Australian auto parts firms eye opportunity in Thailand

Auto & Audio June 23, 2014 00:00

By Erich Parpart
The Nation

5,854 Viewed

Australian component-parts manufacturers for the automobile industry are moving to Thailand while the National Council for Peace and Order's policy to boost the rule of law can restore foreign confidence in the country if it continues in the long run, th

Leigh Scott-Kemmis, president of Austcham, said the chamber |had found ways of helping Australia’s small and medium-sized enterprises (SMEs) to invest and to enter the supply chain in Thailand.

And he said that given Australia would not be producing motor cars anytime soon after closing down Ford, General Motors and Toyota manufacturing plants, the auto sector in the Kingdom had become more attractive.

Austcham has 440 corporate members and 50 per cent of them are SMEs in the service, hospitality, and manufacturing industries.

"There are significant after-markets in Australia for supply, parts manufacture, components manufacture for the auto sector and a lot of those will now look to come to Thailand and in the last year some 12 or more companies have," he said.

Scott-Kemmis said political uncertainty in Thailand from the beginning of the year had not hurt the country’s manufacturing, supply chain or the export sector. And as most exports from here to Australia were cars, the auto sector had seen a major growth in trade between the two countries over the past 12 months.

He said the Board of Investment had done an outstanding job in providing assistance and facilitating foreign businesses in Thailand but there were areas that could be improved including work permit and custom issues and infrastructure.

However, most of these problems had existed for 20 years and were common for local and foreign investors alike. He said there was no real obstacle for investment in Thailand and most of the minor obstacles that people believed existed were due to lack of awareness and access to information.

"Knowledge is so valuable to understand that some investment obstacles here do not really exist and it is just a simple case that some investors do not know since the awareness was not there. If you can build the awareness, sometimes all of a sudden these so-called obstacles sort of disappear," he said.

Leigh said the sum of foreign direct investment (FDI) from Australia in Thailand was small when compared to other countries in the region such as Vietnam but the two countries remained large trading partners.

He said Australians saw Thailand as more of tourism destination than a significant manufacturing and industrial powerhouse that it was and the chamber was looking for ways to get this information across to investors in Australia.

Another reason why there was a small number of Australian firms investing here was because areas that Australia is particularly good at and things that they want |to invest in were not the areas where there was opportunity in Thailand.

Australians were looking to invest more in education, services and agriculture, but these areas were not as open in Thailand compared to many other countries.

As for business confidence and sentiment, Scott-Kemmis said Austcham members had not complained that the situation in Thailand had affected their ability to do business.

"We are not hearing anything from members that the current situation is causing them anxiety in terms of their business and everyone is just getting on with things as normal."

He said that when martial law was imposed, then was followed |by the coup there were some concerns over how the curfew would effect transport, logistics, and insurance but that was not an issue anymore now that curfew had been lifted.

He praised the NCPO’s effort to increase the implementation of the rule of law in the country.

"The things that the NCPO have done that are tangible, and are encouraging to me, is the push to enforce the law, because there is no question that over a number of years the rule of law in Thailand has been dropping and dropping, especially on the street level," he said.

Scott-Kemmis said rule of law was the most important thing for investment and trade confidence because if people did not trust the system and believe that laws would be enforced, they would lose confidence in the country’s investment and trade environment.

"The move to enforce the law is enormously important but the big test is whether it will continue in the future.

"But if it does, it will be one of the most encouraging factors for foreign investors to do business here in Thailand," he said.

Austcham will have a conference on "Enabling Prosperity – Moving beyond the Middle-Income Trap" on Wednesday at the Grand Hyatt Hotel.