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ROH Contributes to Healthy Bottom Line at Toyota Boshoku

The Thai government aims for its Regional Operating Headquarters (ROH) scheme to be the best in Asia. To promote the program, the Board of Investment (BOI) offers a range o attractive incentives that help ROHs in Thailand conduct business more competitively across the region. In the following interview the vice president of Toyota Boshoku Asia Co., Ltd. (TBAS) Mr. Bunchob Ongtanasin, explains to the Thailand Investmen Review (TIR) how the program helps his company operate more effectively.

TIR: Please describe the corporate structure of TBAS
Khun Bunchob: TBAS is based in the outskirts of Bangkok and was established in 2001. We are a subsidiary of Toyota Boshoku Corporation (TBJ), which has headquarters in Aichi Prefecture, Japan. The parent company’s history dates back to 1918. Today it is one of the world’s leading manufacturers of automotive interior and exterior products, with 87 companies in 22 countries.

TBAS has a registered capital of more than 728 million baht. TBAS has six companies in Thailand, with about 3,200 permanent employees here. We develop, engineer and manufacture automotive interior components such as seats, door trims, headliners, floor carpets and curtain-shield airbags; filtration and power train components including high-performance cabin air filters, air cleaners and oil filters; and textiles such as seat fabrics.

The Thailand group consists of Toyota Boshoku Asia Co., Ltd. (in Prawet, Bangkok); Toyota Boshoku Gateway (Thailand) Co., Ltd. (in Gateway City Industrial Estate, Chachoengsao); Toyota Boshoku Siam Metal Co., Ltd. (in Amata Nakorn Industrial Estate, Chonburi); Toyota Boshoku Filtration System (Thailand) Co., Ltd. (in Eastern Seaboard Industrial Estate, Rayong); STB Textiles Industry Co., Ltd. (in Laem Chabang Industrial Estate, Chonburi); and S.K. Auto Interior Co., Ltd. (in Gateway City Industrial Estate, Chachoengsao).

TBAS is also the ROH located in Thailand.

TIR: What year did you enter the Thailand ROH scheme? How many units do you have under this program, and how extensive is the regional service coverage?
Khun Bunchob: TBAS was granted ROH privileges from the Thai government starting in November 2008. Currently we have four units under the ROH scheme: (1) general management business planning and business coordination, (2) procurement o materials and parts, (3) research and development of products and (4) technical assistance. We provide these services to affiliates inside and outside of Thailand such as in the Philippines Taiwan, Vietnam, Indonesia, Malaysia, Australia and India.

Moreover, the ROH privileges of TBAS cover the R&D center unit, which has been importing machinery since April 2009. The training center unit is also in our planning scale of business activity. The ROH scheme offered by the Thai government and the BOI suits us well. This is because under Toyota Boshoku Corporation’s structure, TBAS already serves as a regional hub for manufacturing bases in Asia and Oceania.

TIR: Why did you choose Thailand as your regional headquarters?
Khun Bunchob: At the top of the list would be the incentives granted by the BOI to companies that choose to set up regional headquarters here. Location is certainly also a big reason, as Thailand is the center of Asia.

Excellent transportation is another key factor. Because Thailand has been making efforts to become a major hub of the Asian region for many years, the country offers a well- developed transport infrastructure that is superior to those of surrounding nations. This is of vital importance for TBAS. In doing our business, we must export or import products and transport personnel with our group of subsidiaries throughout the region. Thailand offers a large number of air flights and shipments for accomplishing this efficiently.

Yet another reason that TBJ chose Thailand for a regional headquarters is the relative stability of the manpower here. Labor disputes do arise occasionally in Thailand but they are not as big a problem as in other countries. This is because the Thai Ministry of Labor shows sincere concern to the situation.

Just as important from the regional headquarters aspect is the fact that foreigners enjoy living and working in Thailand. They find Thai culture colorful and appreciate that Thai people are friendly and well mannered. Moreover, Thailand is highly regarded for the quality of the international schools here, offering the children of expatriate families the opportunity for a quality education while abroad. Thailand’s hospitals and medical care are of a high standard as well. All of these considerations are important to foreign investors.

TIR: Does Thailand’s ROH program make your company more effective?
Khun Bunchob: The ROH component has expanded our scope of effectiveness. Because TBAS is a foreign company in this country, the Thailand Foreign Business Act restricted us to operating only certain types of businesses here. After joining the ROH program, however, we can now enjoy a wider scale of permitted business activities.

The ROH also helps operations run smoothly. For example, the ROH makes it easier for our R&D in Thailand to provide support and technical assistance on new products to our affiliates throughout the region. This enables us to continually improve products offered in all countries to ensure customer satisfaction. As Toyota emphasizes the need for creative thinking year after year, effective R&D is vital for advancing our production processes, environmental friendliness, and breakthroughs in lightweight products to boost fuel efficiency. It all contributes to a healthy bottom line.

TIR: Is the ROH scheme important to Thailand’s development?
Khun Bunchob: Absolutely. The ROH program is beneficial to Thailand’s industrial, economic and social development in many ways. Having regional headquarters here means that foreign companies will transfer their expertise and technology to Thailand. This has a very positive impact on the Thai people. For example, at TBAS we send local engineering graduates who we hire to Japan for training on how to use our company’s highly sophisticated R&D tools and production equipment. This knowledge enhances their life skills.

Moreover, when an ROH company’s expat employees come to Thailand to work for a few years, many will relocate their families here as well. This pours money into the economy, as they will often lease or purchase condominiums and cars and buy other high-priced products, helping local businesses prosper and supporting local job growth.

TIR: Does TBAS have growth plans in Thailand?
Khun Bunchob: Part of our growth plans in Thailand involves R&D work on carbon neutral materials that are friendly to the environment. For example, P.T. Toyota Boshoku Indonesia has developed an eco-friendly material made of fiber from kenaf, a plant which is superior at CO2 absorption. Business operations localized in Indonesia also include kenaf seed development and production of board from the material that we use to make door trims, seat backboards, package trays, headliners and other interior parts. Right now, TBAS is considering the possibility of kenaf cultivation and investment in Thailand. If the soil and weather in Thailand suits kenaf well, and the labor cost proves worthwhile, then we may start a new business operation here in kenaf seed improvement and cultivation for retting and fiber production.

That is an example of the TBJ policy via TBAS to transfer knowledge, machinery and technology to the local country. In fact, TBAS has already started some R&D operations in Thailand on interior design products, including car seats.

TIR: What is the mission or business philosophy of TBAS?
Khun Bunchob: In the Toyota Boshoku group, we follow the “TB Way.” This is a code of conduct for a sensible course of action and a good mental attitude in meeting challenges to achieve a common goal. Our motto is to “reinforce our stance as a company with strong community ties.” It is vital that we are seen by local people as contributing to the development of the local country and the growth of its people. You can notice this in many ways. For example, we go beyond the regular transfer of manufacturing technology in that we also transfer design knowledge. Moreover, we work hard to get local staff involved in management. In fact, to achieve the goal of localization of management, we built a Regional Office Headquarters and a Research & Development Center with education and training facilities at our Bangkok site.

TBAS also believes that corporate social responsibility is very important and we engage in many CSR activities and donation drives. We extend this overall philosophy to every country that we operate in, including through the Thailand ROH component to all of our locations in Asia and Oceania.

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