VIENTIANE : Higher labour costs and a labour shortage in Thailand have prompted Japanese auto parts maker Asahi Tec Corporation (ATC) to build its new overseas factory in Laos.
The 1.6-billion-baht plant in Savannakhet province will manufacture aluminium die casting parts.
"The labour shortage and high cost of expansion are the main problems for the expansion plan in Thailand, so Savannakhet is our new investment destination," said ATC director and chairman Shoichiro Irimajiri.
ATC's four factories in Thailand, which produce aluminium and iron casting parts, have already reached full capacity.
A new company, BMM Asahi Tec, has been formed through an equal joint venture with leading Lao company BMM Group, which is involved in property development and duty-free retailing.
The factory will be located in the Savan-Seno Special Economic Zone, which is expected to be a thriving hub of trade and services in the Greater Mekong Subregion.
BMM Asahi Tec plans to sell aluminium die casting parts in Thailand and throughout Southeast Asia based on skills cultivated mainly at ATC Japan.
Construction of the factory is due to start next month, with operations starting in the third quarter of 2014.
The factory is expected to employ 376 workers, mostly from Laos and Vietnam, including engineering experts from Japan and Thailand.
Sales are estimated to reach about 1.5 billion baht a year.
The plant's manufacturing capacity will be about 610 tonnes per month in the first phase, rising to 1,000 tonnes by the end of 2014. With its output from its plant in Samut Prakan's Bang Bo district, its manufacturing capacity of aluminium parts will reach 1,800 tonnes a month.
"Aluminium parts produced in Laos will be exported to car makers in Thailand," said Mr Irimajiri.
Phishith Banyadith, president of the BMM Group, said the Savan-Seno zone has an exemption from corporate income tax for 12 years and a cut in income tax from 30% to 5% for foreign workers.