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NEWS UPDATES Asean Affairs                   15  September 2011

First-time car plan may fizzle

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The Thai government's first-time car buyers' program may sustain a major setback as leasing and finance companies are reluctant to cooperate as they see a high risk of loan defaults.

Lenders yesterday proposed that the excise tax rebates, which could be as high as 100,000 baht, be sent directly to them instead of to car buyers to ensure that borrowers do not default. The proposal emerged in a meeting that Finance Ministry official held with finance and automobile executives on details of the programme.

"The meeting was just held to clarify the details of the programme but was not intended for the industries to question the problems related the programme," said an industry source.

Businesses support the programme in principle but are upset that government officials did not consult them beforehand, and say some aspects of the programme are impractical.

The automobile industry, for example, is disturbed that the programme would narrow the price gap between conventional compact cars, which face a 30 percent excise tax, and eco-cars taxed at 17 percent. Companies are investing billions to make eco-cars after a big push by previous governments and the Board of Investment to encourage them.

Lenders, meanwhile, fear the number of vehicles seized for non-payment may double from around 10,000 a year at present. Seized cars are a big burden for lenders who face the cost of auctioning them to recover money.

They also say the prospect of receiving tax rebates directly from October next year may induce buyers to not honor hire-purchase contracts.

"This will force the leasing and finance companies to increase the down payment for car hire-purchase to prevent their customers from allowing their cars to be seized easily," said a source who asked not to be named.

If the tax rebates were returned to the lenders, customers would benefit from lower or fewer monthly installment payments, the industry says.

However, Deputy Finance Minister Boonsong Teriyapirom and Excise Department chief Pongpanu Svetarundra told the meeting that the tax rebate would only be returned directly to car buyers, as stipulated by the cabinet.

The lenders countered that they were the real owners of any cars against which customers had borrowed money.

They also expressed concern that even if they auctioned a seized car, its title could not be transferred to the winning bidder. The programme requires car buyers to keep a car for at least five years to qualify for the rebate.

If the program failed, the sources said the government could not blame the leasing and finance companies.



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This year in Thailand-what next?

AseanAffairs   04 January 2011
By David Swartzentruber      

It is commonplace in journalism to write two types of articles at the transition point between the year that has passed and the New Year. As this writer qualifies as an “old hand” in observing Thailand with a track record dating back 14 years, it is time take a shot at what may unfold in Thailand in 2011.

The first issue that can’t be answered is the health of Thailand’s beloved King Bhumibol, who is now 83 years old. He is the world's longest reigning monarch, but elaborate birthday celebrations in December failed to mask concern over his health. More


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