The objective of this paper is to analyze Japanese FDI in Thai automotive industry. The paper starts with brief history of how Thai automotive industry started and become one of the most important automotive producer and exporter in ASEAN market and Japanese market.
Thai automotive industry has strong domestic market and international markets that support the industry. Export of vehicles has increased dramatically after the joining of ASEAN (Association of South-East Asia Nations). Free trade between ASEAN nations eliminates tariff rate on automobiles and some of automotive parts. Free trade between Japan does not increase export of vehicles dramatically like ASEAN markets but JTEPA and AJCEP lower production cost and improved competitiveness in Thai automotive industry. We have found out that FDI can increase productivity through technological transfer.