BOI Thailand’s New Measures Drive Innovation in the Automotive and EV Sector

BOI Thailand Introduces New Measures to Boost Automotive Industry and EV Market

As global competition in the automotive sector intensifies, Thailand’s Board of Investment (BOI) is implementing measures to solidify the nation’s leadership in automotive manufacturing, with a particular focus on the growing electric vehicle (EV) market. These initiatives are designed to enhance local production and reduce reliance on imports.

Aligned with the Excise Department’s revised measures, the EV 3.5 program sets a target ratio of local production to imports at 1:2 by 2026 and 1:3 by 2027. This marks a progression from the 1:1 ratio required by the EV 3.0 program by 2024 and 1:1.5 by 2025.

In addition, the Customs Department and Ministry of Industry have introduced new requirements for manufacturers operating in Free Zones and Free Trade Zones. These regulations mandate that at least 40% of materials used must be produced domestically or within ASEAN, with a focus on locally produced batteries and key components. In response, the BOI is intensifying its efforts to strengthen local production capabilities.

One of the BOI’s latest initiatives is to encourage joint ventures between Thai and foreign companies in the automotive parts industry, covering components for both internal combustion engines (ICE) and electric vehicles (EVs). This initiative aims to foster collaboration and drive the development of the local supply chain.

The BOI’s new measures address two cases:

1. Joint ventures for new automotive parts projects.
2. Ongoing projects benefiting from corporate income tax exemptions.

To qualify, Thai entities must hold at least 30% of registered capital and invest a minimum of 100 million baht. Eligible companies will be granted an additional two years of corporate income tax exemptions.

These initiatives are more than mere incentives; they represent a blueprint for the future. By promoting joint ventures, the BOI is not only encouraging Thai manufacturers to adopt and develop new technologies, but also paving the way for enhanced competitiveness and technological advancements within the local production landscape. The anticipated partnerships are expected to deliver significant benefits, including the transfer of advanced technologies, upskilling the workforce, expanding market reach, and increasing the utilization of domestic raw materials.

In the long run, these measures will help Thai automotive parts manufacturers integrate more effectively into the global supply chain, solidifying the country’s position as a regional hub for automotive production.

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Written by Khemthong Chanchao, Consultant based in the Thailand office.