Thailand’s aviation, aerospace hub drive picks up speed
THAILAND is moving quickly to become the regional aviation and aerospace hub as the world’s leading aircraft and parts manufacturers from the US, Europe and China are moving to invest in the country’s Eastern Economic Corridor (EEC).
The world’s top two commercial aircraft manufacturers, Airbus and Boeing, are planning for joint investment with Thai Airways International this year while Jinpao Precision Industry Co has just signed a deal to build a new plant in the EEC area, where U-Tapao international airport is situated.
The Thai government has set to invest trillions of baht in infrastructures to develop EEC to accommodate foreign investment including the expansion of the U-Tapao airport, construction of motorway, deep sea ports, high speed railway linking U-Tapao, Suwannabhumi and Don Mueang international airports and another line linking the EEC, Laos and Southern China.
Kanit Sangsubhan, secretary general to the EEC, said aircraft manufacturer Airbus is to cooperate with Thai Airways International Plc to invest in a big aircraft repair center, paint shop, logistics and training center with a projected investment of billions of baht while Boeing plans to invest in manufacturing aircraft parts and a simulator training center starting this year.
Jinpao last week purchased a 54-rai plot in the Hemaraj Eastern Seaboard Industrial Estate 2, where it will build a new plant to produce structural sheet metal parts to serve the aerospace and medical industries.
Jinpao president Chung Kuo-Sung said the cost of land acquisition and construction of the new plant will be around two billion baht. The new plant is expected to start operation in the next two years.
“Hemaraj 2 represents a great location in terms of logistics, transportation and convenient infrastructure. So with the development of the EEC, the location is perfect to serve our requirements,” he said.
The EEC areas cover Rayong, Chon Buri, and Chachoengsao provinces. The area is best suitable for new businesses in the new S-Curve industries ranging from next-generation automotive, robotics, aviation and logistics, to medical hub.
Analysts say Thailand’s move to become the aviation and aerospace industry hub in the region will directly affect Singapore which now dominates aerospace maintenance, repair and overhaul (MRO).
Singapore is still confident it would maintain the lead saying while Thailand has an edge over Singapore in terms of location, availability of land and cheap labor, there are other bigger challenges to overcome.
They include building the necessary infrastructure, cutting down on red tape and providing a conducive political environment to encourage new foreign investments.
However, the Thai government believes U-Tapao can provide an alternative to Singapore, which is “at capacity” already.
An industrial source told a Singaporean press that this plan requires big investments and Thailand’s bureaucracy system can be very slow and not “perfectly clean” and may be susceptible to corruption.
He also said the government needs to review the law on foreign ownership and come up with clearer policies, as political instability in the past decade has created uncertainty for new investors.
Despite such criticism, Prime Minister Prayut Chan-o-cha has already issued an order under Article 44, which grants the junta absolute powers, to ease limitation on foreign ownership in aviation maintenance center and would allow foreigners to own more than 50 per cent of shares in MRO businesses.
What about the problem of starting business in Thailand claiming to be difficult?
That may not be the case anymore at the moment.
Thailand has just been voted the Number One ranking of the list of Best Countries to Start a Business for the second year in a row out of a total of 80 countries surveyed by the US News and World Report beating Singapore, which ranks fifth.
The US media firm also placed Thailand on the 8th ranking of a list of 25 Best Countries to Invest In, 20th Best Country to Start a Career and 35th Best Country to Headquarter a Corporation.
The Commerce Ministry attributed Thailand’s improved ranking in the two categories to the cutback on the red tapes for the registration of new business in Thailand and the expenses for registration for business operators.
The report was based on the random survey of the opinions of 21,000 respondents worldwide.
“Starting a business in Thailand takes about five days,” according to the World Bank. New business density is one of the lowest in the region, leaving room for hopeful entrepreneurs.
Top: Airbus’ new agreement with Thai Airways International was signed by Usanee Sangsingkeo, acting president, Thai Airways International and Fabrice Brégier, president, Airbus Commercial Aircraft– and witnessed by Somkid Jatusripitak, Thailand’s Deputy Prime Minister . Photo: Airbus.com
By Kowit Sanandang