Thai automakers urge government to join TPP

2_TPP5Thailand’s automotive manufacturers urged the government last week to join the United States-led Trans Pacific Partnership trade group saying it is essential for the sector, which exports 70 percent of its output, to maintain its competitiveness against rivals in the region who are striving to expand their own auto industries.

Although Thailand has the strongest automotive sector in Southeast Asia, neighbors who have joined the TPP will have advantages in reduced tariffs and fewer non-tariff barriers when it comes to exporting, and will be able mount a stronger challenge to Thailand’s leading role in vehicle manufacturing. Thailand has long been referred to as “the Detroit of Asia” because of the size of its automotive manufacturing sector. Virtually every major vehicle manufacturer from Japan, the United States and Europe has set up shop in the Kingdom.

“At present, Thailand has yet to lose much competitiveness against the four ASEAN (Association of Southeast Asian Nations) countries that joined the TPP,” said Pitak Pruittisarikorn, chief operating officer of Honda Automobile (Thailand), while visiting the 32nd Thailand International Motor Expo in Bangkok.

The four ASEAN countries that have already joined the 12-nation TPP are Brunei, Malaysia, Singapore and Viet Nam. Stronger challenges are beginning to emanate, however, from Indonesia and the Philippines, which are not TPP members but who have expressed an interest and desire to join the trade group.

ASEAN ranks sixth in global car manufacturing with 3.9 million vehicles a year. Thailand accounts for 49 percent of vehicle production in ASEAN.

The current Thai government and its predecessor initially showed no interest in joining the TPP. Prime Minister Prayut Chan-o-cha seemed reluctant at first, citing opposition from groups such as public health advocates who fear patent regimes on pharmaceuticals under the agreement would mean an unbearable rise in the costs of life-saving medications.

But Deputy Prime Minister Somkid Jatursripitak has become a strong supporter of joining the bloc, and along with auto manufacturers has been lobbying the prime minister on the subject. Prime Minister Prayut discussed the possibility of joining the TPP with government leaders in Japan during a recent trip there. Japanese leaders urged Thailand to join and said they would support the Kingdom’s admission to the group.

Pitak said the industry’s production capacity is 2.9 million vehicles a year, but utilization has been fairly low because of weak domestic consumption during the past two years. Thailand performs quite well in exports, he said, but still needs more destinations to boost shipment and achieve full production capacity.