Supunnabul Suwannakij

Supunnabul Suwannakij Dow Jones Bangkok

Japan's Denso Corp. plans to invest close to US$500 million in Southeast Asia from this year through 2010, with Thailand as the main investment focus, in order to take advantage of the region's fast-growing car market.

The leading automotive electronic parts maker, and an affiliate of Toyota Motor Corp., has set an initial investment budget of around $280 million for 2003 to 2005, to be used to set up new production facilities and increase existing production capacity, said Chishu Murodono, managing director for Denso International Asia Pte. Ltd.

"In 2005-2010, we will invest another $200 million in the region, half of which will be invested in Thailand," Murodono told Dow Jones Newswires in an interview. Other countries Denso may invest that money in include Indonesia and Malaysia.

From 2000 to 2002, Denso invested $120 million in the region. Of that amount, 40 percent was in Thailand and the rest mainly in Indonesia and Malaysia. At present, the company has four production facilities in Thailand.

Denso has raised its projection for vehicle production in Southeast Asia to 2.5 million units in 2005, from 1.4 million units in 2002, Murodono said.

The Thai vehicle market is expected to reach 900,000 units in 2005, he added.

For the January-September period, new vehicle sales in Thailand rose 32 percent on year to 379,252 units. Total vehicle sales in Thailand this year should reach 500,000 units or more, according to the Federation of Thai Industries.

Denson's investment plan will fuel its revenue growth in the region. Murodono said he expects the company to enjoy double- digit annual growth in Southeast Asia sales up to 2005, and 50 percent annual growth after 2005, contributing a significant share to total sales around $20 billion in 2002.

"We target sales from Southeast Asia to reach $1 billion in 2005, almost doubling from $530 million in 2002," Murodono said.

Thailand is a key player in the region, with expected sales of $450 million in 2005, from $200 million in 2002, he added.

Thailand was chosen as the primary focus for Denso's investment in the region due to its booming car market and its potential as the 'Detroit of Asia,' Murodono noted.

Major Japanese car makers such as Toyota Motor and Isuzu Motors Ltd., and U.S. auto giant Ford Motor Co. (F) have announced plans to increase their investment in Thailand, as the country's robust economic growth fuels more automobile sales. The new Thai production plants and the expansion of its existing facilities will mainly cater to growing domestic demand and supply the car manufacturing plants located in the country, Murodono said.