The Thai News Service reports that the Thai Board of Investment (BoI) has announced generous tax breaks to encourage the automobile industry to build more 'eco-friendly' cars in Thailand.

To qualify for tax privileges carmakers must build models that use alternative fuels or run for 100 kilometres on fewer than five litres of petrol. They will also have to meet or exceed Euro-4 emission specifications and comply with United Nations Economic Commission for Europe safety standards. And, fourth, production will have to exceed 100,000 units a year by the fifth year of production to qualify for the breaks.

Thai Automotive Industry Association president and Toyota Motor Thailand vice president Suparat Sirisuwanangkura described the policy as "great", but questioned the practicality of the requirements.

He said the specifications would lead to companies spending more on development, resulting in bigger price tags. That means fewer buyers, and no mass market.

Suparat said the BoI's production numbers were too optimistic, given domestic demand. As a result, investors would have to build the cars for domestic and international markets.

Safety standards widely used by car companies in Thailand are Japanese, not those demanded by the BoI.

"Other limitations include alternative fuels used by eco cars. Suppose we produce a model with alternative-fuel compatibility for sale in the next two years ... where would we get supplies of fuel?" Suparat asked.

Industry Minister Kosit Panpiemras, who announced the eco-friendly car policy, is scheduled to meet several key Japanese producers in Japan soon to resolve these issues, the report said.