2020/12/09
news briefing 

　　In early November, the Board of Investment (BOI) of Thailand approved a tax reduction plan for electric vehicles and their related supply chains. These measures are formulated in the hope of speeding up the development of the electric vehicle industry and the establishment of the supply chain.

impact analysis 
　　In terms of the automotive industry, there are 16 auto assembly plants and approximately 1,800 component manufacturers in Thailand, which is an export-oriented country with an export value ranking third amongst Asian countries (after Japan and South Korea). The automotive industry is also considered the fifth-largest export commodity of Thailand. Even more, Thailand’s demand for automobiles is the second largest country, after Indonesia, among the five ASEAN countries.

　　As early as 2016, when Thailand had official launched policy 4.0, it has been working to actively support the new-energy vehicle or electric vehicle key component industry based on the exemption of corporate income tax and reducing tax. As for the new tax reduction and the exemption plan, the coverage has expanded to encompass various types of electric vehicles such as passenger cars, buses, trucks, motorcycles, tricycles and ships. Most of the items already have a tax exemption period of 3 years, whereas the period of tax exemption for battery electric vehicles (BEV) and electric boats with a gross tonnage less than 500 tons can be as long as 8 years if the total investment reaches more than 5 billion Thai Baht. This shows that the focus of the Thai government on the development of the automotive industry has shifted from traditional gasoline vehicles to electric ones.

　　Although the proportion of Taiwanese PCB produced in Thailand is relatively low, it is already the largest overseas production location after Taiwan and mainland China. Most manufacturers in Thailand have also focused on automobiles as their primary applications. Out of expectation, the trade of global automobiles has experienced two years of consecutive recessions in 2018 and 2019, making it impossible for some manufacturers to reduce losses at the locality. Hence, the new tax law will not only ensure the competitiveness of the Thai automotive industry but also provide support for the upstream and downstream supply chains that have been severely undermined by the pandemic. These measures should help the manufacturers survive this dark period.