BoI expects subcontractors to increase in EEC
The development of the Eastern Economic Corridor (EEC), Thailand’s showcase advanced development zone, should spark additional growth in the country’s subcontracting sector, the Board of Investment said last week, as direct investors seek out companies to help build, supply and support their new ventures in 10 targeted industries.
As investment soars in the EEC, most news has focused on the major corporations and multinationals that have committed to building manufacturing facilities as primary direct investors. Less attention has been paid, however, to the even larger number of companies that will benefit businesswise by constructing the new plants and factories, supplying machinery and equipment, and also the myriad services companies and people who will be living in the area will need.
The Board of Investment (BoI) is taking a proactive approach to creating opportunities for subcontractors to capitalize on the growth of the EEC. It is sponsoring a major business-matching event in May in Bangkok called SUBCON Thailand 2018, in conjunction with the Thai Subcontracting Promotion Association and UBM Asia Thailand Co.
“More than 400 subcontracting companies will join this upcoming event from Thailand, Taiwan and Japan, while more than 25,000 buyers from various industries such as automotive, electronics, machinery and future industries, including aviation, medicine and equipment, robotics, and the automation industries are expected to take part,” said Krongkanoke Managitjonggol, director of the BoI Unit for Industrial Linkage Development.
She said she is expecting the event to generate business valued at roughly $380 million from a projected 6,500 business matches. That would exceed the $318 million produced from last year’s SUBCON event.
Aside from generating business and revenue, the opportunities for subcontractors also serve to deepen and broaden Thailand’s industrial base. That phenomenon was observed during Thailand’s first transformation from a rural to an industrial economy and the growth of the Eastern Seaboard industrial zone.
While those boom years were noted for the massive influx of foreign investment by multinationals building production plants in Thailand, investment by Thai firms during that same period was actually seven times greater than that of the multinationals.
The result was that countless Thai firms modernized and became more competitive, adopting new technologies in support of the multinationals and large Thai corporations.
A similar phenomenon is expected from the growth of the EEC. With the government supporting its 10 advanced industries, many subcontractors will once again have to elevate their capabilities in support and service for the higher technology firms with which they will do business.