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9 Jul 2010

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World Cup 2010 Boosting Thai Automobile Exports to South Africa (Business Brief No.2874)

คะแนนเฉลี่ย
The World Cup 2010 football tournament, which just ended on July 11, 2010, has helped attract many tourists, as well as generating huge income for South Africa. Then, their consumption and overall economy are expected to increase throughout 2010.
KASIKORN RESEARCH CENTER (KResearch) expects that South Africa's economic growth will help boost the sales of many Thai exports, such as truck and car parts (e.g., bumpers, seat belts, transmissions, wheel disks, brakes, shock-absorbers, drive shafts, clutches, steering wheels and air bags). Another factor helping to increase our exports to South Africa is the potentiality of their local industry that can attract a number of foreign investors setting up manufacturing bases there. Currently, more than 80 percent of the entire automobile manufacturing industry in this region is based there.
Although South Africa's import demand is quite high, Thai exports face stiff competition from rivals, such as China and India due to their lower production costs and shorter freight hauling distances. In addition, we have to brace for competition from both local and foreign investors, e.g., US and European companies whose production networks are well established there.
From statistics on automobile sales in South Africa, it was found that the best-selling automobiles in South Africa are manufactured by Japanese companies, which highlights the excellent performance of Asian automobile companies. This indirectly helps increase our automotive exports, too, as we are part of the Japanese automotive manufacturing supply chain. High demand for Thai automotive products is found in automotive manufacturing bases located in Gauteng, as well as the Eastern and Western Capes, the heartland of South African industry. (More than 90 percent of their entire automobile manufacturing industry – including Japanese companies – is based there).
Thai automotive parts in the South African automotive manufacturing supply chain help increase our opportunities to distribute our products to other countries in the region by means of ‘Production and Processing for Exports', which is a condition of FTA pacts and part of the agreement made between the Southern African Customs Union (SACU) offering tax incentives to one another.

In addition, we enjoy some privileges from the Motor Industry Development Plan (MIDP) of South Africa, which will reduce their import tariff on automotive parts to 20 percent by 2012 (against the current tariff rate of 25 percent). It is expected that this new tariff rate will indirectly benefit their demand for Thai parts in the future.

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