Thailand slashes import tax for green auto parts

Thailand is offering green automakers cuts of up to 90 per cent on tariffs for imported parts and materials in a move aimed at making the nation a manufacturing hub for fuel-efficient and eco-friendly vehicles.

The two-year tax incentive will only apply to components that are not produced domestically. The government estimates that the move would lower production costs by about 100,000 baht ($3,000) per vehicle.

In announcing the tax cut last week, Board of Investment Secretary General Atchaka Brimble said the government wanted to "support manufacturers of eco-cars and encourage them to develop their production bases in Thailand".

She added that the measure would help automakers to offer consumers lower prices on eco-friendly vehicles that are made locally and shipped abroad.

In 2007, Thailand introduced tax incentives to automakers that invest at least $150m to manufacture green vehicles locally. Under the criteria, the resulting cars must consume less than five litres of petrol per 100km and generate less than 120g of carbon emissions per kilometre.

Additionally, companies must have a production output of at least 100,000 vehicles within the first five years of domestic operation.

So far, India's Tata Motors and Japanese automakers Nissan, Toyota, Mitsubishi, Honda and Suzuki have all qualified for the scheme. The companies have pledged to invest a total of US$1.24bn in the manufacturing of green cars in Thailand.

Nissan is expected to start producing cars under the scheme early next year, said Brimble, adding that the company has already imported machinery for the factory.

In January, Nissan said it planned to move production of its fuel-efficient Micra subcompact from Japan to Thailand by 2010. It has earmarked 5.5bn baht ($164m) to manufacture 120,000 cars in Thailand for the domestic and export markets under the incentive scheme.