As China, India and even Vietnam increase their automobile manufacturing capacities, traditional makers such as Thailand are starting to feel the pinch as low cost competitors undercut existing markets. Thailand has been surviving largely on the back of its one-ton pickup trucks, mostly for export, for which it is the world’s second-largest producer after the USA. However, this is just the kind of low-cost, relatively low-technology sector that is particularly vulnerable to competition from low wage cost rivals. So, there is a need for expansion in new areas, preferably through using technology that cannot be easily replicated by those rivals.
This is what is behind the Thai government’s attempts to promote the eco-car project, which is based on the provision of incentives for automobile firms to invest in the company to produce more environmentally-friendly vehicles. The Board of Investment, which regulates incentives for foreign investors, has offered to reduce the excise tax on the sale of such vehicles from the current 30-50% to a more modest 17%. This figure is chosen to ensure that only serious contenders apply, while keeping out smaller companies which might be motivated primarily by short-term financial rewards. In return, investor companies must undertake to sell no fewer than 100,000 units annually, invest at least 5 billion baht (approximately US$150 million) and also comply with various technical requirements.
To date, only Honda has taken advantage of this opportunity. It may be just as well because the demand for automobiles is finite in Thailand and too many new entrants would be likely to spoil the broth for everyone. Of course, individual automobiles are never likely to live up to the environmentally-friendly label that is so easily bandied about these days: even if the carbon emissions issues could be resolved, there are still the many other materials which are used in manufacturing which are scarce resources that cannot be replaced, as well as the fact that individual travel (no matter how convenient) is very unlikely ever to be as resource-efficient as mass public transportation, in addition to the societal effects. If the Thai government were really committed to environmentally friendly transportation policies, then it would be more likely to teach schoolchildren how to walk in the street safely and insist on people driving on the proper side of the road, even if they prefer just to scoot the wrong way for the sake of convenience. And that is not to talk about the endless millions of baht wasted by all those people stuck in Bangkok’s legendary and very tedious traffic jams.
