The Bangkok Post reports that Toyota will likely relocate its worldwide one-ton pick-up truck production base to Thailand after the Board of Investment (BoI) agreed to relax investment conditions for the automobile sector, according to industry sources.
To pave the way for Toyota’s 27-billion-baht project ($613 million) and other large investments, the BoI decided on Friday to ease its investment promotional rules and introduce more incentives for auto assemblers and parts producers.
The newspaper reports that an industry source close to the project said Toyota wanted to move all of its light truck production facilities, including those in Japan, to Southeast Asia. Thailand, the world’s second biggest market for one-ton pick-ups after the United States, was among the few potential destinations.
“The BoI’s move should make it easier for Toyota to make the decision,” the source was reported to have said.
Toyota had been concerned that the project would not be given many incentives.
“In Thailand, Toyota aims to put in a huge investment to expand its existing Gateway assembly lines to accommodate the relocation of light truck production,” said the source.
Under the BoI investment promotion programme, manufacturers in Zone 3, covering the country’s least-developed provinces, receive the highest incentives, including duty exemptions on imported machinery and an eight-year corporate tax break.
BoI regulations previously permitted vehicle and parts manufacturers to set up factories only in Zone 3 and the waiver of corporate tax applied to exports only.
But the relaxed rules allow auto and parts companies to build their plants anywhere they wish. The duty on imported machinery will be waived regardless of the zones where the plants are located.
In addition, the incentives will apply to all production, both for domestic and export markets.
The source said Japan was still the major production base for Toyota’s Hilux light trucks. The vehicles are assembled by Hino Motor Co for both domestic and overseas sales. Toyota holds a 50.1% stake in Hino.
The relocation would enable Toyota to cash in on Asean Free Trade Area (Afta), under which tariffs on automobiles and parts will fall to between zero and 5%, starting next year.
The Bangkok Post says that the relaxed investment conditions are aimed at strengthening Thailand’s position as a hub of light truck production.