ABSTRACT
This chapter provides an historical perspective on Thai automotive development, which can be classified into five phases. The first phase (1960–1970) is associated with ISI policy. The second phase (1971–1977) is characterised by policy for localisation. The third phase (1978–1990) is associated with policy for strengthening further localisation of the industry. The fourth phase (1991–1999) is characterised by the first liberalisation of the industry. The fifth and latest phase (2000-present) is characterised by WTO-compliant policy-making. Since the abolition of local content requirements in 2000, now outlawed under WTO rules, the Thai government has been successfully adjusting to the new environment by shifting its policy orientation towards using effective fiscal policy along with selective state intervention. The policy has focussed on selecting national product champions (picking a winning type of vehicle) and, by setting lower excise tax rates for such vehicles, helping to create a particular domestic market demand. Simultaneously, the government has provided tax concessions, such as low corporate tax, for attracting investors into national product champion production. Furthermore, sector-specific ‘soft’ (facilitative) industrial policy such as technology transfer and human resource development also helped the industry’s development. Thailand is now the most significant vehicle exporter in the ASEAN region.
