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Tax breaks, ‘eco-cars’ to spur growth


March 24, 2008

Tax breaks, ‘eco-cars’ to spur growth

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Tax breaks on investments offered by the Thai government see a number of major car makers competing to roll out fuel-efficient "eco-cars", which may change the market trends in Southeast Asia’s biggest automobile market, AFP reported.

Thailand, already the world's biggest producer of one-ton pick-ups, maker of light pickups, churning out 900,000 one-tonne trucks every year, or about three-fourths of global output, unveiled tax breaks for automakers and car buyers last year.

The incentives are designed to encourage automakers to set up local production bases for "eco-cars" that meet the most stringent European emission standards and run on fuel with a 20-percent ethanol component.

"Investments in eco-car production will help grow this new segment of the country's domestic auto market while increasing exports," said Surapong Paisitpatnapong, spokesman for the Federation of Thai Industries' automotive club. said.

So far there are seven automakers, including Toyota, Volkswagon, and India's Tata, which have proposed eco-car projects to Thailand's Board of Investment. Four have already been approved.

Under the government’s scheme, the companies will not have to pay corporate income taxes on their investments for eight years, and duties on imported machinery will be waived.

Most of the proposals are designed to produce cars for export, and shipments of passenger cars from Thailand already jumped more than 43 percent in the first two months compared to the same period last year.

The government is also boosting domestic demand for fuel-efficient vehicles by slashing excise taxes to 17 percent, compared to the previous rates of 30 to 50 percent.

That has already sent sales of small cars soaring in a country that has long favored roomier trucks and SUVs.

Passenger car sales jumped nearly 33 percent in January and 45 percent in February, against the same months last year, according to Toyota Motor Thailand, the industry's statistics compiler.

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