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Thailand emerges as a leading regional aerospace hub

Thailand emerges as a leading regional aerospace hub

Just 10 years after Thailand’s government announced a new investment and incentives policy with the goal to position the nation as a premier aviation hub, the country has quickly become a full-service, high-quality leader in the aerospace industry. Today the aerospace industry contributes approximately $25.5 billion—9 percent of the Thai GDP—to the economy. The country not only serves major aerospace companies in the areas of aircraft parts production and components manufacturing, but it also provides other functions including maintenance, air transport services, ground-based infrastructure, supply chain activities and other related business areas.

Leading aviation companies such as General Electric Co., Rolls-Royce Co., Michelin, Senior Plc, Triumph Group, Chromalloy, Ducommun Incorporated, Aeroworks, Eurocopter, Driessen and Minebea currently have operations in Thailand, and this sector will continue to grow.

In 2003, Thailand did not have a single aircraft maintenance center, forcing companies to send aircrafts abroad for an expensive and lengthy process of repair and overhaul. Over the past decade, the nation has expanded aggressively to become a center for the maintenance and production of aircraft parts, with an aircraft and parts market worth more than $1 billion and growing. Overall, civil aviation supports 393,000 jobs directly and 1.8 million additional jobs in the tourism and travel sectors.

Key to the nation’s aviation growth was the government classifying the manufacture, repair or conversion of aircraft—including parts and onboard equipment—as a priority activity of special importance and benefit to the country. This classification makes projects in the aircraft maintenance industry eligible for exemption of import duties on machinery and provides an eight-year corporate income tax exemption. Non-tax incentives include assistance with work permit documentation and authorization to bring in foreign workers and own land, while foreign businesses are entitled to 100 percent ownership.

Because of its strategic location and spacious facilities, Thailand has the capacity to handle enormous cargo loads and passenger traffic.  The country’s registered airlines carry more than 638 thousand tons of freight each year, according to the International Air Transport Association, with the region’s cargo volumes projected to grow 6.3 percent annually through 2030. In addition, Thailand has seen a great increase in passenger traffic; in 2012 alone, 44.3 million international passengers traveled through Thailand’s airports, with 2013 travel up 20 percent.