Thailand building test centre to support tire, NR sectors

Bangkok – The Thailand Board of Investment plans to invest $100 million (€94 million) to build an automotive testing centre that the government views as a "top priority" for supporting the nation's growing tire and natural rubber industries.

The centre, to be built in the Sanam Chai Khet district east of Bangkok, will comprise a tire testing track and six car testing tracks. Construction is expected to start in 2018, with the centre operational by early 2020, the investment board said.

"The R&D unit for tires is a top priority for the government because it aims to upgrade the country's rubber industry and increase rubber prices," Suthon Nikomkate, director of the Thai Industrial Standards Institute (TISI), said.

Thailand is considered the world's No. 1 supplier of natural rubber, accounting for roughly 35% of the world's NR supply, with a market value of $25 billion a year, the investment board said. At present, there are 6 million farmers in the Thai rubber sector.

At the same time, Thailand is rapidly becoming a global leader in tire production, with as many as 20 major tire makers operating tire factories in the country.

In the past several months, the board said, Bridgestone Corp., Goodyear Thailand and Shandong Linglong Tire Co. had committed more than $312 million in investments in aircraft tires alone.

"Recent investments by the Thai government in its rubber/tire industry, a plentiful source of raw materials, a skilled workforce and competitive tax incentives is helping attract tire and rubber companies to Thailand," Korbsiri Iamsuri, director of Thailand Board of Investment New York Office, said. "The establishment of new plants is expected to further contribute to Thailand's economic and industrial development."

The government expects the collective industry in Thailand to nearly double tire production to 1 million metric tons a year from the current 530,000 tonnes.

To help attract investment, the board of investment has implemented a package of incentives including exempting tire companies from corporate income tax for eight years, exempting import duties on machinery and raw materials for use in production for export, and other non-tax incentives.

"Our objective is to create world-class industry ecosystems that will enable both Thai and foreign-operated companies to be even more successful while operating in Thailand," Iamsuri said. "Our goal is to ensure that Thailand is an optimal operating environment for business and ASEAN headquarters for foreign companies."

The tire industry in Thailand consumes more than half of the NR produced in the country and is expected to grow at a compound annual growth rate of 12% from 2014 to 2019.

Six of the world's 10 largest tire makers – Bridgestone, Goodyear, Maxxis International, Group Michelin, Sumitomo Rubber Industries Ltd and Yokohama Rubber Co. Ltd – have plants in Thailand, as do three Chinese tire makers: Shandong LingLong Tyre Co. Ltd, Sentury Tire Co. Ltd and Hangzhou Zhongce Rubber Co. Ltd.

The domestic industry is comprised of seven companies: Deestone Ltd; Hihero Co. Ltd; Otani Tire Co. Ltd; Roadstone Tyre & Rubber Co. Ltd; Siam Rubber Co. Ltd; SR Tyres Co. Ltd; and Vee Rubber Corp. Ltd.

The Thailand Board of Investment facilitates promotion of foreign direct investment in the country.