Christian Wiedmann, President, BMW Group Thailand: Interview

Christian Wiedmann, President, BMW Group Thailand

Interview: Christian Wiedmann, President, BMW Group Thailand

What is your medium-term outlook for domestic electric vehicle (EV) demand?

CHRISTIAN WIEDMANN: Similar to other countries, EV development in Thailand will depend on government initiatives in three areas: manufacturing support, consumption and infrastructure. First, the government has put forward proposals for manufacturers to apply for support from the Board of Investment (BOI), and companies have until the end of 2018 to submit applications. With the BOI application, there is still no differentiation between manufacturers inside and outside of free trade zones. The BOI should give assemblers and manufacturers in free trade zones localisation incentives. It is expected this would be staggered over a period of time, because most automotive manufacturers don’t have many EV models in their line-up, so working on an economy of scale looks challenging in terms of localisation of content.

Compared to neighbouring economies, Thailand has the most support in place for EV manufacturing, and further growth of the Eastern Economic Corridor (EEC) is anticipated, so there’s a positive environment. Moving forward, we wish to see more clarity around the development of EEC incentives compared to BOI ones. Generally, the approach is right, and we welcome the country’s proactive stance on promoting trade out of those areas.

Second, consumption initiatives will be the biggest driver, but they are currently unavailable for domestic EVs. By comparison, EV development is very much consumption driven across Europe. Ultimately, that pool will drive a lot of the investment within the market, not only in automotive manufacturing, but also in infrastructure supply networks. Therefore, we would encourage the government to prioritise incentives based on consumer demand.

Lastly, regarding infrastructure initiatives, we will need greater investment in charging stations and supporting infrastructure to ensure high-voltage electricity is available within metropolitan areas along the main travel axis. This need is not specific to Thailand, but when we look at existing support schemes for EVs, the ideal ones include charge points with fast-charge capabilities. The network needs to channel a much higher voltage because nobody is willing to wait long hours to charge an EV. The government has invited the private sector to participate in developing charging infrastructure, and we are already seeing a lot of interest.

How competitive is Thailand in relative terms?

WIEDMANN: Thailand’s location has been, and will continue to be, at the heart of ASEAN trade routes, especially with China. Thailand has an established network of auto investment and labour, and we all have interest in scale. We have seen stability in Thailand – it is ranked 12th globally, with average annual production of around 2m vehicles – and locality and strong consumption should continue apace. We have seen lower GDP growth when compared with ASEAN, but we have also seen increased auto consumption in 2018 compared to 2016. The country will continue to have a positive outlook. Thailand is facing competition from other Asian countries with highly competitive tax schemes, but time will tell whether it will be sustainable and how it will all fit into the ASEAN framework. Thailand should work on areas of industrial effectiveness – including education and labour productivity, where it lags behind – but it is moving ahead of much of ASEAN on salary increases. To maintain progress, we need a strong consumption driver. Therefore, salary increases are a good indicator, but this needs to be balanced with productivity gains through education initiatives. This is where the government should invest more and support apprenticeships, vocational education, a dual curriculum, high-level certifications and other initiatives to enable Thailand to become more competitive.

Anchor text: 
Christian Wiedmann

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The Report: Thailand 2018

Industry & Retail chapter from The Report: Thailand 2018

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