Toyota plans car factory in Myanmar

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Toyota Plans Car Plant In Myanmar

The world’s largest auto maker Toyota (as of the first quarter of 2019) is planning to build an automobile factory in Myanmar, according to Japanese news reports. An official announcement could come within the next days, with construction of the plant to start this year.

The plant will be located in the Thilawa Special Economic Zone outside Yangon and initially produce up to about 10,000 pickup trucks a year. Toyota’s initial investment is expected in the tens of millions of dollars.

The automaker’s plans are a boost for the government of Myanmar’s de-facto leader Aung San Suu Kyi, as foreign investment has slowed since her party took power in 2016 following decades of military rule in Myanmar. Approved foreign investment has sunk for three straight years.

One of the main reasons for Toyota to build a plant in the country are Myanmar’s strict automobile import regulations. For example, imported pickups face a special registration fee of up to 40 per cent of their import price. In turn, locally produced cars are not subject to these fees and instead receive tax exemptions.

Myanmar has a population of about 50 million people, on a par with South Korea and Spain. It is also a young nation, with an average age of about 28 years. While it is one of the poorest countries in Asia, it has seen strong economic growth recently and is expected to grow at annual rates of six to seven per cent.

Though only about 17,500 new automobiles were sold in the country in 2018, the figure more than doubled compared to the previous year. Toyota currently exports about 2,000 passenger and commercial vehicles to Myanmar per year and sees the market as one with strong growth potential.

Suzuki was one of the first entrants to Myanmar among Japanese automakers. It has two factories in the country assembling compact cars, for which it now commands more than half of the market. Nissan, Kia, Hyundai and Ford are among the other automakers that have a presence in Myanmar.

Analysts believe Myanmar has the potential to grow into a market similar in size to neighbouring Thailand with a population of about 69 million, where about one million automobiles are sold per year.

As few parts manufacturers operate in Myanmar, automakers assemble cars using imported knockdown parts. The maturation of Myanmar’s auto manufacturing industry therefore hinges on whether or not parts makers move into the country.

The Thilawa Special Economic Zone is an area 20 kilometers southeast of Yangon that opened in 2015, with the Japanese government and major trading companies including Mitsubishi Corporation fully supporting the zone’s development and management. Companies that set up operations in the zone receive preferential treatment, such as corporate tax exemptions. As of April 1, 2019, more than 100 companies were operating there. The zone has been called “the most successful symbol of Myanmar’s economic development” and has attracted investment from around the world.

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The world's largest auto maker Toyota (as of the first quarter of 2019) is planning to build an automobile factory in Myanmar, according to Japanese news reports. An official announcement could come within the next days, with construction of the plant to start this year. The plant will be located in the Thilawa Special Economic Zone outside Yangon and initially produce up to about 10,000 pickup trucks a year. Toyota’s initial investment is expected in the tens of millions of dollars. The automaker's plans are a boost for the government of Myanmar's de-facto leader Aung San Suu Kyi, as foreign...

Reading Time: 2 minutes

Toyota Plans Car Plant In Myanmar

The world’s largest auto maker Toyota (as of the first quarter of 2019) is planning to build an automobile factory in Myanmar, according to Japanese news reports. An official announcement could come within the next days, with construction of the plant to start this year.

The plant will be located in the Thilawa Special Economic Zone outside Yangon and initially produce up to about 10,000 pickup trucks a year. Toyota’s initial investment is expected in the tens of millions of dollars.

The automaker’s plans are a boost for the government of Myanmar’s de-facto leader Aung San Suu Kyi, as foreign investment has slowed since her party took power in 2016 following decades of military rule in Myanmar. Approved foreign investment has sunk for three straight years.

One of the main reasons for Toyota to build a plant in the country are Myanmar’s strict automobile import regulations. For example, imported pickups face a special registration fee of up to 40 per cent of their import price. In turn, locally produced cars are not subject to these fees and instead receive tax exemptions.

Myanmar has a population of about 50 million people, on a par with South Korea and Spain. It is also a young nation, with an average age of about 28 years. While it is one of the poorest countries in Asia, it has seen strong economic growth recently and is expected to grow at annual rates of six to seven per cent.

Though only about 17,500 new automobiles were sold in the country in 2018, the figure more than doubled compared to the previous year. Toyota currently exports about 2,000 passenger and commercial vehicles to Myanmar per year and sees the market as one with strong growth potential.

Suzuki was one of the first entrants to Myanmar among Japanese automakers. It has two factories in the country assembling compact cars, for which it now commands more than half of the market. Nissan, Kia, Hyundai and Ford are among the other automakers that have a presence in Myanmar.

Analysts believe Myanmar has the potential to grow into a market similar in size to neighbouring Thailand with a population of about 69 million, where about one million automobiles are sold per year.

As few parts manufacturers operate in Myanmar, automakers assemble cars using imported knockdown parts. The maturation of Myanmar’s auto manufacturing industry therefore hinges on whether or not parts makers move into the country.

The Thilawa Special Economic Zone is an area 20 kilometers southeast of Yangon that opened in 2015, with the Japanese government and major trading companies including Mitsubishi Corporation fully supporting the zone’s development and management. Companies that set up operations in the zone receive preferential treatment, such as corporate tax exemptions. As of April 1, 2019, more than 100 companies were operating there. The zone has been called “the most successful symbol of Myanmar’s economic development” and has attracted investment from around the world.

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