March 31, 2016 / 10:10 AM / in 3 years

Thailand looks to auto R&D in shift away from manufacturing dependency

BANGKOK, March 31 (Reuters) - Thailand is looking to reinvent itself as an automotive research and development (R&D) centre, starting with a proposed $105 million automotive test centre on its eastern coast.

For years, Southeast Asia’s second-biggest economy has been a regional base for some of the world’s top car makers such as Toyota Motor Co and Honda Motor Co, banking on its reputation as an assembly line and auto parts producer.

“We need to upgrade ourselves to be more value-added,” Thavorn Chalassathien, vice chairman of the Federation of Thai Industries, told Reuters on Thursday.

On Tuesday, Thailand’s Cabinet approved a plan to invest 3.7 billion baht ($105.1 million) in an automotive test centre in Chachoengsao province near the eastern seaboard.

Built on around 1,200 rai (200 hectares) of land, the site will be used to help local manufacturers develop new automotive technology.

Thailand currently spends 0.3 to 0.4 percent of gross domestic product on R&D across all industries, said Hirunya Suchinai, secretary-general of Thailand’s Board of Investment.

The government wants to increase this to 1 percent within the next two to three years, Hirunya said.

But some economists say Thailand needs more skilled workers if it wants to become a R&D centre, and that becoming a hub would require foreign expertise.

“They would require a lot of foreign experts to help set it up, to bring in the intellectual capital,” said Euben Paracuelles, an economist at Nomura in Singapore.

“For that to happen you will need to provide a lot of incentives and reasons for them to be based in Thailand. It is not going to happen overnight.”

Thailand’s industrial output contracted again in February from a year earlier, led by autos, steel and electronics.

$1 = 35.2100 baht Additional reporting by Patpicha Tanakasempipat; Editing by Amy Sawitta Lefevre and Ryan Woo

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