Three new eco-car projects approved

Thailand Wednesday approved granting tax privileges to automobile-makers Mitsubishi, Toyota and Tata to invest a combined 16.6 billion baht (536 million dollars) to produce more than 300,000 eco-cars for the domestic and export markets. Thailand's Board of Investment (BoI) Secretary General Sathit Chanchouwakul said the three companies would be ready to begin operations within two to four years.

Volkswagen, which has also submitted a proposal to produce eco-cars in Thailand, was not included among the approvals granted by BoI Wednesday.

The Mitsubishi project promised to invest 4.7 billion baht to produce 107,000 eco-cars in Thailand, 88 per cent for export, while Toyota will invest 4.6 billion baht to make 100,000 units by 2012, 50 per cent for export, and India's Tata Motor has pledged to invest 7.3 billion baht to make 100,000 units by 2010, of which 52 per cent will be exported.

The BoI - the government's investment promotion body which grants tax waivers to favoured industries - had previously approved similar eco-car investments worth 21.8 billion baht (703 million dollars) by Asian Honda Motors, Suzuki Motor and Siam Nissan Automobile, the local subsidiaries of Japanese auto multinationals Honda, Suzuki and Nissan, respectively.

Thailand, which already ranks among the world's top 15 auto exporters, is seeking to become a hub for manufacturing small, reasonably priced "eco car" models for both the domestic and export markets.

Under the government's policy, manufacturers who produce eco-car models in Thailand that meet the set requirements will be eligible for a cut on excise taxes from the current 30 per cent of the factory price down to 17 per cent, as of October 2009.

The projects will also receive BoI privileges, which grant tax exemptions on imported equipment and parts, plus tax holidays. To qualify for the tax privileges, manufacturers must produce cars with an engine size of no more than 1,300 to 1,400 cc, using no more than 5 litres of fuel per 1,200 kilometres and must comply with Euro 4 emission standards.

Thailand is already the world's second-largest market for pickups after the United States and has become a leading exporter of the vehicle over the past decade. During the first two months of 2008, Thailand produced 231,680 vehicles, up 27.28 per cent from the same period last year. About 57 per cent of the total production, or 132,674 vehicles, were exported from January to February, a 39.5-per-cent jump on last year's vehicle exports from the same period a year ago. In 2007, Thailand's total vehicle production reached 1.25 million units.