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Vibrant Thai Automotive Industry 1

News Bites / BOI Net Applications 2Industry Focus: Thai E&E Industry 5BOI Updates 7Thailand Sets The Standard 8Thailand a Top Hub of Business,Leisure and Medical Travel 9

Company Spotlight: LG Electronics (Thailand) 10

Thailand Economy-At-A-Glance 12

CONTENTS

August 2012 Volume 22 No. 8

Thailand’s automotive industry is growing like gangbusters in 2012, with makers left and right shattering performance records. The country’s automobile production for January to June reached 1.06 million units, marking robust growth of 30.5% compared with the corresponding period of last year. Auto sales in the domestic market zoomed to a total of 606,523 vehicles in the first half, up a whopping 40.4 % y-o-y, with many car brands seeing 1H growth nearly double. Exports shot up by 14% to 456,869 units.

Performance in June alone showed an especially blistering pace. With all carmakers recovered from last year’s massive flooding, Thailand’s automobile output for June reached 205,600 units. This represented an all-time high for any single month and a hefty 33.8% y-o-y increase. Domestic sales during June soared by 75.7% y-o-y to set yet another record at 123,471 units. Exports of Thai-built vehicles in the month hit 94,722 units, the most since the country began auto exports in 1988, the Federation of Thai Industries reported.

June activity in the pickup truck sector was also brisk, with production of 1-ton models rising to 119,568 units, up 20.3% from a year earlier. For the entire January-June period, 1-ton pickups output skyrocketed by 36.1% y-o-y to 679,915 units. Thailand remains the world’s second-largest producer and exporter of 1-ton pickup trucks.

The spectacular first-half success of the Thai automotive industry can be attributed to several factors. These include production capacity’s rapid recovery

Vibrant Thai Automotive IndustryShattering Performance Records

NEWS BITES BOI NET APPLICATIONS2010

(US$ = 31.68THB)2011 (Jan-July)

(US$ = 30.07THB)2012 (Jan-July)

(US$ = 31.65THB)Number of

projects Value Number of projects Value Number of

projects Value

Total Investment 2,112 22,066 973 9,564 1,239 18,142

Total Foreign Investment 1,059 12,999 599 6,824 829 10,496

By Sector

Agricultural Products 72 555 48 347 43 581

Minerals / Ceramics 40 886 20 290 17 254

Light Industries / Textiles 63 434 43 334 43 504

Automotive / Metal Processing 367 3,974 207 2,577 281 3,863

Electrical / Electronics 200 2,566 113 1,406 171 2,569

Chemicals / Paper 117 1,409 66 843 114 996

Services 200 3,174 102 1,026 160 1,729

By Economy

Japan 560 6,358 312 3,237 474 6,663

Europe 150 765 95 482 94 831

Taiwan 54 271 26 174 31 122

USA 31 252 18 141 27 422

Hong Kong 32 435 15 361 27 405

Singapore 55 815 35 579 78 603

By Zone

Zone 1 278 1,108 161 620 223 1,402

Zone 2 578 8,817 326 4,959 469 7,457

Zone 3 203 3,075 112 1,245 137 1,637

Unit: US$ MillionNote: Investment projects with foreign equity participation from more than one country are reported in the figures for both countries.

Boosting Economic Development in Thai-Myanmar Border Areas

Thailand and Myanmar have agreed to promote further economic development in their shared border areas, an issue that was discussed during the visit to Thailand by U Thein Sein, President of the Republic of the Union of Myanmar, from 22 to 24 July 2012.

Prime Minister Yingluck Shinawatra said that she had proposed the establishment of three permanent border crossings between Thailand and Myanmar. The border crossings include Kio Pha Wok checkpoint in Chiang Mai province, Ban Huai Ton Nun checkpoint in Mae Hong Son province, and Ban Phu Nam Ron checkpoint in Kanchanaburi province.

Both countries agreed to work closely on the development of Myanmar’s Dawei deep-sea port, which will be connected with the Laem Chabang deep-sea port in Thailand. A Thai-Myanmar working group was set up at the ministerial level, and the working group will meet in August 2012 to consider various pending issues related to Thai-Myanmar cooperation in Dawei, ways and means to work together to expand the industrial area, and how to take care of communities located in the area.

A Call for Thailand and Germany to Promote Trade and Investment for the Building of EU and ASEAN

Germany is now Thailand’s largest trading partner in Europe, with a close relationship and strong partnership. During her visit to Germany last month, Prime Minister Yingluck Shinawatra called for both countries to work together to promote trade and investment in the building of the European Union and ASEAN.

