Automakers say Thailand needs to join the Trans-Pacific Partnership trade agreement to strengthen the country’s vehicle-export prospects in the long run.
The agreement is undergoing ratification by the 12 nations that signed the pact, including Thailand’s neighbor Malaysia.
Honda Thailand Chief Operating Officer Pitak Pruittisarikorn says any free-trade agreements, bilateral or regional, would be a boon to Thailand's automotive industry, which exports 70% of its overall production.
Speaking at a seminar at the Thailand International Motor Expo, the Bangkok Post quotes Pitak as saying, “At present, Thailand has yet to lose much competitiveness against four ASEAN (Association of Southeast Asian Nations) countries that joined the TPP.”
ASEAN members who have signed the pact are Brunei, Malaysia, Singapore and Vietnam.
“The pact will deliver a huge impact to Thailand once (those nations) develop their own automotive industries to support TPP members or (if) Indonesia decides to join the trade pact,” Pitak says.
The Honda Thailand executive says a weakness of the local automotive industry is the less than 70% utilization of its total production capacity of 2.9 million units a year. Thailand performs well in exports but needs more destinations to reach full production capacity, he says.
Also joining the TPP are Australia, Canada, Chile, Japan, Mexico, New Zealand, Peru and the U.S.
Other countries interested in TPP membership include Taiwan, Philippines, Colombia, Laos, Indonesia, Cambodia, Bangladesh and India, but international law experts say many will have to end protectionist trade policies to qualify.
Top Dog in Southeast Asia – For Now
The Thai government has said it wants to join the TPP, but changes to the Constitution in 2007 made it much more difficult to enter such an agreement. This followed a stinging report in 2006 by the nation’s Human Rights Commission that likened the trade deal’s potential impact to “a tsunami that crashes to the shore without warning when one is not prepared to deal.”
Ong-arj Pongkijworasin, chairman of the Federation of Thai Industries automotive industries club, tells the forum the ASEAN Economic Community’s tariff-free zone taking effect at the end of the year will allow Thailand to beef up exports, particularly of completely built-up vehicles, complete-knocked-down kits and auto parts throughout the region.
Thailand has the most prominent automotive industry in ASEAN, accounting for 49% of the 3.9 million units built in the region yearly. Indonesia accounts for 35%.
The newspaper quotes Ong-arj as saying ASEAN Economic Community implementation is unlikely to boost competitiveness in the regional automotive market.
“To ensure regional sustainable growth and long-term competitiveness, each world-class car manufacturer should not set up a production base that overlaps in other ASEAN countries,” he says.