Thai visit was a “mercy mission”

A THAI automotive trade mission to Australia late last year – which caused a furore because some people assumed Thailand wanted local parts-makers to build factories in Thailand and export back to Australia – has been defended by an Australian business representative.

The executive director of the Australia-Thai Chamber of Commerce in Bangkok, Mark Carroll, yesterday described it as “a mercy mission”.

Mr Carroll said everyone can see that the Australian industry is at a low ebb – last year’s output was the lowest for more than 50 years – and the Thais believed the Australian parts-makers would want to seize an opportunity to increase volumes when domestic production was at a low level.

He said that is why the Thai Board of Investment organised the trade mission to Australia, not to persuade the parts-makers to shut their Australian operations.

“I do see a role for the Australian auto industry in Thailand,” said Mr Carroll.

“We are well-versed at operating in a high-productivity environment, and that is what’s happening in Thailand.”

He said the growth in the Thai car industry has been so rapid there is a shortage of labour now appearing in the special economic zones on the country’s eastern seaboard.

“The businesses have to become more productive to cope with some of these pressures coming from a structural shortage of labour. That’s where Australian companies can help.

“I think the Thais can see a role for Australian businesses there.

“But that can also come from somewhere else. Australia is not the only country used to operating in a high-productivity environment.”

Mr Carroll said the Australian government could have intervened last year and done more to explain what the Thai trade mission was about.

“There was a great opportunity for the government to stand up and say, ‘Hey, this is not all about off-shoring jobs this is about expanding markets’, but that opportunity was missed as well.”

There are 11 Australian companies – a mixture of Tier One, Tier Two and Tier Three suppliers – now established in the Thai automotive industry.

“That is exactly what Futuris has done they’ve expanded their market by moving out here, as well as keeping their operations in Australia.”

Mr Carroll said the Thai automotive industry was expanding rapidly and offered a lot of opportunity.

In 2012, the Thai industry made two million vehicles – of which 170,000 were exported to Australia – while the Australian industry produced a little more than 200,000 vehicles.

Projections by the Thai Board of Investment indicate that output is expected to reach three million vehicles by 2017.

The automotive industry is one of seven activities selected for specific promotion under Thai government policies.

Incentives include exemption of import duty on machinery and on raw and essential materials needed for production.

Companies also receive an eight-year corporate income tax exemption, a 50 per cent reduction in personal income tax for designated people and some accelerated corporate tax deductions.