(Source: Thailand Investment Review, December 2018)
Automation and robotics trends
Over the past five years, the world has experienced a period of sustained growth in the robotics industry, while the adoption of automation systems has also increased significantly, even breaking into the field of domestic use. From 2012 to 2017, the global average sales of robots rose sharply with a compound annual growth rate (CAGR) of 19% per year. According to the International Federation of Robotics (IFR) World Robotics 2018 Report, sales continued to surge in 2017, rising by 30% to 381,335 units to set a new high for the fifth year in a row.
Leading the global growth, Asia holds the highest share of the world’s annual shipment of industrial robots. With an average annual growth rate of 25%, the 261,800 units shipped in Asia in 2017 reinforced the position it has held since 2012 as the region with the most robot installations. The rapid growth of automation in Asia corresponds to the global trends that are largely driven by metal and electrical/electronics industries.
For Thailand, the country’s impressive growth has earned it a reputation with the IFR as one of the most promising markets within Asia. After a period of decreasing demand in recent years, robot sales in Thailand bounced back in 2017 to increase by 28% and reach a total of 3,400 units. Under Thailand’s industry 4.0 era, automation and robotics play an essential role in the development of Thai manufacturing, particularly for the automotive, electrical and electronics industries, as well as food processing which is one of Thailand’s top export industries.
Adoption of industrial robots
In addition to being the world’s leading exporter of hard-disk drives, Thailand is also a major exporter of motor vehicles. Ranked as the world’s 12th largest motor vehicle producer, Thailand produced nearly 2 million units in 2017, according to the International Organization of Motor Vehicle Manufacturers (OICA). The automotive industry in Thailand is also reported to have a high density of robot adoption, with 974 units per 10,000 persons employed, placing Thailand closely behind industrial giants like the USA, Germany, and Japan at 1,200 units, 1,162 units, and 1,158 units per 10,000 persons employed respectively.
Apart from the huge adoption in its automotive industry, Thailand’s food sector is also looking at enhancing its efficiency by incorporating more robots into the production line, especially for the food processing sector. As one of the most advanced in ASEAN, Thailand’s food processing industry was predicted to grow by 8.7 percent in 2018 to reach a total value of 36 billion USD. To accommodate this growth, large manufacturers are increasingly relying on robots, especially the so-called “Cobots” - a robot designed to interact physically or assist humans in the workspace.
Compared to the growing demand and adoption in the automotive, electronic, and food processing industries, the application of robotic equipment in other industries remains relatively low. According to the Department of Industrial Promotion, only 15% of the manufacturing sector in Thailand has adopted robotics and automation into the production process. This indicates the untapped potential for robotics and automation to further maximize the capacity and efficiency of the country’s manufacturing and service sectors.
Strong supporting factors
Having embarked on a journey towards an advanced economy under its Thailand 4.0 vision, Thailand’s public and private sectors are placing maximum effort into creating growth and ensuring sustainability through the government’s 10 targeted industries. Automation and robotics figure prominently among the new engines of growth prioritized by the Thai government. For its part, the BOI is also offering a wide range of investment incentives for any projects that meet national development objectives on either the supply or the demand side.
To encourage the development of automation and robotics providers, a number of generous incentives are available. For example, activities that include the manufacture of automation machinery / automation equipment with engineering design are eligible for an 8-year corporate income tax (CIT) exemption while the assembly of robots or automation equipment or parts is eligible for a 5-year CIT exemption. Non-tax incentives include the permission to own land, to acquire relevant visas/work permits for foreign staff.
The BOI also recognizes the importance of investments in relevant activities in targeted locations. For this reason, it has provided additional incentives for investment in the Eastern Economic Corridor (EEC) area. For example, in the Eastern Economic Corridor of Innovation (EECi), an additional 4-year CIT exemption is available for the manufacture of automation machinery/automation equipment with engineering design and an additional 2-year CIT exemption with a 5-year 50% CIT reduction is available for the assembly of robots or automation equipment or parts. To qualify for these EEC incentives, it is also necessary for conditions on cooperation with academic institutions to be met.
To stimulate the use of automation and robotics systems, the BOI has also offered incentives under the Measures for Improvement of Production Efficiency for enterprises which upgrade their technology and machinery for manufacturing. Available incentives include, for example, a 3-year CIT exemption on the revenue of an existing project, with a CIT cap not exceeding 50% of the investment capital (excluding cost of land and working capital); in the case of investments in automation systems, the CIT cap will be raised to 100% of the investment if the value of linkages to the Thai automation industry reaches at least 30% of the total value of the automation system.
Aside from the growing demand in various sub-industries and strong government support, Thailand’s automation and robotics industry enjoys an increasingly robust ecosystem. Private sector entities in the automation and robotics industry have joined together to create the Thailand Automation and Robotics Association (TARA) and the Thai Robotics Society to assist their members in strengthening cooperation and partnerships in the industry. Thai educational institutions have also supported the industry through research and development as well with human resource training. The rising number of academic institutions offering undergraduate and graduate programs in robotics engineering, as well the number of students enrolled in such programs, is just one clear example that Thailand is ready to provide the next generation of highly-qualified personnel for the automated future of production in the country.