Thailand offers tax incentives to produce eco-car

Jun 15, 2007, 11:03 GMT

Bangkok - In a bid to transform Thailand into a regional hub for eco-car manufacturing, the government Friday approved tax privileges for any company that invests at least 5 billion baht (143 million dollars) in the project.

Industry Minister Kosit Panpiemras said the Board of Investment (BOI) would grant qualified investors in eco-car production the maximum eight years of tax exemption on corporate tax income and machinery import duties.

'To be eligible for the tax incentives, auto companies must submit their plans in a package that covers the assembly, engine production, and the production of parts. The package value must be no less than 5 billion baht,' said Kosit, as reported by The Nation online news service.

Eligible companies must also manufacture no fewer than 100,000 units per annum from the fifth year and meet the government requirements of manufacturing a vehicle that consumes less that 5 litres of petrol per 100 kilometres and complies with the Euro 4 standards of carbon emissions of less than 120 grammes per kilometre.

Interested companies were invited to submit their applications for the tax privileges by November 30, 2007, said The Nation.

Earlier this month the government agreed to lower the excise tax on eco-car models made in Thailand to 17 per cent, kick-starting the project which has been under discussion for the past five years.

The Industry Ministry hopes to encourage Japanese car manufacturers to use Thailand as a hub for small eco car production, both for the domestic market and exports.

Production is expected to start in 2009.

Thailand is already the world's second largest manufacturer of one-ton pickup truck models, a utility vehicle that is popular in the kingdom and is now a major export item.

Thailand has attracted nearly all the major Japanese automotive manufacturers to set up production lines in the kingdom with the exception of Suzuki, which specializes in small-sized vehicles such as the eco-car project.

Although BMW and Mercedes Benz have assembly plants in Thailand, they are unlikely to invest in eco-cars, the target price for which will be under 500,000 baht (14,300 dollars).