Thailand aims to lure automakers to relocate their production of new-technology vehicles by offering tax incentives for projects worth at least 10 billion baht, the Board of Investment (BoI) said yesterday.

The board, chaired by Prime Minister Abhisit Vejjajiva, yesterday agreed to designate the new segment of vehicle production eligible for BoI privileges.

“We want to attract new investments from automakers to use Thailand as their production base for exports of new-technology vehicles such as hybrid cars,” said BoI secretary-general Atchaka Brimble.

“These vehicles must be models that have never been produced locally.”

According to Dr Atchaka, there are foreign automakers that have expressed interest in such projects in Thailand but she declined to elaborate.

Under the criteria endorsed by the BoI, companies need to invest in a new production line with the capacity to make a minimum of 100,000 units in the first five years of operations.

Investment, including land and working capital, must be at least 10 billion baht. Interested automakers must submit their proposals to the BoI by 2010 to obtain the privileges, she said.

The incentives include a waiver of tariffs on machinery imports and a temporary waiver of corporate tax for five to seven years, subject to project value and timing of the proposal submission.

Toyota Motor Corp, which has produced hybrid cars in Thailand, would not qualify under the new scheme because the Japanese company had expanded existing production lines for hybrid models but has not made a new investment for production relocation, she said.

India’s Tata Motors would be eligible but has yet to show keen interest to invest in such a model in Thailand.

Dr Atchaka said that US-based Ford Motor Co was considering increasing its investment in Thailand among other countries in the region.

In a related development, the BoI yesterday approved privileges for six investment projects worth a total of 12.88 billion baht.

The first project was a joint venture worth 2 billion baht between Italy’s Faber Industry, a major producer of compressed natural gas (CNG) cylinders, and Japan’s Sumitomo Corporation to produce 200,000 units a year of CNG cylinders.

Other projects approved were:

- A joint venture worth 2.48 billion baht between Thai Summit Auto Parts and a Japanese company to manufacture 1.34 million chassis units and 547,000 axle housings per year.

- A venture by MTP HPPO Manufacturing Co to produce tap water for industry worth 1.12 billion baht.

- A waste-water management project worth 1.13 billion baht.

- A plan by Mab Ta Phut Tank Terminal Co worth 1.88 billion baht to offer transport services for liquefied petroleum gas.

- A venture by Rayong Terminal Co worth 4.2 billion baht to offer transport services of 3.2 million tonnes of LPG per year.

According to a BoI report, applications for investment privileges in May showed a promising trend, with 84 projects worth a combined 29 billion baht seeking approval.

The applications increased from 58 projects worth 24 billion baht in the same month a year earlier.

However, application values in the first five months of this year were down by 9% to 166.6 billion baht compared with 183.6 billion in the same period last year.

source:Bangkokpost