Major home-appliance firms have been shifting manufacturing to Thailand since last year to boost sales in the Asean market while reducing production costs through low-tax privileges under free-trade agreements.

The government’s policy of FTAs with key trading partners has made the Kingdom more attractive than ever before. Pacts have been signed with Australia, New Zealand, China and India, the last two with early-harvest schemes ensuring tariff reduction.

Deputy Prime Minister and Commerce Minister Somkid Jatusripitak hopes to formalise a Japan-Thailand economic partnership by April 3, and Thai trade negotiators are preparing for a seventh round of free-trade talks with the United States and Peru.

Arnut Changtrakul, vice-president of Thai Samsung Electronics Co Ltd, said Thailand could become the production base for its refrigerators for the Asian market as its labour costs were lower than those in South Korea and Thai skilled workers were just as good.

“These reasons prompted the company to shift its 400-litre and 440-litre refrigerator plants from South Korea to Sri Racha in Chon Buri,” he said, adding that the Thai plant was already manufacturing Samsung’s refrigerators up to 380 litres. Samsung moved its microwave-oven-making operations from South Korea to Sri Racha last year.

Mitsubishi Electric announced last week that the company planned to invest Bt1.2 billion in a second air-conditioner factory in its production complex on the Amata Nakhon Industrial Estate. The second factory, scheduled to open in September, will raise annual production capacity from 1.5 million units to more than three million and make Thailand the world’s largest production base for the company’s air-conditioners.

Mitsushige Dehari, managing director of Mitsubishi Electric Kang Yong Watana Co Ltd, the company’s local sales and marketing unit, said the expansion was part of its bid to become one of the world’s top three air-conditioner manufacturers. “Thailand is well located for our Southeast Asian expansion plans,” Dehari said.

Chinese firm TCL Electronics (Thailand) Co Ltd plans to invest several billion baht in the production of air-conditioners and washing machines this year to boost its regional sales ranking to No 1 within five years, the company’s managing director Anson Zeng said.

TCL Electronics (Thailand) is a subsidiary of the TCL Group, a Chinese home-appliance, IT and mobile-phone company with sales of 55.3 billion yuan (Bt282 billion) and a net profit of 760 million yuan last year.

The group succeeded in expanding its foreign market after taking over the French television firm Thompson and cell-phone company Alcatel last year.

TLC put its name on the Thompson television factory on Pathum Thani’s Bang Kradi industrial estate. Its production capacity is three million units a year.

Zeng said Thailand had the potential to be its production base for home appliances, especially air-conditioners and washing machines, for export to South-East Asia, Europe and the US.

Thailand will have a free-trade agreement with the US in a few years, making exports to that country easier from here than from the company’s factories in China.

Somluck Srimalee

The Nation