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mplete Build Up (CBU) and Complete Knocked Down (CKD) parts. However in 1960, government had announced to keep tax rate on imported CBU unchanged and reduced tax rate on imported CKD parts by 50%. In addition during 1964 to 1969, Board of Investment (BOI) had promoted the automotive assembly industry according to investment promotion Act. According to this Act, more than 10 automotive assemblers have joined the industry. 10 companies are listed below.

Pattana Automobile Co., Ltd.,

Prince Motor Thailand Co., Ltd.,

Toyota Motor Thailand Co., Ltd.,

Isuzu Motor (Thailand) Co., Ltd.,

Thai Hino Industry Co., Ltd.,

Thai Auto-Invent & Assembly Co., Ltd.,

Nailerd Co., Ltd.,

Product and Package Delivery Authority

International Engineering Co., Ltd.,

Bangchun General Assembly Co., Ltd.,

Although in 1969, Thailand has14 assemblers with domestic production were 12,140 vehicles but this is equivalent to 18.55% of domestic demand. After 1969, even though the productions of vehicles were not sufficient to meet domestic demand, BOI closed investment promotions for automobile assembly. Gave the reason that too many assemblers will fail to reach economies of scale. After announcement of BOI there were only 9 assemblers in operations.

Figure 3: Domestic Production, Domestic Sales and Export (1988 – 2010)

(Source: Thai Automotive Industry Association)

Thai automotive industry has domestic production capacity greater than domestic demand since 1988 with more than 150,000 vehicles were produced in that year. Excess of domestic demand were exported and this was the year that Thailand start exporting of vehicles. Thailand became export oriented since 1996 which is shown in figure 3; from point A in figure 3 represent the year that Thailand became export oriented. Export of vehicles has grown more than 33% on average since the beginning of the exporting periods. One of the reasons to explain this fast growth of export of automotive is production base. Mr. Atsuo Kurada, president of the Japanese External Trade Organization (JETRO) in Bangkok said that “Thailand has become a very favorable export and production base for Japanese assemblers” he also added that “several auto-manufacturers have closed their Japanese factories to shift production to Thailand”.

Thai automotive industry has grown exponentially since the beginning of the production in 1961 to 1996; which are shown in figure 2. In 1997 due to Asia Financial Crisis, both domestic production and domestic sales drop sharply. This is shown in point B in figure 3. Domestic production in year 1997 dropped by 35.47% and domestic sales decreased by 38.36%. In year 1998 these 2 figures have further dropped and reach its highest negative growth of 56.11% for domestic productions and 59.74% for domestic sales. However during the financial crisis, one thing that Thai automotive industry is doing well is export.

Export has grown sharply in both 1997 and 1998 with more than 200% in growth rate in 1997 and more than 60% in 1998. Thai automotive industry had gained benefit from this financial crisis since collapse of the Thai baht caused by the decision of the Thai government to float the baht and this result in devalue of Thai baht. Thai made automobile were become more attractive. In