INDUSTRIAL LOCATION FACTORS ANALYSIS: A COMPARISON OF THE AUTOMOTIVE INDUSTRY IN THAILAND AND INDONESIA

Abstract

This study utilizes industrial location factors to conduct a comparative analysis of the automotive industry, specifically focusing on the car manufacturing sector, in Thailand and Indonesia, two prominent car production hubs in Southeast Asia. The factors are categorized into country-level and industry-level factors to determine the superior potential between the two countries. The findings indicate that Thailand demonstrates higher potential than Indonesia in terms of country-level factors, suggesting a more favorable investment environment for car manufacturers. Thailand benefits from generous tax incentives, strong government and financial sector support, and well-developed infrastructure, all of which create a conducive environment for automotive industry investment. However, Thailand faces challenges in economic conditions and government stability compared to Indonesia. Indonesia performs well in terms of industry-level factors, attributed to factors such as substantial domestic demand, growing middle-class income, expanding industrial capacity and production, a relatively low number of competitors, and a plentiful and cost-effective workforce. Nevertheless, Indonesia's automotive industry faces a significant challenge due to a shortage of suppliers.