Tariff cut to spark new investment in 2010

       Thailand is in line for more investment in the electrical and electronics industry early next year, when Southeast Asian economies are due to become a single production base.
       The elimination of import tariffs within the region and trade facilitation under the Asean Free Trade Area (Afta) will allow freer flows of electrical and electronic parts and components, said Charuek Hengrasmee, the president of the Electrical and Electronics Institute.
       "The Thai industry has already been strong in products such as hard disk drives (HDD) and several home appliances," said Mr Charuek.
       "(International) players will look at Asean as a single production base with Thailand positioned as the manufacturing centre of the region."
       Katiya Greigarn, chairman of the Electrical, Electronics Industry Club at the Federation of Thai Industries, agreed but said Thai officials must work with Asean counterparts to simplify standards and eliminate non-tariff barriers.
       For instance, exports of electronic and electrical products to Singapore face about 100 industrial standards, he said.
       "Certainly, Asean integration into a sole production base will benefit Thailand, especially for products we are competitive in - HDD, air-conditioners, refrigerators and microwaves," said Dr Katiya.
       Asean has become the second-largest export market for Thai-made electrical and electronic goods - after Europe replacing the US and Japan, which have seen shipments plunge, he added.
       Meanwhile, the Board of Investment (BoI) has outlined strategies to propel Thailand as a parts provider for Asean by launching initiatives such as networking, business matching and trade show subsidies, said Chanin Khaochan, director of the BoI Unit for Industrial Linkage Development (Build).
       "[But] local producers should be more active in building their reputation and expanding marketing networks with Asean. The expansion would increase their customer base and develop strengths to be the region's top player,"he said."Our weakness is insufficient R&D and limited co-operation with education institutions for human resource development."
       The sector has recovered from a steep slump, when demand sank by 70%.
       "Capacity utilisation now averages 50-60%. We hope to see further improvement next year from inventory restocking,the improving global economy and effects of the government's economic stimulus package," said Mr Chanin.
       New investment is expected to arrive with the improving business environment. The industry generally attracts more than 100 billion baht a year, but investment has dipped to 30 billion this year to date.
       The stronger yen will encourage Japanese companies to invest abroad - including in Thailand, where production is cheaper, he added.
       About 150 Japanese manufacturers are expected to join Metalex 2009 from Nov 19-22 at Bangkok International Trade & Exhibition Centre.