Higher aviation stake a move towards hub goal
A new government initiative to allow foreign investors to hold 70 per cent or more of a company manufacturing aviation parts will help promote the country as the regional repair centre of the industry, says an executive of Thai Airways International.
Danuj Bunnag, executive vice president of THAI’s commercial department, welcomed the plan and said it would help strengthen Thailand’s performance in the region in this competitive industry.
Thanks to its strategic location, Thailand has long been an important nation in the region for the aviation industry. It has become a major centre for airlines to connect their flights between other cities. Therefore, if the country offers a repair service centre, it is most likely that airliners will eye the country as a one-stop operation by using this service and maintain their flight-connection hubs at the same time, which will boost the local economy.
Thailand has for long tried to promote itself as the regional repair hub. However, it has lacked facilities, especially aviation parts for different sizes of aircraft. If the idea is implemented, the country will be able to compete with Singapore.
The Cabinet, as initiated by Transport Minister Chatchart Sithipan, last month agreed on a draft act to replace the one that has governed this issue since 1954. It will be considered later by the House of Representatives in the hope that it will help consolidate the country as the aviation hub in the countdown to the formation of the Asean Economic Community (AEC) in 2015. The new law would allow foreign investors to hold a 70-per-cent stake in a company in this field, and 100 per cent if they are required to utilise high technology for production. Controlling a 70-per-cent stake in the operation is also in line with the AEC agreement on the aviation-industry liberalisation.
Currently, foreign investors can hold only a 49-per-cent stake in a company. This is not an attractive incentive for them, and this affects job creation for local people.
The government hopes to use this move to back construction of an industrial park for aviation-parts production as well. It will promote Thailand as a logistics hub after the launch of the AEC. However, some regulatory barriers of the Board of Investment will have to be removed, especially one on declaring business information to the agency.