In her statement at a reception celebrating the 150th anniversary of diplomatic relations between Thailand and Germany in Berlin, the Prime Minister pointed out that trade between Thailand and Germany came to about nine billion US dollars. She noticed an increase in Thailand’s imports of German products, in particular the intermediate goods. Imports from Germany in 2011 rose by 15 percent, while the level of imports for intermediate products was around 1.6 billion, representing an increase of 14 percent. They include plastics, iron and steel, chemical products, and organic chemicals, all of which are important to Thailand’s production and exports.

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from the end-2011 flood, the strong condition of the domestic economy, consumers’ warm response to launches of new models, and the government’s first-car-buyer stimulus program. Toyota, the top-sel l ing brand in Thai land, acknowledged that the stimulus program accounted for 50% of the company’s subcompact sales during January-June.

Eco-Car and a Third Champion

The ongoing success of the government’s eco-car project is adding vigor to the industry as well, spurring output and sales. The Board of Investment (BOI) launched incentives to promote the manufacture of fuel-efficient and envi ronmental ly safe eco-cars in Thailand back in 2009. So far, there are five BOI-promoted companies of eco-car manufacturing. Nissan was the first, introducing its March model and later offering the Almera. Today those compete for Thai market share with the Honda Brio, Suzuki Swift and Mitsubishi Mirage. Toyota is to launch eco-cars in 2013.

Among the BOI’s requirements on eco-cars, such vehicles need fuel economy of at least 20 kilometers per liter, must meet the Euro 4 emission standard, and should have UNECE 94 and 95 safety levels. In addition, four of five main components (cylinder head, cylinder block, crankshaft, camshaft and connecting rod) must be produced in Thailand.

More than 200,000 eco-cars have been sold locally so far, and the current waiting list exceeds 20,000 units for each model. According to BOI Secretary General Atchaka Sibunruang, once all five manufacturers (including Toyota) reach production of 100,000 units per year, investment in the eco-car project would have exceeded 200 billion baht.

Even better days are ahead for the industry, which begins to explore such avenues as electric car production. The birth of an EV sector locally would represent a potential ly lucrat ive opportunity for investors. To help spur sector development, the BOI is offer ing tax incentives for investment in the manufacture of the high-tech batteries that are the heart of the EV.

Industry experts believe that once mass production commences, local demand for electric cars will increase as economies of scale push down sticker prices. Mitsubishi Motors Thailand is among the enterprises to have already expressed great interest in the EV project. The company said it could launch production of an electric version for its Mirage eco-car in two years as long as the batteries are available. With lower energy consumption than gasoline

or hybrid-powered vehicles and a high level of material recycling, EVs could make up 10% of global automobile output by 2020, according to the Thai Automotive Industry Association.

World Class and Still Growing

With its good fundamentals, the Thai automotive industry has matured into a world-class production base. The record-breaking first half shows that international carmakers continue to regard Thailand, dubbed the “Detroit of the East,” as an excellent investment site for its highly skilled but affordable workforce, state-of-the-art industrial estates that focus on the automotive industry, strong network of parts suppliers, and strategic business location at the heart of Asia.

Thailand will become even more attractive as an investment location when nations of the surrounding region launch the ASEAN Economic Community (AEC). The 10 member countries of ASEAN, or the Association of Southeast Asian Nations, are scheduled to form the AEC in 2015 as a massive single market and production base. Thailand, Singapore, Malaysia, Indonesia, Vietnam, Cambodia, Laos, Myanmar, Brunei and

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the Philippines will drop trade tariffs among them to zero and liberalize investment sectors, enabling the free flow of goods, services, capital and people across the regional bloc. This will open all doors for businesses operating in Thailand to enjoy easy access to a huge market of 600 million consumers.

While the entire Thai automotive industry is surging, performance by some companies has been utterly phenomenal. Chevrolet Thailand sold 112% more vehicles in the first six months of 2012 compared with the year-earlier period. Ford Thailand announced its all-time best monthly sales performance for June at 71% y-o-y growth.

Ford this year is also celebrating the opening of its US$450 million plant in Rayong Province. The plant has an initial production capacity of 150,000 vehicles, which increases the American automaker’s capacity in Thailand to 445,000 units annually. That makes Ford, which has invested more than $1.5 billion in expanding its local operations since 2007, one of the largest producers and exporters of vehicles in the country.

Encouraged by the prosperous nature of the Thai automotive industry, many other enterprises have stepped up their investments in 2012. U.S.-based Dana, a producer of auto axles and driveshafts with 19 manufacturing facilities in the Asia-Pacific region, said it will make Thailand its ASEAN hub. Swedish auto giant Volvo also announced plans to soon move its production base from China to Thailand to serve as its hub, with an eye on the AEC. China’s biggest carmaker, Shanghai Automotive Industry Corporation, reportedly intends to set up a manufacturing base for right-hand-drive vehicles in Thailand, also with the AEC in mind.

