Motorists and environmentalists alike last week applauded the Board of Investment's (BoI's) announcement of generous tax breaks to encourage the automobile industry to build more eco-friendly cars here.

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.

Second, models will have to meet or exceed Euro-4 emission specifications. Third, they will have to 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.

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.

The Industry Ministry hoped for a unit price of Bt500,000.

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 here 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?" he 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.

At present, consumers prefer hybrid petrol-electric cars. These are imported and subject to an 80-per-cent tariff. That makes the retail tag Bt800,000 more than petrol-only models that go for about Bt1 million.

"So, who will be willing to pay Bt800,000 extra for the environment?" he asked.

The prospect that oil prices will remain high for years to come has increased the attraction of eco-friendly cars.

Environmentalists call automobiles "climate criminals" as a result of carbon dioxide and greenhouse-gas emissions that cause global warming.

 "We've been going greener. It's been the policy for almost a decade now. We're gearing up our efforts," said Kiyoshi Masuda, senior environment officer at Toyota.

As for Thailand, a new department dedicated to the environment and related affairs was set up in 2004. Toyota also has imported about 20 units of the hybrid Prius for sale here. The vehicles will be tested for their impact on the environment and the results publicised.

The Prius's gas emissions are said to be 70-per-cent less damaging than those of petrol-only models. Fuel consumption can reach 20 to 25 kilometres a litre.

Toyota Thailand environment officer Suvisar Thitiniran said it was making its Chachoengsao factory eco-friendly, with subsidiaries and suppliers encouraged to comply with global environmental standards by the end of 2008.

"It is a good sign," said Wanan Permpiboon, a climate-change campaigner for WWF Thailand. However, she too noted that if locally made eco-cars were too expensive they would not sell.

"The government must set an example by using more eco-friendly cars so the public is convinced these vehicles are a better choice," she said.

"However, we must not forget there are even better choices - reducing the number of cars on the road and using more public transport."

Kamol Sukin

The Nation