News Room - Business/Economics

Posted on 05 Feb 2009

Abhisit considers auto stimulus

The government will seriously look into problems faced by the automotive industry and might consider short-term measures to protect the sector from the global market slump, said Prime Minister Abhisit Vejjajiva.

 

Speaking at a video conference with the US Chamber of Commerce in Washington DC, the premier said the next meeting of the Public-Private Consultative Committee would consider the automotive industry's concerns.

 

In the short term, the government aims to facilitate financing for car purchases and will consider other ideas from industry representatives, Mr Abhisit told the conference hosted by the American Chamber of Commerce (AmCham) late Tuesday.

 

His comments came in response to a question raised by a US executive of General Motors (GM) about whether the Thai government would introduce measures to prop up the local industry.

 

Worldwide vehicles sales are expected to plummet by 14 million units this year due to the global financial crisis, said the GM executive.

 

Surapong Phaisitpattanaphong, a spokesman for the Automotive Industry Club, said it was wrapping up details of an auto rescue plan aimed at improving consumers' purchasing power and raising manufacturers' liquidity.

 

"We will propose a tax allowance for new car buyers as a relief measure for one year," said Mr Surapong.

 

He added that 100 billion baht in soft loans would be requested to raise auto leasing firms' margins from vehicle hire-purchases and to reduce worries about potential non-performing loans.

 

The soft loans could be applied for by wholly owned Thai automotive parts makers to ease their financial constraints, said Mr Surapong.

 

The club forecast a vehicle production drop of 22.5% from 2008 to one million units this year with domestic sales falling to 500,000 units from 610,000 last year.0 Exports are projected to decrease 24.5% to 592,000 vehicles.

 

The Thailand Automotive Institute estimates that about 30,000 people out of the country's overall automotive and parts workforce of 350,000 would potentially lose jobs this year.

 

Mr Abhisit said tourism had recovered faster than expected from last year's closure of Suvarnabhumi Airport. The latest figures show that arrivals to Thailand fell 20%, compared with a drop of 25% in global travel, he said.

 

He said authorities had been assigned to augment airport security to prevent similar incidents happening again.

 

"Thailand is on track to bring back normalcy. With the installation of a democratically elected government, we can put political uncertainties behind us and gear up for new global economic challenges," Mr Abhisit said.

 

"This government will open up the country to investors as far as the laws allow. It's our intention not to amend or modify the Foreign Business Act."

 

AmCham president David Carden said US investors hope the government can promote joint efforts to help the country withstand global crisis.

 

"Competition to attract foreign direct investment is fierce. Without stability and incentives, Thailand could be left behind regional competitors," he said.