Club spokesman Surapong Paisitpatnapong yesterday said most auto-makers were not happy about what they believe are impractical rules, particularly for exhaust emission standards, to make eco-car production eligible for the BoI's investment incentives.

"Even in European countries, auto-makers have been asked to produce cars that comply with Euro IV emission standards in 2012. But the BoI expects local auto-makers do so in 2009, three years faster than European countries, which normally have high environmental standards," he said.

Many local auto-makers will consult Thai oil refineries to see if there is a possibility of producing fuels to meet the Euro IV emission standards within the next three years.

Surapong said another BoI condition - that companies agree to produce at least 100,000 units in the fifth year - did not conform to the nature of the automobile business. Car companies usually enjoy rising sales volumes in the first two years after launching a new model. Later, sales tend to decelerate.

He said a 100,000-unit production level was possible only if some conditions are revised to suit auto-makers that want to export their eco-cars. The project's conditions should be reconsidered because of the difficulty manufacturers face in focusing only on the domestic market.

"The greater the volume that auto-makers can produce, the more production costs they can cut. That's why they need to think of markets in other countries as well as the local market," he said.

Despite its criticisms, the FTI's Automotive Industry Club believes the eco-car project is a good start.

On another issue, Surapong said the club's members disagreed with a decision by the Commerce Ministry's Trade Negotiations Department to remove automobile products from the list of sensitive products subject to partial protection.

He warned that if cars are removed from the list of sensitive products under the Asean Free Trade Agreement, some car companies would shift to importing cars because they will be exempted from import duty in 2012.

Moreover, he said the government should negotiate with countries such as South Korea to obtain the same tariff rate that Thailand will enjoy from Japan, in which tariffs for cars with engine sizes over three litres will be cut to 5 per cent in four years when the free-trade-area agreement becomes effective.

Chalida Ekvitthayavechnukul

 The Nation