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 and cross-border dispersion of component production and assembly. Each country specialises 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 industrialisation where economies of scale can be reaped and more foreign exchange can be earned. Given the small market in Sri Lanka, import substitution industrialisation cannot reap economies of scale in the domestic market and save foreign exchange to match the foreign exchange earnings of export-oriented industrialisation. 

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

Although the automobile assembling industry is a relatively new industry to Sri Lanka, this emerging sector is well established in South East Asian countries such as India and Thailand. Thailand is one of the top 10 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 of the world’s major automakers, assemblers and parts and component manufacturers have a manufacturing presence in Thailand. 

EDB is working closely with the industry and has identified potential manufacturers to be developed to ensure sustainable 

production capacities. Given the appropriate guidance, technology, know-how and exposure, Sri Lankan companies could become producers of quality automobile components which can compete with the rest of the world. 

Keeping in line with the above, EDB, with the assistance of the Sri Lankan Embassy in Thailand, organised the first-ever promotional program for the automobile component manufacturing sector in Thailand with the objective of seeking opportunities to supply automobile components to automobile companies based in Thailand and to explore joint venture opportunities to establish manufacturing facilities in Sri Lanka. 

Lalan Rubbers Ltd, Lanka Harness Ltd, LAUGFS Corporation (Rubber) Ltd, Sierra Cables Plc, Polymer Products Inpex Ltd., Accolade Composite Technologies, Auto Foam Ltd., Bopitiya Auto Enterprices and F R P Technologies Ltd. participated in the program.

The program included business meetings, visits to the Metalex exhibition, visits to factories manufacturing automobiles and automobile components and meetings with relevant associations and organisations.

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

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

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

The Summit Group in Thailand is a leading auto parts manufacturer of automotive, motorcycle, electrical appliances and agricultural machinery. The 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 US. Sri Lankan companies got the opportunity to present their product portfolios to the management of the Summit Group and create an effective impression in their minds and were able to pose positive enquiries to them.   

The delegation visited Poonsup Market, which is a centre 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 Poonsup Market to explore supplying automobile components manufactured in Sri Lanka to the Thai after-sales market.

A visit to the Eastern Seaboard Industrial State was organised for the delegation to obtain firsthand knowledge on a world-class industrial estate. They offer a total solution package that includes customised site selection, world-class design and high-quality construction to optimise the long-term logistical costs of local and international customers.

The Thai companies are extremely interested to work with Sri Lankan companies and the positive inquiries received will bring potential businesses and joint ventures to Sri Lanka. EDB will work with the automobile component manufacturing industry and the Sri Lanka Embassy in Thailand to closely follow up on the initiatives undertaken to turn them into a fruitful business contact.