Boonyarit Phongmekhin, executive director of Yontrakit Kia Motors, said yesterday that having manufacturing bases in Asean countries would allow the Korean auto-maker to enjoy low import tariffs under the Asean Free Trade Area (Afta) agreement.

"The parent company has foreseen long-term competition, and the current high import duties in Asean have reduced its competitiveness," he said, adding that the project will draw billions of baht of foreign direct investment into Thailand.

Yontrakit Kia Motors is the sole local distributor of the Kia brand.

Kia Motors has been studying the investment potential in three Asean's countries - Thailand, Malaysia and Indonesia.

The stringent government restrictions in Malaysia to protect its auto industry will hamper the market, while investors in Indonesia face a shortage of skilled labour.

To survey the investment potential in Thailand, Kai Motors' staff from Korea have met with the Board of Investment to learn more about investment privileges for foreign investors. They have also surveyed the potential of some industrial estates and negotiated with vehicle-part suppliers to ensure their manufacturing continuity if they set up a plant here.

He added that a manufacturing plant needed at least one million square metres. The parent company is set to complete and announce its investment plant in Asean next year.

Kia Motors' goal is to become the world's fifth-biggest auto-maker in 2010, so the company has plans to establish not only manufacturing plants but also research and development centres in targeted markets.

The company plans to access more city-car markets - the so-called 'A-segment' - in Thailand and has drawn up the Asean policy to focus on producing smaller cars.

It is expected there will be one imported smaller model for sale in Thailand later this year, with the price starting at Bt490,000 to Bt590,000. Total sales are forecast at 5,000-6,000 units per year.

The Kia brand's sales in Thailand reached 1,100 units during the first eight months of the year.