Thailand has approved a series of incentives to strongly advocate joint ventures between domestic and foreign companies to produce auto parts, the Board of Investment (BOI) said on August 8, Reuters reported.
The BOI said that new joint ventures, as well as existing parts manufacturers that already enjoy incentives but are in the process of transforming into joint ventures, are eligible to receive an additional two years of tax exemptions if they apply before the end of 2025, but the total number of years of exemptions shall not exceed eight years.
Meanwhile, the Board of Investment of Thailand (BOI) said that in order to qualify for the reduced tax rate, a newly established joint venture must invest at least 100 million baht (approximately US$2.82 million) in automotive parts manufacturing and must be comprised of a Thai company and a foreign company, with the Thai company holding at least a 60% stake in the joint venture and contributing at least 30% of the registered capital of the joint venture.
The above incentives are generally aimed at building Thailand’s strategic drive to be at the center of the global automotive industry, and in particular to leapfrog to a major position in the fast-growing global electric vehicle market. Under this initiative, the Thai government will strengthen cooperation between Thai and foreign companies in technology development to maintain Thailand’s competitiveness in the Southeast Asian automotive industry.
Thailand is the largest automotive production center in Southeast Asia and an export base for some of the world’s top automakers. Currently, the Thai government is promoting investment in electric vehicles and has introduced a series of incentives to attract large companies. These incentives have attracted significant foreign investment in recent years, particularly from Chinese manufacturers. As the “Detroit of Asia,” the Thai government plans to have 30 percent of its vehicle production come from electric vehicles by 2030. In the last two years, investments by Chinese electric car makers such as BYD and Great Wall Motor have also brought new life to Thailand’s automotive industry.