Thailand's automotive industry has made big strides over the past six decades and ranks 12th in the world for vehicle output for the fifth straight year.
The ranking reached as high as ninth in 2012 and 2013, due to massive local sales volume stemming from the first-time car buyer scheme.
The country ranks fifth in the world in output of light commercial vehicles, after the US, Mexico, China and Canada.
The overall automotive industry currently has capacity to make 2.85 million vehicles a year at 23 assembly plants. But there is no Thai-owned car brand, as successive governments have sought to position the country as an original equipment manufacturer for leading car companies, mostly from Japan.
"The country's automotive roadmap should not offer incentives for each manufacturer to localise only car assembly, which is just a superficial policy," says Nattapol Rangsitpol, one of the government officials most familiar with Thailand's automotive industry.
"But the industry needs to create a deeper supply chain locally and compete at a global level with technology and innovation," he says. "Otherwise, the government's policy will not make any benefits for every stakeholder in Thailand."
The doctor is in
At age 49, Mr Nattapol (known among other officials and in the media as Dr Pun) serves as director-general of the Office of Industrial Economics (OIE) under the Industry Ministry.
In automotive circles, he is well-known as the ministry official behind many initiatives, including the Thailand Automotive Institute (TAI) and the switch to a new excise tax structure for cars based on emissions.
Mr Nattapol talks about how his background led to an interest in vehicle assembly and new automotive technologies.
"I am fond of cars, which is why I chose to study industrial engineering," he says. "During my university life, I also joined a class on car assembly at Pathumwan College [now Institute] of Technology to learn the method from an actual auto classroom."
But Mr Nattapol at the time had yet to start his career in the automotive field. After graduating from Chulalongkorn University at age 20, he went to the US in 1990 to complete his master's and doctoral levels using his personal funds.
"Before I moved back to Thailand, I had experience working as an industrial engineer at an energy company in Texas," he says.
Mr Nattapol was home by 1998 and entered public service at the Industry Ministry.
"The Department of Industrial Works was my first workplace in the position of engineer," he says. "But in that period, the government planned to establish the TAI, separately as a new agency from the Thai Industrial Standards Institute (TISI), and I was assigned to draft the TAI's regulations and master plan for transport and environment in order to carry on the automotive policy in the country."
During the 1990s, the country's automotive industry learned to stand on its feet as investment flowed in from overseas car brands. The government's policy required that each company produce and assemble cars with a minimum of 54% local content in order to enjoy investment privileges.
The requirement sought to encourage car makers and local parts producers to expand their manufacturing in Thailand and reduce importation of parts.
As a result of the policy, the country has roughly 2,500 parts suppliers, the largest such sector in Southeast Asia, giving Thailand an important role on the World Trade Organization (WTO) stage.
"I also joined this working group of the ministry to participate in the WTO conference and led a dialogue on the environment in automotive," Mr Nattapol says. "After that conference, the WTO took action in 2000 to revoke the local content regulation and Thailand had to comply."
Despite the lack of local content rules, Thailand remains competitive in the automotive industry and continues to build around its first product champion: pickup trucks.
Eco-car initiative
"Thanks to former ministerial officials, they have tried hard to lay the foundation in the automotive sector and make Thailand a production hub at the global level," Mr Nattapol says.
Thai-made pickups now rely on over 90% local content and attract Japanese and American brands to the country.
In Mr Nattapol's view, the industry still has room for improvement, particularly in technology and in safety and environmental standards, as it bids to remain competitive in the fast-changing auto world.
The initiative of eco-friendly cars has arrived. Mr Nattapol says his working group proposed this vehicle type in 2004 and studied environmental technologies worldwide, then tailored the specifications to take the form of a small car, suitable for local customers and for export, in the hope of duplicating Thailand's success in pickups.
"We have to chase what the new auto movement is going to and put any strong points into our plan," he says.
The eco-car scheme (phase one) was launched in 2007. The many conditions included CO2 emissions of less than 120 grammes per kilometre under the Euro 4 standard, fuel economy of 20kpl and production of more than 400,000 eco-cars. The scheme also required the eco-cars to meet UN safety standards for frontal and lateral collision.
"For auto parts, the policy encouraged car makers to localise the production of core components for passenger cars because this vehicle type had less output during the 2000s than pickups and many locally assembled models relied on parts imports," Mr Nattapol says. "Furthermore, Thailand had never required these international safety standards for locally made vehicles, so it meant that the eco-car would be more competitive in both domestic and overseas markets in the long run."
The government positioned eco-cars as the second product champion, after pickups. As expected, the first phase attracted 28.8 billion baht in combined investment to make 585,000 eco-cars from five manufacturers: Nissan, Honda, Mitsubishi, Suzuki and Toyota.
Then in 2013, phase two began with tighter regulations: CO2 emissions of less than 100 g/km under the Euro 5 standard, fuel economy of 23.3kpl and production of more than 500,000 eco-cars.
In 2014, 10 car companies, including the five existing brands, submitted eco-car applications. The scheme ultimately saw six Japanese car makers join the second phase, adding Mazda.
Although Mr Nattapol did not participate in the working group of the second phase, the policy still benefited the country with a deeper supply chain, international quality and environmentally friendly vehicles, all in line with global trends.
As of 2018, Thailand had made 2,458,000 eco-cars and the segment constituted over half of passenger car sales in the local market.
Environmental mission
As the chief of the OIE, Mr Nattapol has ambitions to upgrade locally made vehicles to Euro 5 and Euro 6 standards by 2021 and 2022.
"In the past, Thailand was far more advanced than other countries in Southeast Asia on improvement to Euro standards, closely following European policy," he says. "During the announcement for Euro 4 for vehicles, we encountered disagreement from car makers on why Thailand needed Euro 4 while neighbouring countries remained on Euro 3, then the government took its Euro 4 action in 2012."
Thailand in recent years has suffered from worsening air pollution. The OIE is taking serious action to encourage car companies and importers to comply with higher Euro standards.
"Thailand is now falling behind while other countries are moving ahead concerning Euro emissions standards," Mr Nattapol says. For example, Singapore announced the Euro 6 standard in September 2017, replacing Euro 4.
Every car maker and importer in Thailand has given the nod to compliance with the upgraded Euro emission standard.
"The country needs cooperation from every stakeholder, they cannot be willing to postpone this policy," Mr Nattapol says. "The Euro 5 and 6 standards should be enforced within 1-2 years; otherwise Thailand cannot fall 14-15 years behind Europe, and each stakeholder should join together, even if there is a high cost initially."
He says the smog problem is dire and causes all Thais to suffer: people have to pay 18,250 baht per person per year for N95 masks and 19,900 baht per household for air filters.
With 11 million people in Bangkok, the market value for N95 masks stands at over 200 billion baht per year.
"The question is why pedestrians have to pay so much for their health," Mr Nattapol says. "Meanwhile, vehicles release many emissions and should bear some responsibility for this problem."