totalling 1,750 entities.
In a related development, the BoI said it approved investment promotion applications for 1,555 projects in the first nine months of this year, up 31% year-on-year, with a combined investment of 517 billion baht, a gain of 22%.
The three industries with the highest investment were electrical appliances and electronics at 208 billion baht, agriculture and food processing at 55.8 billion, and automotive and auto parts at 42.2 billion.
Foreign direct investment projects totalled 910, aa 49% increase from the same period the previous year. The total investment was 399 billion baht, a 43% increase. Projects from China topped the table at 97.5 billion baht, followed by Singapore at 80.3 billion and Japan at 43.2 billion.
The Eastern Economic Corridor received the most significant investment promotion requests, totalling 552 projects with investment of 232 billion baht. The majority are for electrical appliances and electronics, petrochemicals and chemicals, as well as automotive and auto parts industries.
Both Thai and foreign investment applications are expected to exceed the government’s target of 600 billion baht this year, Mr Narit added.