In other investments announced during 2012, Bridgestone is building a 20 billion baht factory for construction-vehicle tires, Siam Toyota Diesel is pouring 6 billion baht more into engine production and Thai Summit Group, one of Thailand’s largest auto parts makers, will spend 5 billion to bolster its existing factories.

As industry activity races ahead, forecasts are for Thailand’s total automobile output in 2012 to hit or exceed 2.1 million units,

up dramatically from 1.46 million units last year. Domestic sales projections for 2012 have been revised to a record 1.2 million units, or 553,900 passenger cars and 646,100 commercial vehicles. Whole-year exports are estimated at 1 million units.

T h e i m p r e s s i v e m o m e n t u m established in 2012 will likely carry the vibrant Thai automotive industry to further historic levels in 2013 and beyond. Boosting confidence in the upswing is the Ministry of Finance’s recent announcement that the first-car-buyer scheme, which offers a 100,000 baht excise tax rebate for customers, is to be extended to mid-March 2013.

Thailand is on track to break into the top 10 of the world’s biggest auto producing countries when output climbs to 3 mill ion units in 2015 as opportunities increase with the advent of the AEC. Steady growth will be fueled by continued government support of this core industry that employs 350,000 workers and anticipated further investment from makers.

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INDUSTRY FOCUS

With strong fundamentals and plenty of new investment, Thailand’s electrical appliances and electronics (E&E) industry is forging ahead in 2012. As capability expands to even greater heights, the country augments its status as a top global production hub.

Thailand’s E&E industry stands very tall among the competition. The country is the world’s largest manufacturer of hard disk drives (HDDs), the second-biggest producer of air conditioners and the fourth-largest for refrigerators. The most voluminous electrical appliances base in the Association of Southeast Asian Nations (ASEAN), Thailand also ranks high at 13th in the world for E&E export value.

E&E contributes between 25 and 30% of Thailand’s annual export revenue for all industries. After recovering from last year’s massive flooding, the country’s resilient E&E industry is projected to pass US$54 billion in exports for 2012, according to the Electrical and Electronics Institute. It sees 7% growth in electrical appliances and 12% for the electronics sector this year.

Expertise, New Investment KeepThai E&E Industry at the Top

Major export markets include ASEAN (which currently absorbs 17%), mainland China (17%), the EU (14%), the United States (13%), Hong Kong (12%) and Japan (8%).

The electronics sector accounts for 60% of the local E&E industry’s outbound shipments. The leading export products are HDDs, integrated circuits (ICs), semiconductors, compressors and equipment for mobile phones. Electrical appliances are led by air conditioners, refrigerators, TVs and washing machines. Thailand’s air-conditioner output reached 17 million units in 2011.

In fact, the vibrant electronics sector feeds the prosperity of many other manufacturing industries in Thailand. From communication devices to automotive to even electrical appliances themselves, companies depend on electronic component suppliers’ R&D breakthroughs for achieving added value in new models.

Besides its robust export and manufacturing c a p a b i l i t y, T h a i l a n d a l s o o f f e r s entrepreneurs a lucrative domestic market. The country’s rising middle class with

families of two income earners spells hefty sales for producers of electronic and electrical consumer products.

World-Class Production

With more than 2,300 companies, Thailand’s E&E industry contributes heavily to the country’s economic vigor. Fortified by expertise and innovation, the industry is composed 77% of part and component makers and 23% of end-product assemblers. While the majority of part suppliers are Thai companies, most of the major assemblers are foreign or joint-venture firms.

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Among the many Japanese manufacturers in the country are household names such as JVC, Sony, Orion, Nikon, Pioneer, Panasonic, Canon, Sharp, Hitachi, Mitsubishi, Toshiba, TDK, NEC, Stanley, Rohm, Alps Electric, Epson, Alpine, Minebea, NHK, Seiko, Sanyo and Fujitsu. Prominent investors from South Korea include LG and Samsung, with Tatung and Acer from Taiwan. Other top manufacturers are Europe’s ETA, Philips, Electrolux, Stiebel Eltron, Schneider, BHS, ABB and Fasco; and Western Digital, Seagate, Hutchinson, Honeywell, Carrier, Emerson and Spansion of the United States. Delta Electronics (Thailand) Plc is one of the industry’s biggest firms with 11,000 employees.

This year is seeing more investment as enterprises demonstrate confidence in Thailand as a leading hub. Samsung has announced plans for spending 3 billion baht to double its local refrigerator output to 3 million units. LG is also expanding its air-conditioner manufacturing facility with a 1 billion baht investment.

Toshiba Carrier Corp. said it is building a second air-conditioner plant in Thailand that will be the company’s largest worldwide. With a capacity of 2 million units a year, the plant is scheduled to start production next February. Electrolux will set up its first ASEAN refrigerator factory in Rayong Province, with production starting by early 2013.

