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5 Mar 2010


Thai Motorcycle Industry: Benefits needed to Survive post-Liberalization (Business Brief No.2773)

ASEAN is a region with relatively high motorcycle use volume because of the large population of over 600 million. Other factors that have helped highlight the necessity of motorcycles in ASEAN daily life include underdeveloped mass transit systems and low wage scales. As a result, the motorcycle industry has played a huge transport role in ASEAN economy. Thailand is one of ASEAN's main manufacturing bases for motorcycles.
Due to many ASEAN liberalization pacts, it is not necessary to invest in any one member country anymore to reduce tariff-related costs. For foreign investment, particularly by Japanese companies having the largest market share in the ASEAN motorcycle market, they will likely shift manufacturing bases to countries where companies can generate the highest profit.
The most favorable characteristics for a production base from the investor's viewpoint would be a large market. Nevertheless, Thailand's motorcycle market is nearing saturation and the opportunity to expand is quite limited, compared to potential rivals such as Indonesia and Vietnam. Therefore, we have to create other benefits to attract further foreign investment.

Our strengths that help maintain our potential as an ASEAN production base includes infrastructure that is superior to rivals and fewer labor problems. We have to maintain that advantage and try to develop those strengths beyond rivals. On the other hand, Thailand is now facing many risks with social and political uncertainties that are affecting the investor confidence and country's future development because those situations are becoming our main weaknesses, and are being continuously monitored by investors. Therefore, the authorities and other relevant parties should join hands in fostering social and political stability to enhance long-term investor confidence.