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Thailand’s Eco-Car Project Attractive to Investors

eco-car-2012-marketing

BANGKOK – The eco-car project in Thailand has received a positive response from consumers. It has also attracted investors who have been given incentives to produce environmentally friendly vehicles.

The Thailand Board of Investment (BOI) expects that the project will help push the country’s car manufacturing sector toward its target of three million units by 2017.

An eco-car is a motor vehicle that emits either modest or no greenhouse gases. It is less harmful to the environment, in comparison to conventional internal combustion engine vehicles running on gasoline or diesel. The eco-car models also offer lower fuel consumption.

BOI launched its investment promotion scheme for eco-car manufacturing in 2007. Under the scheme, incentives were offered for integrated car assembly and key parts manufacturing projects. Among the incentives are corporate income tax exemption for eight years, exemptions on import duties for machinery and raw materials, and other tax reductions. All manufacturers are required to achieve a production of 100,000 vehicles a year by the fifth year of operation.

The second phase of the eco-car project was launched in August 2013. The application deadline was set for 31 March 2014. A report from BOI said that the second phase attracted 10 car manufacturers, with more than 138.9 billion baht in investment value and a combined production capacity of 1.5 million units.

Out of the 10 manufacturers, five are companies that did not apply for the first phase of the eco-car project, while the other five are investors in the first phase. The total investment value for the second phase is 100 billion baht higher than that in the first phase.

The next step is that BOI will consider in detail all proposed investment projects to ensure that they are in line with the set criteria. Then the projects that meet the criteria will be submitted to the new BOI for approval. A key objective of the new promotion scheme is to improve eco-car manufacturing, making them more competitive in the global market, and another is to focus more on exports. The production must include bodies, engines, and parts, achieving at least 100,000 units annually by the fourth year of operation.

When both phases of the project are pooled, there will be a combined production capacity of 930,000 eco-cars in 2018. Thailand is likely to produce 3.4 million car units in 2017, against three million targeted earlier. With this number, Thailand will rank among the world’s top automotive manufacturers.

The Thai auto market is experiencing a transformation. Consumer preference in Thailand is shifting toward smaller cars because of their lower prices as well as operating costs.

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