EDB promotes global value chain linking automobile component manufacturing sector with Thailand

EDB Media Unit

12/12/2017

EDB promotes global value chain linking automobile component manufacturing sector with Thailand

The global trading environment is changing rapidly with global production networks and global value chains. The developments are a result of product fragmentation; cross boarder dispersion of component production/assembly. Each country specializes in a particular stage of production sequence and trades the value added components which ultimately results in the final product.

Sri Lanka needs to switch to export oriented industrialization where economies of scale could be reaped and more foreign exchange earned. Given the small market in Sri Lanka, import substitution industrialization cannot reap economies of scale in the domestic market and save foreign exchange to match the foreign exchange earnings of export oriented industrialization.

The automobile component manufacturing industry has been identified as one such sector to be developed and promoted in the international market by linking with the Global Value Chains (GVCs).

Although, the Automobile assembling industry is relatively a new industry to Sri Lanka this emerging sector is well established in South East Asian countries such as India & Thailand. Thailand is one of the top ten global automobile manufacturers and a leading producer of auto components. Many leading vehicle manufacturers and auto parts producers have production facilities in the country while some auto parts are still imported from abroad. Almost all world’s major automakers, assemblers and parts & component manufacturers have manufacturing presence in Thailand.

EDB is working closely with the Industry and has identified potential manufacturers to be developed to ensure the sustainable production capacities. Given the appropriate guidance, technology, know-how and exposure the Sri Lankan companies could become producers of quality auto mobile components which could compete with the rest of the world.

Keeping in line with the above, EDB with the assistance of Sri Lankan Embassy in Thailand organized the first ever promotional programme for the Automobile Component Manufacturing sector in Thailand with the objective of seeking opportunities to supply automobile components to the automobile companies based in Thailand and to explore JV’s opportunities to establish manufacturing facilities in Sri Lanka.

Lalan Rubbers Pvt) Ltd., Lanka Harness Co.(Pvt) Ltd., LAUGFS Corporation (Rubber) Limited, Sierra Cables PLC, Polymer Products Inpex (Pvt) Ltd., Accolade Composite Technologies, Auto Foam (Pvt) Ltd., Bopitiya Auto Enterprices, F R P Technologies (Pvt) Ltd participated at the programme.

The programme included business meetings, visits to Metalex exhibition, visits to factories manufacturing Automobile/ Automobile components and meetings with relevant associations and organizations.

Sri Lankan delegation visited Metalex exhibition for metal working and automotive products and accessories. Items displayed by 392 exhibitors at the show included equipments with wires and tubes, pumps, valves, molds, welding machinery, and sheet metalworking products from 50 countries. This provided an opportunity for the Sri Lankan manufacturers to explore business opportunities for metalworking related to automobile component manufacturing.

Sri Lankan delegation had business meeting with the members of The Federation of Thai Industries, Thai Automotive Industry Association, Thai Auto Parts Manufactures Association at Bangkok International Trade & Exhibition Centre and Board of Investment in Thai to explore possibilities to supply automobile components to the automobile companies based in Thailand and to explore JV opportunities to establish manufacturing facilities in Sri Lanka.

Factory visits were organized to Summit Auto Body Industry, Summit Auto Tech Industry, Thai Rung Union Car Public Co. Ltd. and Mercedes Benz Assembling Plant etc.. Sri Lankan companies had the opportunity to get an understanding of the Thailand Automobile/ Automobile component manufacturing industry.

Summit group in Thailand is a leading auto parts manufacturer of automotive, motorcycle, electrical appliance, and agricultural machinery. Summit Group has manufacturing facilities in Laem Chabang, Nakhon Nayok, Rayong and Samut Prakan in Thailand and overseas manufacturing facilities in Southeast Asia, China, India, Japan, and the USA. Sri Lankan companies got the opportunity to present their product portfolios to management of the Summit group and create an effective impression on their minds and were able to obtain positive inquiries from them.

Delegation visited Poonsup Market which is a center with over 1,000 stores for motorcycle parts, car accessories, car audio and tools etc. The companies were able to establish contact with the company owners and stores owners of the Poonsup market to explore supplying Automobile component manufactured in Sri Lanka to the Thai after sales market.

Visit to the Eastern Seaboard Industrial State was organized for the delegation to obtain first-hand knowledge on world class industrial estate. They offer total solution package that includes customized site selection, world class design and high quality construction to optimize the long term logistical costs of local and international customers.

The Thailand companies are extremely interested to work with Sri Lankan companies and the positive inquiries received will bring potential businesses and JV’s to Sri Lanka. EDB will work with the Automobile Component Manufacturing Industry and the Sri Lanka Embassy in Thailand to follow up closely on the initiatives undertaken to turn them into fruitful business contact.