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A Site Selection Web Exclusive, May 2017
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Takeoff Velocity

Thailand’s efforts to boost its economy could bring opportunities for the aviation sector.

ONLINE INSIDER
Mastercard Asia-Pacific in April ranked Bangkok No. 1 in its 2017 destinations index.
Photo courtesy of Tourism Authority of Thailand

by SAVANNAH KING
An agreement to evaluate the development of a major new maintenance and overhaul (MRO) facility at U-Tapao International Airport near Bangkok was signed in March by Usanee Sangsingkeo, Acting President, Thai Airways International and Fabrice Brégier, President, Airbus Commercial Aircraft; and witnessed by Somkid Jatusripitak, Deputy Prime Minister of the Kingdom of Thailand.
An agreement to evaluate the development of a major new maintenance and overhaul (MRO) facility at U-Tapao International Airport near Bangkok was signed in March by Usanee Sangsingkeo, Acting President, Thai Airways International and Fabrice Brégier, President, Airbus Commercial Aircraft; and witnessed by Somkid Jatusripitak, Deputy Prime Minister of the Kingdom of Thailand.
Photo courtesy of Airbus

It doesn’t take much to grow in Thailand — it was once a lush jungle after all. But though plants have no trouble taking root in the Southeast Asian kingdom, incomes have been slower to rise.

Over the last 50 years, Thailand has been steadily working to improve its economic standing through a series of successive economic models. “Thailand 1.0” built on the country’s agricultural success and gave way to “Thailand 2.0,” which provided cheap labor for manufacturing and production. The most recent economic model — yes, you guessed it “Thailand 3.0” — brought about more complex manufacturing and, unfortunately, a fair amount of income disparity.

To climb out of the middle-income trap, Thailand announced in February its plan to transform the country into an innovation-driven economy with “Thailand 4.0.” This incarnation will shift from manufacturing products for export to attracting high-tech industries and the well-paying jobs needed to support them.

The kingdom has identified 10 industries it wants to cultivate: five that will improve upon successful, existing industries (agriculture, tourism, automotive, electrical and petrochemicals) and five additional industries expected to spur job creation and economic growth (automation and robotics, aerospace, digital, bio-chemical and bio-energy, and health care).

Thailand’s ranking in the A.T. Kearney Foreign Direct Investment (FDI) Confidence Index 2017, released in May, improved to 19th, with 21 percent of respondents saying they were optimistic about Thailand’s economic outlook over the next three years.

A key component of Thailand 4.0 includes plans for nearly $43 billion of public/private investments in key economic regions, starting with the Eastern Economic Corridor (EEC). This 13,000-sq.-km. (sq.-mile) hub in the Rayong, Chonburi and Chachoengsao provinces involves developing infrastructure, business and industrial sectors, tourism and, oh by the way, three new cities.

Infrastructure investments include a high-speed train connecting the three main international airports in the region, new rail lines to connect industrial zones across the country and highway improvements connecting Rayong and Bangkok to ease traffic on notoriously crowded roadways.

Gateway to Asia

Thailand is the second largest economy within the Association of Southeast Asian Nations (ASEAN) and a prime location for investors looking to reach Asian markets. Neighboring ASEAN countries account for 9 percent of the world’s population and 2 percent of the world’s gross domestic product, while the countries that make up the Regional Comprehensive Economic Partnership (which includes ASEAN, Australia, China, India, Japan, South Korea and New Zealand) account for 50 percent of the world’s population and 28 percent of the world’s gross domestic product.

Deputy Prime Minister Somkid Jatusripitak calls Thailand’s geographic location one of its most valuable assets. “Thailand is strategically important as the region’s manufacturing and distribution hub, which not only serves the domestic market but also the CLMV, ASEAN, South Asia and the Middle East markets. Thailand is thus committed to develop and become the region’s true center for investments.”

In February, supporters of the Thailand 4.0 initiative spoke to a crowd at the Opportunity Thailand foreign investment conference in Bangkok. Creating easier access for trade and travel was top of mind for many of the panelists.

“When you invest in EEC you’re not only getting Thailand customers, but you’re getting Myanmar, Laos and Singapore. Now we are working to be borderless like Europe,” said Piere Jaffre, president Asia-Pacific, Airbus Group.

A Station for Aviation

Indeed, the EEC is in an incredibly strategic location.

One of the ways Thailand expects to improve air transportation is through the expansion of U-Tapao International airport in Rayong. U-Tapao is a joint civil-military public airport that was initially built as a U.S. Air Force base during the Vietnam War.

Today, the regional airport is used by the Royal Thai Navy. Improvements to the airport include constructing a second passenger terminal and an additional runway. The expansions will allow the airport to accommodate 3 million passengers a year. An “eastern aviation city” or aeropolis will eventually be established near U-Tapao with a high-speed passenger train connecting the airport to Suvarnabhumi and Don Mueang international airports.

“Thailand is continuing to establish itself as a full-service avionics hub for the ASEAN region,” writes Korbsiri Lamsuri, director of Thailand Board of Investment North America. “Global aviation power players such as Airbus look at U-Tapao as a future MRO [maintenance, repair and operations] hub in the region, and companies like Bridgestone are expanding their avionics-specific tire manufacturing operations in the country.”

FDI applications to Thailand in 2016 grew by 69 percent in both number of projects and in dollar value.

According to the Board of Investment, Bridgestone invested more than $178 million in two new aircraft tire production facilities in Thailand. Lamsuri notes the Thai government has approved an Aviation Industry Development Plan that will offer incentives to encourage the production of aircraft maintenance and parts production through 2032.

Airbus and Thai Airways International are considering the development of a new MRO facility at the U-Tapao airport, and recently signed a memorandum of understanding. The MRO complex would include repair shops and a training center. Thai Airways currently operates a large maintenance facility out of U-Tapao.

“This exciting new project will help to meet strong demand for maintenance services in the fast-growing Asia-Pacific region,” said Fabrice Brégier, President, Airbus Commercial Aircraft, from the stage in Bangkok. “With the fleet in the region set to almost triple to over 15,000 aircraft over the next 20 years, this project represents a sound opportunity for Thailand to develop its footprint in the aerospace sector.”

The uninhabited island of Ko Phi Phi Le, part of a national park in the Strait of Malacca, is one of many pristine places calling tourists to Thailand in growing numbers.
Photo courtesy of Tourism Authority of Thailand

Savannah King
Managing Editor of Custom Content

Savannah King

Savannah King is managing editor of custom content for Conway Inc. She is an award-winning journalist and previously wrote for The Times in Gainesville, Ga. She graduated from the University of West Florida with a degree in Broadcast Journalism and lives near Atlanta.

 



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