Sunday, June 7, 2009

TATA's ASEAN strategic business hub possibly in Thailand

The TATA Group is actively considering using Thailand as a strategic marketing hub for promoting its products in the ASEAN region, revealed that country's Industry Minister, Chanchai Chairungruang, who is currently on a six-day visit to India.

Interacting with media after meeting with Indian businessmen here, Chairungruang said TATA Motors (TATAMOTORS.BO : 369.45 +7.45), one of India's best known automobile manufacturers, is looking to expand its export market in ASEAN countries, and plans included introducing the TATA Motor's truck range, an eco-car and possibly the TATA Nano (the world's most economically priced passenger car).

A TATA Motors, Thailand, representative said talks for the launch of the Nano were still at a very preliminary stage, but acknowledged that the project could form part of the Thailand-India Free Trade Agreement (FTA) expanded negotiations that are to take place later in the year.

For TATA Motors to think of Thailand as a future investment base does not come as a surprise, as the country has evolved into the largest vehicle producer in South East Asia since constructing its first automotive plant in 1961. Today, Thailand's automotive products are exported to 130 countries worldwide. The country is also the world's largest producer of one-ton pick-up trucks, the seventh largest automotive exporter and the 14th largest automotive producer overall.

TATA Motors appears interested in bidding for an eco-car project, as the Board of Investment of Thailand (BOI) and the Thai Ministry of Finance is offering the maximum incentives to manufacturers of eco-cars.

Under the new incentives program, the BOI will offer projects with a minimum investment value of five billion Baht (approximately 144 million USD), a corporate income tax holiday of eight years, regardless of location, and duty-free importation of machinery.

On its part, the Thai Finance Ministry will allow eco-car manufacturers to pay a reduced excise tax of 17 percent on cars with engines smaller than 1300 cc for petrol-powered cars and 1400 cc for diesel powered cars. This is significant in that the excise tax currently levied on standard passenger cars in Thailand ranges between 30 to 40 percent, and if reduced for eco-cars, it would be the equivalent of 2000 USD on the car's retail price.

The finance ministry is also offering a three-year exemption of import duties on auto parts used to make vehicles E85 ready and which cannot be produced in Thailand. Cars using E85 will have their excise taxes reduced to 25 to 35 percent depending on the size of the engine. Excise tax on petrol in this category of car will also be reduced from 3.6850 Baht per liter to 2.5795 Baht per liter.

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