Sony has earmarked 700 million baht for marketing and promotions to boost sales of its digital cameras, and Haier will increase annual capacity at its washing machines plant to as much as 300,000 units.

During the first half of 2012, the Board of Investment (BOI) received applications for 134 E&E projects valued at nearly 59.7 billion baht in new investment by foreign companies.

Helping to ensure sustainable growth for the industry, the BOI grants a wide range of incentives to E&E investors. Tax-based benefits include exemption or reduction of import duties on machinery and raw materials, and corporate income tax exemption for up to eight years. The non-tax incentives are permission to bring in foreign workers, own land and

remit foreign currency abroad. There is also a special package for investors that apply prior to the end of 2012. Investors have praised the BOI’s incentives as the most attractive in Asia.

Prime Location for Investment

Dubbed the Silicon Valley of the Far East, Thailand is the global frontrunner in production of HDDs, the country’s largest electronics export. The world’s largest HDD manufacturers, Western Digital and Seagate, operate production facilities here. With a highly efficient cluster network of supporting industries, Thailand produces more than 260 million HDDs a year, or 40% of world output. The country’s exports in the line reach US$12 billion annually. As digital data now rules nearly every aspect of life, demand for hard drives will soar in coming years, heightening Thailand’s vital importance as a production center.

The IC segment of the industry will also continue prospering, as demand for electrical apparatuses and electronics of all types is rising. Investment possibilities are therefore going to widen as well. As Thailand’s imports of ICs currently exceed its exports, the segment represents a golden opportunity for new investors that establish IC plants here.

Virtually all of the major international manufacturers of electrical appliances have already located in Thailand to benefit from its

many advantages. Thai-made white goods are praised by buyers around the world for their quality and affordable prices.

Boasting very favorable investment circumstances, Thailand is an excellent location for E&E operations. The country gives manufacturers a great infrastructure, including state-of-the-art industrial estates and a vigorous network of parts suppliers. Efficient transportation provides easy access to fast-growing markets, with Thailand located at the heart of Southeast Asia. The steady government support also perpetuates the industry’s competitiveness.

E&E businesses will see Thailand become an even more attractive investment location with the launch of the ASEAN Economic Community (AEC) in 2015.

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The 10 member countries of ASEAN are to drop trade tariffs among them to zero and liberalize investment sectors, enabling the free flow of goods, services, capital and people across the regional bloc. Collectively, this massive single market comprising Thailand, Singapore, Malaysia, Indonesia, Vietnam, Cambodia, Laos, Myanmar, Brunei and the Philippines offers 600 million consumers.

Investors in Thailand also enjoy efficient regional market access through the country’s free trade agreements with Japan, China, India, Australia and New Zealand.

Dynamic Clusters, Hard Workers

Developed with encouragement from the government, Thailand’s various electronics clusters are the envy of competing countries. By putting assemblers and their input suppliers in proximity, the cluster program enables companies to benefit from efficient flow of goods, cost-savings, collected expertise and technological innovations.

This dynamic concept gives operators in Thailand a considerable advantage. As a prime example, nearly all of the world’s major HDD players operate production facilities within a 250-kilometer radius of Bangkok, representing a preeminent supply chain.

The bustling E&E industry in Thailand employs more than 480,000 workers. Diligent, reliable and well-educated, the Thai workforce is another reason that investors continue flocking to the country. The government endeavors constantly to advance Thailand’s technical capability, and certified engineers already make up one-third of the total E&E labor pool.

Thailand Board of Investment (BOI) has extended the application period for its flood relief measure for replacement of damaged equipment or new investment until 31 December 2012. This will allow more than 150 companies in Pathum Thani and Ayutthaya the time to access this incentive. As of 30 June 2012, 490 projects received approval for import duty exemption for machinery replacement, with the total value of Bt108.65 billion.

The BOI Board also revised promotional incentives for large-size motorcycle manufacturing projects. Previous BOI incentives were offered only to motorcycles manufactured with larger than a 500cc engine. This has now been reduced to engines with at least 250cc. The change in the measure should support Thailand’s goal to become a manufacturing hub for big motorcycle exports.

BOI has also approved the Thai Overseas Investment (TOI) Plan with Indonesia, Myanmar and Vietnam as target countries in ASEAN economies, as well as with India and China also included as target markets with high potential for Thai’s overseas investment.. Action plans were also approved to

BOI Updates

support overseas investment, including cooperation with other relevant government agencies and financial sectors for tax and financial support, training programs on outbound investment for entrepreneurs and Thai employees as well as an information center for overseas investment.

