A Thai economist watches Indonesia try to pull Toyota across the border

Thailand has been the car factory of Southeast Asia for decades, and the Thai economists who watch it are now naming Indonesia as the competition. In a commentary for Fulcrum, the news site of Singapore's ISEAS institute, Archanun Kohpaiboon of Thammasat University sets out what is going wrong in Bangkok. New registrations of Japanese-brand cars in Thailand have shrunk or flatlined since 2023, after the government brought in incentives for electric vehicles that favour imports, many of them Chinese. Toyota and Honda say they want a level playing field on tax and tariffs. Suzuki stopped building cars in Thailand in 2024, and Kohpaiboon suggests that around 10,000 sales a year may be the level at which a carmaker gives up on local production.

That is the opening Jakarta is trying to use. Kohpaiboon records that Indonesia's finance minister has publicly invited Toyota to move its supply chain from Thailand to Indonesia. He lists Indonesia, with 288 million people, and Vietnam, with 102 million, as the places intensifying the fight for new Japanese investment, and the pull is simply the size of the home market: a carmaker wants to build where the buyers are.

His own conclusion is cooler than the invitation suggests. A full exit by the big Japanese makers is unlikely, because the factories in Thailand are already paid for, and money spent on a plant does not move. What is more likely is a gradual shift of the supply chain, segment by segment, rather than one headline announcement. He also questions the quality of what Thailand won in its own EV rush: the investment board counted 180 EV-related projects worth 4 billion dollars, but many of them are small. He is writing about Thailand, not Indonesia. The lesson still travels, because a long list of signed projects is not the same as a working industry.

Why it matters

If you work in the industrial belt east of Jakarta, or supply parts to it, this is the realistic version of the "Toyota is coming" story: pieces of a supply chain, arriving over years, not a factory next quarter. The useful signal is not a minister's invitation but a Japanese supplier actually announcing a plant and a hiring number. Watch, too, whether Indonesia copies Thailand's mistake and counts signed projects instead of cars and jobs.