Thailand is set to benefit tremendously from the elimination of import duties on automobiles and parts under the Asean Free Trade Area scheme, industry leaders say.

The 5-per cent tax on automobiles and parts traded among the six founding Asean countries -Thailand, Malaysia, Singapore, Brunei, the Philippines and Indonesia – was abolished on January 1, in a move towards turning Asean into a single market.

This would help Asean nations become more competitive against other Asian giants – particularly China and India.

Despite the global recession last year, auto sales in China reached 13 million units and in India 2.2 million units, while combined sales in Asean hit 1.8 million units.

Since major markets such as the US, Europe and Japan are saturated and stagnant, due to the financial crisis, any growth in the auto industry would have to take place in the Asian region, analysts say.

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Thailand auto industry to benefit hugely from AFTA

Demand from businesses have increased rapidly over the years in Thailand
These include both universal tariff reductions, which are applicable to goods from all countries, and specific tariff reductions that result from free trade agreements (FTAs) with other countries and regions. For example, since June 2008, a wide range of agricultural and manufactured products from ASEAN member countries, China, India, and New Zealand enjoy lower or no tariffs. Among others, they are butter, vegetable extracts and fats, pharmaceutical products, paper and tubes for a medical use, pumps for liquid, air and vacuum pumps, commercial trucks, steel tubes, iron wires, aluminum structures, dish washing machines, weighting machines, and switching circuits and boards parts. In addition, the government will also cut or cancel tariffs for three types of animal feeds (soybean, corn, and fish meals) in 2009. The magnitude of changes varies across different trade agreements, such as those with the WTO, ASEAN, ACMECS28, Japan, Australia, and New Zealand.

Thailand auto industry to benefit hugely from AFTA

A clear policy framework is needed, and the development direction set forth by the policy makers should be based on reliable information on the current status of infrastructure development. Systematic, periodic, and internationally-standard information collection within the infrastructure sector will provide Thai policy makers with good background with which to assess the current situation, identify bottlenecks, set clear policy direction, and prioritize projects more effectively .

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