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Thailand remains one of the world’s top investment destinations and continues to receive accolades and high rankings from a variety of international organizations and rating companies. Christine Lagarde, Managing Director of the IMF, has called the post-flood rebound in the Thai economy “a testament to the resilience of the Thai people.” The IMF also writes that “Thailand is one of the great development success stories. Due to smart economic policies it has become an upper middle income economy and is making progress towards meeting the Millennium Development Goals.” The Fiscal Policy Office, Ministry of Finance, forecasted Thailand’s economy to grow by 5.2% to 6.2% this year.

It is no wonder then that The Economist Pocket World in Figures lists Thailand as having the 33rd biggest economy in the world, up from 35th in 2011, or that the country has moved from being the 33rd biggest exporter and 34th biggest earner from services and income in 2011 to 30th and 32nd, respectively, in 2012. Also showing improvement over the past year, Thailand has moved from being the 19th to 17th country with the largest manufacturing output, 39th to 35th for largest services output; 15th to 14th for agricultural output and from 18th to 17th for tourist arrivals. To show such improvement while the world economy remains so uncertain truly reflects the strength of Thailand’s economy.

The Worldwide Cost of Living Survey 2012, conducted by Mercer Human Resource Consulting, covers 214 cities across five continents and measures the comparative cost of over 200 items in each location, including housing, transport, food, clothing, household goods and entertainment. It is the world’s most comprehensive cost of living survey and is used to help multinational companies and governments determine compensation allowances for their expatriate employees. Thailand is ranked 81st for 2012, which is competitive in comparison to most other cities in Asia.

Thailand Sets The StandardThis is clearly reflected in CBRE Global Research and Consulting’s Semi-Annual Survey Report. This year Bangkok is ranked at the 18th position in the rise of office space, as the Bangkok office market saw increased levels of demand.

The World Bank’s 2012 Ease of Doing Business rankings, which compare 183 of the world’s economies on 10 topics which include starting a business, dealing with construction permits, registering property, getting credit, protecting investors, paying taxes, trading across borders, enforcing contracts, resolving insolvency and getting electricity, ranks Thailand as the 17th easiest place to do business in the world, followed by Malaysia, Germany and Japan, and one of the best among ASEAN countries. “Thailand has ranked among the world’s top 20 countries for Doing Business for the past 8 years. The ranking is a testimony to Thailand’s continuing efforts to improve its business environment”, said Annette Dixon, World Bank Country Director for Thailand.

Thailand also continued to show improvement in attracting foreign direct investment, moving

up four places to an 8th place ranking in the UNCTAD World Investment Report 2012-2014. Among the ASEAN economies, only Indonesia ranked higher.

In the Heritage Foundation’s Index of Economic Freedom, Thailand ranks 10th out of 41 countries in comparison to the Asia-Pacific region. The Index states that “The Thai economy has rebounded quickly from the recent economic slowdown with strong export performance. Economic fundamentals remain relatively solid, and the main challenges are to strengthen investor confidence and move forward with institutional reforms.” It should be noted here that the Index was compiled prior to Thailand’s revision of the corporate income tax, which has substantially reduced tax rates. “The overall regulatory framework continues to evolve gradually in ways that promote the emergence of a dynamic private sector and encourage broad-based employment growth.”

Thailand enjoys relatively high freedom in trade, a category in which the country is ranked 75.2. In several other areas as well Thailand achieved high marks, such as in government spending, 87.5; labor freedom, 79.0; fiscal freedom, 75.1; business freedom 72.5; financial freedom, 70.0; and monetary freedom, 69.3.

Looking at consumer confidence, the Nielsen Global Survey of Consumer Confidence and Spending Intentions, conducted in May 2012, lists Thailand among the top ten countries for global consumer confidence. The Survey polled more than 28,000 online consumers in 56 countries throughout Asia-Pacific, Europe, Latin America, the Middle East, Africa and North America. Across the spectrum, whether it be ease of doing business, freedom to do business, affordable lifestyle, and a momentum towards future growth in a burgeoning region, Thailand is the place that is globally recognized as good for business, good for living.

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Thailand continues to be celebrated as a world-class travel destination, whether for business, leisure or medical care. Offering excellent infrastructure, reliable full service and very affordable prices, the country is considered a prime location by travelers from Asia to the Middle East to the West.

Business travelers from Malaysia, Singapore, Indonesia, Hong Kong, mainland China and India have ranked Thailand among their top destinations of the first half of 2012, according to a recent survey by the France-based hotel chain Accor.

The company a l so f ound t ha t Tha i entrepreneurs themselves traveled more in the January-June period, with the upward trend expected to continue during the second half of the year. In the first half, Thai business people made nine trips (domestic or overseas) on average, up from five in 1H 2011. Entrepreneurs indicated that they are increasing travel activity because business is growing.

“We found that Thai business travelers are more confident about the economic strength this year and are seizing new business opportunities both locally and abroad,” said Evan Lewis, vice-president for communication at Accor Asia-Pacific.

