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THAILAND’S MANUFACTURING STRENGTH – WHAT IT MEANS FOR AUSTRALIA Carey Ramm Principal Economist AEC Group Ltd.

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Presentation on theme: "THAILAND’S MANUFACTURING STRENGTH – WHAT IT MEANS FOR AUSTRALIA Carey Ramm Principal Economist AEC Group Ltd."— Presentation transcript:

1 THAILAND’S MANUFACTURING STRENGTH – WHAT IT MEANS FOR AUSTRALIA Carey Ramm Principal Economist AEC Group Ltd

2 Thailand’s Economy 2 Growth – 2011 Thailand moved into the upper-middle income category of nations – Thailand Output has grown for 25 years above an average rate of 7% or more – Thailand will move into the World Bank’s high income category by Thai exports – mostly machinery, electronic components, agricultural commodities and jewellery

3 Scale of Thailand’s Manufacturing Highly competitive, characterised by world-leading manufacturers: – Toyota - General Motors- Caterpillar – Nissan - Ford - Seagate – Mazda- Canon- Sony – Toshiba- Nikon- Hewlett Packard – Michelin- Isuzu – Lenovo- Western Digital Over 2 million vehicles produced in 2012 Over $US 8 billion in machinery exports Rapidly expanding into high value industries: – Top hard disk drive and components manufacturing base worldwide – Alternative energy, green automotive, high value electronics and ICT 3

4 Thailand/Australia Manufacturing Comparison (2011) ThailandAustralia Manufacturing Gross Value Added ($US)$113.6 Billion$98.3 Billion Manufacturing % of GDP35.6%9.3% Employment5.3 million903,000 % of Total Employment13.8%9.2% 4 Source: World Bank, NSO, AEC GroupThailand’s manufacturing sector is now 16% larger than Australia and growing fast due to exports

5 Manufactured Product Exports (USD$Million) 5 Source: Bank of Thailand, ABS, AEC Group Thailand’s manufactured exports are 400% larger than Australia

6 BOI Approved FDI ( ) JapanUnited States European UnionAustralia Projects Approved 1, Total Investment (Million Baht)588, ,838193,73912,705 6 Source: BOI Thailand is now a major manufacturing hub, particularly for Japanese and US companies.

7 BOI Approved Foreign Investment (Million Baht) 7 Source: BOI Australian companies clearly need further assistance to expand into Thailand/ASEAN

8 Share of Japanese Manufacturing FDI into ASEAN 8 Source: Hamanaka Japanese companies get substantial assistance to expand into ASEAN

9 Thailand… Land of Opportunity 9 Australian companies already in Thailand see opportunities for expansion in the manufacturing, mining, services, construction and technology sectors. Business Opportunities for Australian Companies in Thailand Source: AEC Group

10 Thailand… Land of Opportunity 10 Industries with Opportunities in Thailand Source: AEC Group

11 Why Manufacture In Thailand? % of Australian businesses established in Thailand to service the international market 59.4% to service the Thailand market 14.1% to re-export to Australia This is not about offshoring Australian jobs Source: AEC Group

12 Key Considerations 12 Key factors which support Thailand as a destination for Australian manufacturing investment include: Centre of the ASEAN Community Friendly and Manageable Business Environment Accounting and Regulatory Familiarity The Thailand-Australia Free Trade Agreement (TAFTA) Functioning and Secure Legal System Skilled Labour Force Attractive Investment Incentives

13 World Bank Ease of Doing Business Ranking Singapore1 Thailand17 Malaysia18 Brunei83 China91 Vietnam98 Indonesia129 Philippines136 Cambodia138 Laos165 Source: World Bank Australia is #11

14 Australian Domestic Manufacturing Outlook 14 Manufacturing lost 106,775 jobs in the last four years... another 85,600 jobs may be lost in the next five years... Prime Minister’s Manufacturing Taskforce – Report of the Non-Government Members August 2012 One out of every ten manufacturing jobs disappeared over the last four years. Prime Minister’s Manufacturing Taskforce – Report of the Non-Government Members August 2012

15 Australian Domestic Manufacturing Outlook 15 A small number of Australian firms have demonstrated how Thailand can be used as a base for expansion. They are not only saving manufacturing jobs in Australia - but creating them. Australian manufacturers need to grow into much larger markets to get economies of scale and to integrate into global supply chains. So how do we help them do this? The Asian Century Whitepaper raises awareness but it doesn’t have the on-the-ground initiatives to help business grow into Asia….

16 Unlocking The Potential Of Asia 16 The Incubator will advise on: Company registration / start up Identification of partners Office / factory location and establishment Market analyses Practical export sales advice Production sourcing Product approvals Human resources and labour market legislation Government regulations Accounting rules and tax legislation

17 Danish Export Incubators 17 Denmark is a world leader in Export Facilitation Incubators. They: service 7,500 clients a year 92% satisfaction level increased exports by AUD$5 billion pa The Trade Council of Denmark has established export incubator facilities in: Atlanta Washington Silicon Valley Montreal New Delhi Bangalore Beijing Chongqing Guangzhou Tokyo Sao Paulo

18 In Summary 18 Time is running out to save Australian Manufacturing. Expanding offshore and linking into global supply chains is the solution. Australia can no longer ignore the opportunities in the ASEAN region. Thailand is the logical choice for manufacturers to expand. Australian manufacturers need an Incubator to make the change from thinking LOCAL to acting GLOBAL. Thank you…


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