BMW is progressing plans to make Thailand the export base serving Asian markets after its factory in Rayong becomes a full assembly plant in the next four to five years, according to a report in The Bangkok Post.

The report says that initial exports will start next year, taking advantage of tariff privileges that ASEAN members allow each other under the Asean Free Trade Association agreement.

The newspaper quotes Luder Paysen, BMW senior vice-president for sales, as saying that BMW's production plan in Thailand has been divided into three phases.

Phase 1 is serving the domestic market - already achieved. Phase 2 sees exports to ASEAN countries - next year - and phase 3 sees the development of a full Asian hub, when all core models and assembly is handled at the Rayong plant, after 2004.

The report added however, that Mr Paysen warned that BMW's strategic plans also depended on political and economic factors.

Because Malaysia is not seeking to join the Afta scheme until 2005 at the earliest -- to extend protection for its national car programme -- BMW said production numbers and the cost of investment could not be disclosed as some flexibility would be needed in making calculations.

"We will start to export the 3-series next year to markets like the Philippines and Indonesia, even though we cannot penetrate Malaysia yet," Mr Paysen said.

BMW earlier persuaded the Thai government to negotiate with its Malaysian and Singaporean counterparts on relaxing the rules on importing cars that were built in ASEAN. However, both countries have declined to make concessions.

Currently, BMW's wholly-owned factory in Rayong undertakes the final assembly of the 3-series.

The use of 40% local content meets the eligibility requirements for Afta benefits.

Although details have not been announced, it is understood that the all-new 7-series will be built in Thailand early next year and exported to markets in ASEAN.

Next year, BMW is scheduled to open a body workshop in Rayong. Painting will still be done by an outside firm, most likely the Yontrakit Group which now handles the work on both the 3- and 5-series.