New York-based Travel & Leisure, with 4.8 million readers, also views Thailand most favorably. In its 2012 poll, the magazine has once again voted Bangkok as the world’s best city for tourism. The Thai capital’s attractiveness as a tourist center outranks Florence, Istanbul, Cape Town, Sydney, Rome, New York City, Hong Kong, Kyoto and Paris.

Thailand welcomed about 19 million foreign tourists last year and the figure for 2012 is projected to shoot well past 20 million visits. According to Department of Tourism statistics, activity was vigorous in the first half of this year with 12.43 million arrivals, up 8.34% from the same period in 2011. During 1H, visitors from China led the way at 1.40 million, followed by Malaysia at 1.36 million, Japan with 730,590, Russia with 726,041 and South Korea at 640,230. Visitors from India, Laos, Australia, the United Kingdom, Singapore, the United States, and Middle Eastern countries also came in high numbers.

They flock to Thailand for the shopping, nightlife and ancient palaces of its cities, beautiful beaches, delicious Thai cuisine, and scenic mountains and valleys.

Thailand a Top Hub of Business,Leisure and Medical Travel

Thailand’s tourism industry is on track to reel in revenues from foreign visitors totaling 1.04 trillion baht in 2013, 1.23 trillion baht in 2014 and 1.45 trillion baht in 2015, according to estimates by the Tourism and Sports Ministry. Local tourists will spend an additional 480 billion baht next year, 520 billion baht the year after and 550 billion baht in 2015. The expenditure by foreigners and locals combined elevates the country to a 2 trillion baht tourism market in three years.

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COMPANY SPOTLIGHT

“Life’s good.” That is the highly inspirational slogan of LG Electronics known around the world. It can also be said that Thailand has been very good for one of the conglomerate’s overseas production subsidiaries.

LG Electronics (Thailand) Co., Ltd. set up its plant in the Pluakdaeng district of Rayong Province in 1997, the leading lines now being washing machines (40% of current output), air conditioners (25%) and TVs (20%). Microwave ovens and compressors for air conditioners are also produced.

Annual output at the plant, which is an affiliate of South Korea-based LG Electronics, Inc., reaches 4 million sets, with 60% for export. The facility also imports products from LG plants in other countries, selling them in the robust Thai domestic market. These include vacuum cleaners, refrigerators, monitors and mobile phones.

In the Thai domestic arena, at present LG enjoys a hefty 31% market share for washing machines and 17% for LCD TVs. With local society modernizing and the buying power of Thai citizens increasing, Thailand is proving to be an excellent location for the company. It sees the domestic market for washing machines and TVs in particular continuing to expand by at least 5% per year.

LG enjoys a long history in Thailand. The company first started manufacturing here during 1988 at a since-closed factory near Bangkok that served only the domestic market. Production is now concentrated at the huge 310,000 sq.ft. facility in Rayong.

Mr. Cheol Yung Kim, production subsidiary president at the factory, said many factors give LG the edge in the industry. “Our advantage over competitors is our reliability, sophisticated production processes, cost-effectiveness, durability and quality,” he explained.

Top quality is certainly one of the keys to success at the plant. The company said quality is in the mind of every person in the line. Among the many steps for ensuring quality, some of the plant’s personnel are sent to LG headquarters for training of several months or even years depending on the position.

It was also pointed out that TDR or Tear Down and Redesign is a core project for achieving continuous progress of the company.

Market Leading LG ElectronicsEnjoys Strong Growth in Thailand

TDR involves the improvement of every aspect, all areas from personnel and the building itself to production and product quality.

Social care and concern for the environment are also important policies at LG Electronics (Thailand). Among many such activities, the company regularly donates its products to help support schools, police stations and local communities. It also grants scholarships each year for young Thai students.

Strong Confidence in Thailand

When considering three different countries in Southeast Asia for the new plant, LG was most impressed by Thailand’s many favorable investment circumstances. Mr. Kim noted that Thailand is an excellent operating base for its efficient infrastructure (including his plant’s closeness to the Laem Chabang deep-water port only 35 kilometers away) and centralized location amid the region’s fast-growing export markets. The country’s affordable skilled labor and generous government support of business are other advantages.

“I believe in Thai people,” Mr. Kim said. “They are very kind, skillful and diligent.”

The Thailand plant can be described as “a people company.” This is in line with the LG group’s corporate policy to respect workers, customers and all of society. Under one of the plant’s many assistance programs, the company pays all expenses for employees traveling to their provincial hometowns during holidays.

As for the Thai government’s pro-business attitude, the incentives offered by the Board of Investment (BOI) played a significant role in LG’s decision to choose Thailand. “The BOI is very helpful to investors,” Mr. Kim said. “The BOI incentive granting exemption on duties for imported machinery is especially helpful. This is because, as a home appliances and electronics c o m p a n y, w e a r e continually investing in our production machines.”

