Volvo waits for FFV tax breaks
Thai production will depend on incentives
Bangkok Post – 5 November 2008
BUSRIN TREERAPONGPICHIT
The Swedish carmaker Volvo will invest in making flex-fuel vehicles (FFVs) and gasohol E85-compatible cars in Thailand once the cabinet has approved tax incentives, said Paul Stokes, president of Volvo Cars Thailand.
The first locally made FFVs could reach the market within 18 to 24 months of approval for investment incentives, Mr Stokes said yesterday after a meeting with Energy Minister Wannarat Charnveerakul.
But the company admitted it was still reluctant to move forward with FFV production in Thailand until it has a clearer idea of policy on E85, a blend of 85% ethanol and 15% petrol.
E85 became a hot issue during the previous government, which was keen to develop E85 facilities in Thailand and drafted a framework approved in principle by the last cabinet.
Most carmakers expressed interest in the project if the government offered more attractive incentives that could make investment in FFV production lines viable.
"Not only us [Volvo Cars], the other [European and US] carmakers also are hesitating to move forward with investment plans, as no one is able to hammer out the final decision," Mr Stokes said.
However, Volvo will continue with its plans to import the Volvo C30 FFV into the domestic market by the end of this year, while waiting for the final word on incentives for manufacturing FFV vehicles in Thailand.
Volvo had joined with other automobile companies and oil traders in asking the previous government to revise the excise tax rate, arguing that it should be cut to 0.55 baht per litre as E85 fuel contains only 15% petrol.
The energy minister also said yesterday that the ministry's policy on alternative fuels and energy conservation would be maintained.
He said the ministry intended to seek approval from the cabinet for its E85 development plan in mid-November but he declined to give final details of the plan.
However, Twarath Sutabutr, a consultant to the minister, said the undisclosed E85 plan reflected the ministry's view that E85 would be the nation's main alternative fuel in the future.
He said gasohol E85 would offer the optimum benefits to the country in both energy and agriculture. In terms of energy, E85 would reduce dependence on crude oil imports and cut greenhouse gases emissions. For farming, demand from the energy sector would offer alternative distribution channels to the food market for cassava and molasses.
"Over the next 10 years, Thailand will be the main market of ethanol in the region. We are already more advanced in dialogue on E85 than our Asean neighbours," said Mr Twarath.
Currently, gasohol E85 is only available in Thailand at a PTT station on Bang Na-Trat road opened to serve the nation's first five FFVs, including the Volvo S40 and C30 and a Chevrolet Impala LT from General Motors.
PTT plans to open E85 pumps at 14 stations by the end of this year and its subsidiary Bangchak Petroleum has just launched E85 at the first of an intended total of 14 service stations.
Mr Twarath added that so far all major car firms had shown an interest in investing in FFV production in Thailand as their strategies aim to move in line with state policy.
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