It is also vital for manufacturers to rapidly adapt to meet the demands imposed by new technology trends in global markets.

Last year, according to a report by the Federation of Thai Industries (FTI), the  electronics industry was the country's top export sector with revenue worth US$35.87 billion (Bt1.37 trillion), or a 32.34-per-cent share of the total national export value of $110.88 billion. The industry at the same time has attracted local investment worth about Bt2.08 trillion.

The electronics industry is among the 10 priority sectors that the government has targeted to strengthen competitiveness. The others are textiles and garments, foodstuffs, automobiles, footwear and leather goods, gems and jewellery, plastic products, rubber and rubber products, software, and tourism.

In turning Thailand into Southeast Asia's most attractive location for foreign investment in the electrical and electronics industry, the Board of Investment (BoI) has set up new incentive schemes to attract investment.

Seksan Ruangwohan, director of the BoI's electronics and electrical industries division, said investors would be able to receive premium incentives, especially advantages on corporate income tax.

It has expanded its zone-based fiscal incentives for Zones 1 and 2 - in Bangkok and surrounding provinces - to all electrical and electronics projects.  For example, projects in Bangkok located outside industrial estates were previously ineligible for corporate income tax exemption. Under new incentives, they are eligible for five-year exemptions under certain conditions.

With these dynamic new incentives, it is believed the country will be able to secure long-term attractiveness as a growing and rapidly diversifying electronics hub.

To assist companies to remain globally competitive, the BoI has also granted duty exemptions on all electrical and electronics projects - not just those designated as long-term projects - permitting duty-free imports of upgraded or replacement machinery for the life of project operations. As long as they maintain BoI promotion status, projects can import machinery duty free on an ongoing basis.

Katiya Greigarn, chairman of the FTI's Electrical, Electronics and Allied Industries Club, said that since prices of base-materials, especially copper, aluminium, steel and plastic, have increased, manufacturers needed to create additional new value in what they produce in order to maintain competitiveness.

He said the key factors that will bring advantages in competition were product innovation, knowledge capital, and the use of information and communications technology.

Success also depends on how much manufacturers can keep in line with changing product trends worldwide, with the move towards smaller, simpler but smarter and faster products.

This includes the adoption of environmentally friendly and energy saving concepts.

To support electronics manufacturers, Thaweesak Koanantakool, director of the National Electronics and Computer Technology Centre (Nectec), said that the National Science Technology and Development Agency, Nectec's parent organisation, had earmarked a research and development budget of about Bt1.7 billion this year.

The budget will support eight technology clusters that have been set up to support industries in all areas.

Apart from having a hard-disk drive cluster to assist with advanced research, there are clusters for microelectronics, as well as embedded systems and RFID (radio frequency identification), mobile applications, intelligent medical systems, and next-generation Internet protocol.

suchalee@nationgroup.com

Suchalee Pongprasert

The Nation