The Thai government has highlighted the Robotics and Automation industry as one of the industries of the future (the so-called “New S-Curve industries”) and also recognizes it as the “New Engine of Growth” that will elevate the standards and productivity of the Thai industries and services sector.
Currently, the Robotics and Automation industry is expanding substantially, predominantly in ASIA. The data from the International Federation of Robotics (IFR) in 2018 shows that more than 415,700 units of robots have been sold around the globe. The sales of robots have increased by 10 percent compared to 2017. In ASIA, the sales of robots have a 14 percent growth which is considerably higher than in Europe (7 percent) and in America (-4 percent).
In 2018, over 4,000 units of industrial robotics and automation systems have been delivered to the Thai industries which is a significant growth of 18 percent compared to 2017. The number of industrial robotics and automation systems to be delivered in 2019 is forecasted to be increased to 5,000 units.
The IFR has predicted that in the next three years (2019-2021) the Thai robotic industry will grow by approximately 21 percent.
According to the forecast of the Institute of Field Robotics (FIBO), the Thai Robotics and Automation industry in the next three years will have an estimated worth of approx. 400-500 billion Baht (approx. 12.6-15.7 billion USD) and the rise of the industry will lead to a great deal of investment projects worth over 20-30 billion Baht (629-943 million USD).
Once Thailand has stepped into the 5th wireless communication generation (5G), the Robotics and Automation industry is poised to be the major beneficiary and will elevate the potential of industrial machinery manufactures in Thailand. Such development will result in a reduction in imports of machinery and equipment in the future.
While the industry is expanding significantly, the Office of the Board of Investment (BOI) has put a major focus on the production side (Supply Side) and the user side (Demand Side) of the machinery, robotics, and automation industry, which is also in line with the current government’s policy. The government suggests that in order to move the industry forward, the demand should be created on the Demand Side and the evolvement of the Supply Side will naturally occur. This will lead to the development of an efficient ecosystem for the whole industry.
Manufacturers of robotics and automation systems are eligible for high incentives for group A business activities. Corporate income tax exemption will be granted for five to eight years. Moreover, import duties on machinery, raw material, and other non-tax incentives are included in the incentives package. Even higher incentives will be granted if investment projects are located in the Eastern Economic Corridor (EEC).
Business activities in the Robotics and Automation industry which are eligible for investment promotion are as follows:
- Activity 4.5.1 Manufacturing of automation machinery and/or automation equipment with engineering design
- Activity 4.5.2 Manufacturing of machinery, equipment and parts and/or repair of molds and dies
- Activity 4.5.4 Assembling of robots or automation equipment and/or automation parts
Projects can apply for BOI incentives under the specific measure to promote investments in alterations and transformations of machinery in order to include robotics or to automate production lines until December 2020. Furthermore, manufacturers of robotics and automation systems can apply for tax incentives with no time limit.
Moreover, the BOI promotes the usage of robotics and automation systems in the production lines to improve productivities under the BOI’s “Measure to Improve Production Efficiency”. Promoted projects will receive a three-year corporate income tax exemption with a tax exemption cap not exceeding 50 percent of the investment capital. In the past years, automotive and electronic manufacturers are major users of robotics and automation systems.
One of the key players in the Robotics and Automation industry is the System Integrator (SI) developers who design, assemble and install the systems and software to serve the specific needs of each manufacturer (made-to-order). SI developers are eligible for the highest incentives from the BOI, including an eight-year corporate income tax exemption.
In 2018, the Board of Investment has received applications for 58 projects in the Robotics and Automation industry with a combined value of 7,867 million Baht (approx. 247 million USD).
68 projects have applied for incentives under the BOI’s measure to promote investments in alterations and transformations of machinery in order to include robotics or to automate production lines which were enforced from August 2014 until 2018. These projects have an investment value of 19,195 million Baht (approx. 612 million USD). This high value of investment indicates that the industries are aiming towards increasing production efficiency and enhancing competitiveness.