On Thursday, the Board of Investment (BoI) authorized three-year tax benefits for companies in the automotive sector that engage in robots and automation to boost production.
According to BoI secretary-general Narit Therdsteerasukdi, incentives are offered to investors looking to improve manufacturing efficiency for internal combustion engine, hybrid, and plug-in hybrid electric vehicles.
According to him, the incentives are applicable to both new and current investments made to increase production efficiency, which will accelerate the nation’s transition into a center for a technologically advanced, modern automotive sector.
Businesses who meet the requirements and invest in robotics or automated systems can receive a three-year, 50% corporate income tax exemption on their capital expenditures. Projects within the nation that use automated machinery to generate 30% or more of their total output are eligible for a 100% tax exemption on the capital invested.
By 2024, applications for the incentives must be received.
“The automotive industry plays a crucial role in the nation’s economy as a whole, contributing significantly to exports, employment growth, and the vast number of manufacturers that make up the supply chain, which consists of over 2,300 entities,” stated Mr. Narit.
Thailand ranked 10th in the world and manufactured 1.9 million cars in 2022, making it the largest automotive production base in Asean.
The industry is going through a very important phase of change, and manufacturers will need to make some big changes in order to adopt new technology. Entrepreneurs will be better equipped to compete and manage the technological shift thanks to these industry-supporting initiatives.
With a total value of 1.02 trillion baht in the first nine months of 2023 and an 8.2% annual growth rate, the automobile and auto parts business is the greatest sector in terms of exports, according to Mr. Narit.
This industry employs between 800,000 and 900,000 people and accounts for 14% of Thailand’s export value.
Among the more than 2,300 manufacturers that are a part of the supply chain, 20 are producers of automobiles, 530 are producers of Tier 1 parts, and several smaller and medium-sized businesses, or 1,750 companies, are producers of Tier 2 and Tier 3 components.
In a related event, the BoI said that in the first nine months of this year, it authorized 1,555 investment promotion applications, up 31% from the previous year and resulting in a 22% increase in total investment of 517 billion baht.
At 208 billion baht, electrical appliances and electronics, agricultural and food processing, and automobile and auto parts at 42.2 billion were the three industries with the biggest investment.
There were 910 foreign direct investment projects, up 49% from the same time last year. A 43% increase in overall investment was made, totaling 399 billion baht. Chinese projects topped the list with 97.5 billion baht, then those from Singapore (80.3 billion) and Japan (43.2 billion).
With a total of 552 projects totaling 232 billion baht in investment, the Eastern Economic Corridor got the most substantial investment promotion requests. Most are for the automotive and auto parts industries, petrochemical and chemical industries, and electrical appliances and electronics.
According to Mr. Narit, it is anticipated that the government’s aim of 600 billion baht would be surpassed by both Thai and international investment applications this year.
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