Incentives helped F&P Appliances choose Thailand

By NZPA

Friday 27th April 2007

An array of attractive incentives helped Fisher & Paykel Appliances settle on Thailand as the location of its new washing machine production plant.

The company announced yesterday it would be closing down that operation in Auckland with the loss of 350 jobs after, in the words of managing director John Bongard, this country had become an unfriendly environment for manufacturing.

Appliances is clear the inducements being offered by Thailand are not the reason the company chose to move the plant from this country, but they did influence its choice of where to move to.

The incentives for moving to the part of Thailand chosen by Appliances include an exemption from corporate income tax for the first eight years, and a 50% reduction for the next five.

Thailand's Board of Investment also allows double tax deductions of transportation, electricity and water costs for 10 years.

Then there are exemptions on import duties for machinery and on duties for raw or essential materials used in manufacturing of export products.

Firms in the area also get a 25% tax deduction from net profit of the project infrastructure installation and construction costs.

Appliances vice-president investor relations Paul Brockett said the choice of Thailand had been made from a final group of three countries, with the other two being Vietnam and China.

A range of factors were taken into account including infrastructure, labour costs, the cost of doing business and location, Brockett said.

The incentives offered by Thailand had helped sway the final decision, although other countries also offered inducements.

Announcing the move yesterday, Appliances chief executive John Bongard said the environment in this country for the type of manufacturing done by the company had deteriorated due to a combination of factors.

Those factors included high interest rates, persistently high exchange rates and some trade and tariff policies, he said.

Most of Appliances' competitors supplying the Australasian market did so from facilities in low cost Asian countries which offered generous manufacturing incentives.

Later he said the difference in labour costs between this country and Asia was a big factor. "But I've also got to be honest and say that the incentives that are available to manufacturers in Asia are also very attractive," he told Radio New Zealand.

"These sorts of incentives are available in every country, not just Thailand, but there's all sorts of tax breaks. There is help with training. There's just a very, very large package there."

Brockett said few, if any, incentives were available to manufacturers in this country.

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