Japan aeronautics firms eye Thai base

The BoI has recently approved a relaxation of its criteria regarding the use of foreign machinery at its latest meeting on Thursday where foreign businesses moving their production bases here can now use machinery that is more than 10 years old but it must have passed the BoI’s extra regulation first.
Transport Minister Air Chief Marshal Prajin Juntong revealed on Thursday that the expansion of airlines business in Thailand is going well despite the negative effect from the announcement of safety concerns by the International Civil Aviation Organisation (ICAO). He said four firms, have received BoI privileges to expand their production bases.
The four companies, which produce and supply spare parts for airline companies, will invest a total of around Bt5.43 billion.
“We have to produce value-added products because of our higher labour cost when compared to the neighbours. More foreign investors are interested to move their production base to make value-added products here because of the changes in the BoI’s promotion and because Thailand already has an adequate supply chain that can support the domestic production of such products. Our neighbours are still lacking in this aspect,” Pridiyathorn said at “SCB Investment Symposium 2015” arranged by Siam Commercial Bank yesterday.
“Thailand can already produce some parts of an aeroplane and the government wanted to promote this development. If we want to produce more sophisticated parts, we have to partner up, for example, with Japan, because they have substantial expertise in producing aero-parts,” he added. He revealed that during his visit to Japan last month, some Japanese manufacturers in Nagoya had expressed an interest to move their aeronautics parts production base here. Japan Airlines has also expressed an intention to train its stewardesses in Thailand and he has invited them to do so.
“Japanese manufacturers in Nagoya asked me questions for hours about the BoI’s new promotion and this does not usually happen,” he said.
Meanwhile, Pridiyathorn said that the reason why exports are doing so badly is because Thailand is producing products that “people no longer want” while neighbouring countries can produce the same product at lower cost. However, he said the BoI new strategy should be able to remove this flaw. He was confident the economy should be able to expand by 5 per cent in 2-3 years once the effects from the changes in the BoI strategy and the move to promote international headquarters and international trading centres start to bear fruit.
“In my life, I’ve never seen two consecutive quarters of export contraction. If the export numbers in March do not improve or do not expand at all, it would mean that exports could contract by 3 per cent in the first quarter and that could pull the country’s GDP [gross domestic product] down by 1.6 per cent. The government will have to combat this with increased spending,” he said.