Samsung Electronics is planning to relocate part of its production of inverter air-conditioning models to its factory in Si Racha in eastern Thailand, aiming to benefit from the ASEAN free trade agreement (AFTA) effective next year.

The Thai plant's manufacturing capability benefits from a strong network of local sourcing for raw materials with strong and longstanding connections with local supporting vendors, said Somporn Jangreenapawong, the air-con business head at Thai Samsung Electronics. The company also has a good quality-assurance system at its plant.

"The relocation will benefit the Thai operation - which will be more flexible in its production plan - and the local launch of inverter air-conditioners at more affordable prices. Also, the products will be transported to the market at shorter lead-time," said Mr Somporn.Under Afta, 10 ASEAN members will fully implement tariff reductions early next year, cutting import tariffs to between zero and 5%.

The company plans to launch a complete lineup of Samsung inverter air-conditioning models, including 9,000, 13,000, 18,000 and 24,000 BTUs, into the Thai market and ASEAN next year.

Currently, inverter air-conditioners make up only 1% of domestic sales, but this figure is expected to rise to 3 % next year and to 10% in 2011.

Though local air-conditioner sales are flat at about 680,000 units this year, Samsung expects its air-conditioner sales to rise by 10% in value and by 21% in units this year, he said.

The company expects its sales of air-conditioners to reach 100,000 units this year, he added.

Three or four new models of vacuum cleaners will also be relocated to the Thai plant for local production next year, said Sasitorn Khoopatanakul, business leader for home appliances.

The Si Racha factory also produces washing machines, refrigerators, air-conditioners, microwave ovens and vacuum cleaners.

Sales of its home appliances in the first 10 months of this year grew 20% in value and 22% in units. The fastest-growing products included refrigerators, microwave ovens and air conditioners.

Ms Sasitorn expects the electrical home appliances market to grow by 1-2% in value this year to 20 billion baht.