Thailand offers "eco car" producers tax breaks

BANGKOK (Reuters) - Thailand has increased tax incentives to attract global car makers to invest in the production of small passenger vehicles for its domestic and export markets.

The state-run Board of Investment (BOI) said car manufacturers investing in its “eco car” projects would enjoy cuts of up to 90 percent in import tariffs for foreign car parts and material used for producing the vehicles.

The parts entitled to the low tariff must not be available from local producers, it said in a statement.

“The BOI incentive aims to encourage investors to move their manufacturing base to Thailand,” Industry Minister Chanchai Chairungruang said in a statement issued by the BOI.

“It also aims to expand investment opportunities in the automotive sector, which will benefit the automobile parts industries in Thailand in the long term,” he said.

Several car makers, mostly Japanese but also India’s Tata Motors Ltd, have shown interest in investing 10 billion baht ($295 million) each in “eco car” projects as required by the government.

According to the BOI, “eco cars” are passenger cars that must meet safety, low fuel consumption and “EURO 4” emission standards.

Among the interested companies are Toyota Motor, Mitsubishi Motors, Nissan Motor, Honda Motor and Suzuki Motor.

The BOI has already offered companies corporate tax exemption for at least five years provided their production of the small vehicle reaches 100,000 a year within the first five years of operation.

Global car firms such as Toyota, General Motors, Ford, Mazda, Isuzu and Nissan have made Thailand a big production and export base for one-ton pick-up trucks.

Thailand is the world’s biggest producer of the small trucks, which it exports to more than 130 countries.

Writing by Vithoon Amorn; Editing by Alan Raybould