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The money saved by such incentives from the government can be used by LG to invest more in quality and productivity at the plant. The parent company LG Electronics, with more than 115 operations and over 91,000 employees worldwide, is a global leader and technology innovator in home appliances, consumer electronics and mobile communications. Achieving global sales of US$49 billion in 2011, it is one of the world’s top producers of air conditioners, washing machines, refrigerators, flat panel TVs and mobile devices. LG invests in the future through innovative technologies, cutting-edge designs and unique products.

Since taking its very first step in 1958 as GoldStar, LG Electronics has an over 50-year history that can truly be called Korea’s history of electronics. LG Electronics has improved people’s living standards and has contributed to economic growth with aggressive investments and constant technological developments.

The corporate logo positions the “L” and the “G” inside a circle, with the two letters shaped into a stylized image of a human face. The symbol represents the ideal of humanity, along with the company’s goal to keep close relationships with its customers around the world. The modern and distinctive design is also regarded as symbolic of the company’s emphasis on excellence as it builds the LG brand by launching innovative and breakthrough products.

Besides business and leisure, Thailand is also a hub of medical tourism. With government agencies and business associations pushing the concept of medical, health and wellness tourism, the country already welcomes 2 million foreign patients each year. Services range from heart bypass procedures to hip replacements to dental care. In a cost comparison example, a heart bypass runs about US$130,000 in the United States, US$20,000 in Singapore but only US$11,000 in Thailand.

Some 1,400 public and private hospitals are situated far and wide throughout the nation, offering state-of-the-art equipment and overseas-trained doctors who operate at international standards. Thailand’s quality care is a fraction of the cost of procedures in many other countries.

In addition to the affordable world-class medical services, Thailand has its excellent coastal, highland and cosmopolitan tourism sites as a bonus for medical tourists who want to bring their families along. The country’s medical tourism packages are all-inclusive. Besides arranging the needed medical services, they provide the foreign patients with airport-hotel transfers, accommodation and meals, and cultural activities such as visits to temples, floating markets, traditional Thai dancing shows, elephant and crocodile farms, and beautiful coral coasts.

To help make treatment more convenient, the Cabinet in August

2012 approved a Ministry of Interior measure allowing visitors from six Middle Eastern nations who seek medical services to stay in Thailand for up to 90 days without visas. This is part of the government’s work to enhance Thailand’s status as a major tourist destination. The six countries are Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates. According to the Tourism Authority, the new measure should boost Middle Eastern medical tourists substantially from the current annual number of about 527,000.

Thailand’s position as a leading global center of tourism will be further strengthened when the ASEAN Economic Community (AEC) takes shape. In 2015, the 10 member countries of ASEAN (Association of Southeast Asian Nations) are to launch the AEC as a single market. Tariffs will be eliminated and investment sectors liberalized between Thailand, Singapore, Malaysia, Indonesia, Vietnam, Cambodia, Laos, Myanmar, Brunei and the Philippines.

With this, a free flow of goods, services, capital and people will blossom across the regional bloc. Under the so-called AEC Blueprint, health care and tourism are two of the priority service sectors targeted for removal of all restrictions by 2015.

Continued from P. 9

August 2012

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THAILAND ECONOMY-AT-A-GLANCE

Source: Stock Exchange of Thailand

Source: Bank of Thailand

SET Monthly Closing Values

International Reserves / Short-term Debt (%)

Exchange Rate Trends

Industrial Capacity Utilization (%)

Head Office, Office of the Board of Investment 555 Vibhavadi-Rangsit Road, Chatuchak, Bangkok 10900, ThailandTel: +66 (0) 2553 8111 Fax: +66 (0) 2553 8222 Website: www.boi.go.th E-mail: head@boi.go.thBEIJINGThailand Board of Investment, Beijing Office Royal Thai Embassy No.40 Guang Hua Road, Beijing, 100600, P.R.China Tel: (86-10) 6532-4510 Fax: (86-10) 6532-1620 E-mail: beijing@boi.go.th

FRANKFURTThailand Board of Investment, Frankfurt OfficeBethmannstr. 58, 5.OG60311 Frankfurt am Main Federal Republic of Germany Tel: (49 69) 92 91 230Fax: (49 69) 92 91 2320E-mail: fra@boi.go.th

GUANGZHOUThailand Board of Investment, Guangzhou Office Investment Promotion Section, Royal Thai Consulate-General, Guangzhou, Room 1216-1218, Garden Tower, 368 Huanshi Dong Road, Guangzhou, 510064 P.R.C. Tel: (86-20) 833-38999 Ext: 1216 to 18 (86-20) 838-77770Fax: (86-20) 838-72700 E-mail: guangzhou@boi.go.th

