Follow the leader? ASEAN members‘ policy towards electric vehicles with focus on Thailand

Type de publication:

Conference Paper


Gerpisa colloquium, Sao Paulo (2018)


Purpose: This paper aims to analyse the challenges smaller emerging countries face when trying to attract manufacturing and R&D of advanced automotive technology. The case of electric vehicle (EV) promotion in ASEAN, with special attention to Thailand, is investigated to elaborate if and how smaller nations can pursue innovation via policy.

Design: This paper will analyse ASEAN members’ industrial policies aiming at the automotive sector. First, a brief overview over EV-related policies in the whole region will be presented to explain characteristics of each country’s approach. Due to significant differences between ASEAN members’ level of socio-economic and technological development, policy objectives as expressed through EV adoption figures, infrastructure development or intended timeframes for objective realisation vary strongly. Thus, there is no single representative case that characterises the region as a whole. Therefore, it is only possible to subsume several countries under groups that share general EV policy aims.
As a second step, analysis will concentrate on the case of Thailand which has positioned herself as the regions primary production hub and nurtured the most developed supplier industry in ASEAN. Thailand may be regarded as a suitable case study in comparison to BRICS countries as her production output is higher than that of Russia and South Africa. However, Thailand differs in a one characteristic from BRICS countries, i.e. market size. For this reason, Thailand positioned herself as a regional and global production hub without demanding dedicated innovations for the domestic market. Instead, Thai policy concentrated incentives on particular vehicle segments that were deemed suitable for local production and export. While Thai policies contain elements that aim at upgrading technology, this rather is a case of being a fast follower than an innovator. While innovative activity in the Thai automotive industry increased recently, it has been observed that R&D centres are mainly undertaking process innovation and homologation (Intarakumnerd/Charoenporn 2015: 1325). Nevertheless, what can be labelled as “product champion” policy (Natsuda/Thoburn 2013) was relatively successful in establishing Thailand as a vehicle producing country.

Findings: The latest iteration of Thai automotive policy seems to have reached the limits of the product champion approach: Thai policy clearly desires to attract EV manufacturing operations, but policy varies significantly in comparison to former industrial policies towards the automotive sector. Former product champion policies were capable to make detailed demands on minimum investment, production volume, localised production of core components, emission standard, and fuel efficiency that clearly prescribed investment conditions. Comparison between different Thai product champions reveals the limitation of this approach: While making detailed requirements is possible if targeted products are standardised or incrementally improved designs such as 1t pickup trucks or fuel-efficient compact cars, this becomes difficult when potentially disruptive technology is pursued. Consequently, analysis finds that Thailand employs significantly softer requirements towards EVs than it applied to pickup trucks and compact cars.
From an industrial policy perspective, several interpretations are possible: Firstly, this may be regarded as a case that illustrates typical challenges associated with shifting from industrial towards innovation policy. Regarding policies on the automotive industry, this is not an uncommon phenomenon: Even large countries such as Brazil rather encourage adapting existing technology to local conditions than require production or R&D of disruptive technology (Marx/Marotti de Mello 2014; Marotti de Mello, Marx & Gutierrez Motta 2016). Only China seeks to break the mould by aggressively pursuing disruptive EV technology.
Secondly, from a perspective that highlights the impact of global value chains (GVCs), it may be regarded as a case that highlights the difference between creating a value chain and joining one (Baldwin 2011). From this perspective, developing countries – only large-sized ones may escape this tendency – can no longer utilise policy tools such as local content requirements to gradually foster domestic industries. Thus, developing industrial capabilities and innovations nowadays depends on foreign investment and countries’ capability to move upward inside GVCs. From this point of view, Thailand has successfully joined automotive GVCs, but is therefore dependent on continuous upgrading inside those chains.
Thirdly, from a perspective that emphasises the bargaining power of national policy-makers vis-à-vis transnational enterprises (TNEs), this highlights the significant difference between BRICS countries and other emerging countries: The former may leverage market size to enforce requirements on automotive TNEs (Liu/Dicken 2006). Lacking size does not allow smaller emerging nations such as Thailand to make similar demands, effectively leaving them only the option to follow TNE technological leadership.

Practical implications: Findings highlight the general problem of smaller emerging countries in dealing with TNEs and the question of technological innovation and upgrading. As countries’ size cannot be altered the only option for ASEAN members is increased cooperation. While a common market is pursued through the ASEAN Economic Community, industrial policies are loosely coordinated at best. While ASEAN members work on the harmonisation of vehicle-related standards (emissions, fuel economy, fuel quality, road safety) progress is slow. This is due to significant differences between members and the principle of the so-called “ASEAN way”, in practice meaning unanimity, which makes formulating and implementing challenging industrial standards and requirements difficult.


Baldwin, Richard (2011): Trade and Industrialisation after Globalisation’s 2nd Unbundling: How Building and Joining a Supply Chain Are Different and Why It Matters, NBER Working Paper 17716, [29.01.2018]
Intarakumnerd, Patarapong/Charoenporn, Peera (2015): “Impact of stronger patent regimes on technology transfer: The case of the Thai automotive industry”, in: Research Policy, Vol. 44, Issue 7, pp. 1314-1326
Liu, Weidong/Dicken, Peter (2006): “Transnational corporations and ‘obligated embeddedness’: foreign direct investment in China’s automobile industry”, in: Environment and Planning A, Vol. 38, Issue 7, pp. 1229-1247
Marotti de Mello, Adriana/Marx, Roberto/Gutierrez Motta, Flavia (2016): “A Preliminary Analysis of Inovar Auto: Impact on the Brazilian Automotive Industry R&D Activity”, in: Revista de Administração e Inovação, Vol. 13, Issue 1, pp. 47-62
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Natsuda, Kaoru/Thoburn, John (2013): “Industrial policy and the development of the automotive industry in Thailand”, in: Journal of Asia Pacific Economy, Vol. 18, No. 3, pp. 413-437

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