Thai Rung keen on customs zone
SET-listed vehicle assembler and auto parts maker Thai Rung Union Car Plc (TRU) is applying for the Customs Department's free-zone scheme to allow assembly of vehicles for other brands in the future.
Managing director Sompong Phaoenchoke said the free zone would be set up at existing manufacturing facilities in Bangkok and Rayong.
The duty on a product manufactured abroad and imported is assessed on the finished product rather than its individual parts, materials, or components. Local manufacturers are at a disadvantage as they must pay a higher rate for imported parts, materials or components used for production.
The free-zone scheme corrects this imbalance by treating products made in the zone as if they were manufactured abroad for tariff purposes. Thailand benefits because the local manufacturer uses domestic labour, services and inputs.
Mr Sompong said the company is looking to assemble vehicles for other brands, including several from Japan and China.
The scheme would enable Thai Rung to cut its import tariff costs while making it easier for other brands to hire it to assemble their vehicles, including trendy electric vehicles.
"Our plants are ready with a maximum capacity of 50,000 units per year," he said.
Thai Rung makes 15,000 to 18,000 units a year, mainly flat-deck Isuzu pickup trucks and its own passenger pickup vehicle (PPV): the TR Transformer with a Toyota Hilux Revo chassis.
Thai Rung recently invested 200 million baht to cope with future expansion
In a related development, the company will register the TR Transformer as a Thai innovative product at the National Science and Technology Development Agency this year to boost its image and sales in the long run, said Mr Sompong.
"Once the TR Transformer is registered, Thai Rung can approach government units for direct sales instead of general procurement," he said. The company plans to feature the vehicle in roadshows in Cambodia and Singapore next year.
Mr Sompong said sales of the TR Transformer were unlikely to reach their target of 300 units this year because of aggressive competition in the PPV segment. He predicted sales of 200 vehicles this year, 100 of which will come from abroad, mainly Malaysia.
Mr Sompong also cut Thai Rung's financial outlook for 2016 from 2.4 billion baht to 2.2 billion, on par with last year's performance. The company reported its revenue fell by 18% to 914 million baht in the first half, with net profit at 28.37 million, down 53%.
Last year Thai Rung revenue decreased by 10% to 2.21 billion baht, missing its target of 2.5 billion, while net profit dipped 5% to 145 million.
TRU shares closed yesterday on the SET at 4.04 baht, down two satang, in trade worth 469,210 baht.
Credit : http://www.bangkokpost.com/business/news/1068744/thai-rung-keen-on-customs-zone