LOS ANGELES Thailand Board of Investment, Los Angeles Office Royal Thai Consulate-General 611 North Larchmont Boulevard, 3rd Floor, Los Angeles, CA 90004 USA Tel: (1-323) 960 1199Fax: (1-323) 960 1190E-mail: boila@boi.go.th

NEW YORKThailand Board of Investment, New York Office 61 Broadway, Suite 2810 New York, NY 10006 U.S.A.Tel: (1-212) 422 9009Fax: (1-212) 422 9119E-mail: nyc@boi.go.th

OSAKAThailand Board of Investment, Osaka Office Royal Thai Consulate-General, Osaka, Bangkok Bank Bldg. 7th Floor , 1-9-16 Kyutaro-Machi, Chuo-Ku, Osaka 541-0056 Japan Tel: (81-6) 6271-1395 Fax: (81-6) 6271-1394E-mail: osaka@boi.go.th

PARISThailand Board of Investment, Paris Office Ambassade Royale de Thailande, 8, Rue Greuze75116 Paris, FranceTel: (33 1) 5690 2600 (33 1) 5690 2601Fax: (33 1) 5690 2602E-mail: par@boi.go.th

SEOULThailand Board of Investment, Seoul Office #1804, 18th Floor, Coryo Daeyungak Tower, 25-5, Chungmuro 1-ga, Jung-gu, Seoul, 100-706, Korea Tel: (822) 319-9998 Fax: (822) 319-9997E-mail: seoul@boi.go.th

SHANGHAIThailand Board of Investment, Shanghai OfficeRoyal Thai Consulate-General15 F., Crystal Century Tower, 567 Weihai Road, Shanghai, 200041, P.R.China Tel: (86-21) 6288-9728, (86-21) 6288-9729 Fax: (86-21) 6288-9730E-mail: shanghai@boi.go.th

STOCKHOLMThailand Board of Investment, Stockholm OfficeStureplan 4C 4th Floor 114 35 Stockholm, Sweden Tel: +46 (0)8 463 1158 +46 (0)8 463 1172 +46 (0)8 463 1174 to 75 Fax: +46 (0)8 463 1160 E-mail: stockholm@boi.go.th

SYDNEYThailand Board of Investment, Sydney Office Suite 101, Level 1, 234 George Street, NSW 2000, Australia Tel: (+61) 2 9252 4884 Fax: (+61) 2 9252 2883 E-mail: sydney@boi.go.th

TAIPEIThailand Board of Investment, Taipei Office Taipei World Trade Center 3rd Floor, Room 3E39-40, No.5, Xin-Yi Road, Sec.5Taipei 110, Taiwan, R.O.C. Tel: (886) 2-23456663Fax: (886) 2-23459223 E-mail: taipei@boi.go.th

TOKYOThailand Board of Investment, Tokyo Office Royal Thai Embassy8th Fl., Fukuda Building West,2-11-3 Akasaka, Minato-ku, Tokyo 107-0052 JapanTel: (81 3) 3582 1806Fax: (81 3) 3589 5176E-mail: tyo@boi.go.th

Facts about ThailandPopulation (2010) 66 millionASEAN Population 600 millionLiteracy Rate 96%Minimum Wage (1 Apr’12, Bangkok) 300 Baht/day

GDP (2011) US$ 345.6 billionGDP per Capita (2011) US$5,113GDP Growth (2011) 0.1%GDP Growth (2012, projected) 5.5-6.5%Export Growth (2011) 16.4%Export Growth (2012, projected) 15.1%

Trade Balance (2011) US$ 23.5 billionCurrent Account Balance (2011) US$ 11.9 billionInternational Reserves (2011) US$ 175.12 billionCapacity Utilization (2011) 58.14%Manufacturing Production Index (2011) 172.39Customer Price Index (July 2012) 115.82(2007 = 100)

Corporate Income Tax 10-23%Withholding Tax 10-15%Value Added Tax 7%

July Average Exchange RatesUS$1 = 31.65 baht€1 = 38.94 baht£1 = 49.36 baht100 ¥ = 40.07 bahtCNY1 = 4.97 baht

Top 10 Exports 2012 (Jan-Jun)

Product Share Value (US$ bn)

1 Motor cars, parts and accessories 9.20 10.332 Automatic data processing machines

and parts thereof8.82 9.90

3 Refine fuels 5.90 6.624 Precious stones and jewellery 5.20 5.835 Rubber 4.20 4.716 Polymers of ethylene, propylene, etc

in primary forms3.75 4.21

7 Chemical products 3.75 4.218 Rubber products 3.74 4.209 Electronic integrated circuits 2.90 3.25

10 Machinery and parts thereof 2.79 3.13Total 112.26

Source: Ministry of Commerce

Source: Bank of Thailand

Source: Bank of Thailand BOI

BOI Fair 2011

August 2012

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