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Published on December 10, 2007

The next step, using a similar strategy, is to encourage steelmakers to build high-quality steel blast furnaces.

"The country's investments should be driven mainly by the private sector. They are better at business matters than state agencies," said Deputy Prime Minister and Industry Minister Kosit Panpiemras.

The new promotional strategy will encourage investment by considering the benefits to the country first.

To satisfy the increasing demand for energy-saving cars following rising oil prices, and to be in line with environmentally friendly trends, the BoI has set primary conditions that eco-cars must not consume more than one litre of fuel for every 20 kilometres and emit no more than 120 grams of carbon dioxide per kilometre.

"We must know whether these investments are necessary for our country. If the answer is yes, we should offer a win-win strategy for the country and the private firms," he said on the day he announced a change in the promotion policy at the BoI's meeting in November last year.

Another interesting point is that the BoI has also put in its conditions a minimum production capacity for each eco-car project.

Chanin Khaochan, head of the BoI unit for Industrial Linkage Development, said this would encourage a huge investment of more than Bt100 billion in local support industries such as automotive components and the steel industry.

The BoI's promotional strategies for eco-cars and

premium-grade steel blast furnaces were designed to go together from the beginning. It announced its policy to promote investment in upstream steel plants for use by automotive, electronics and food packaging industries on the same day that the three eco-car projects were approved. Meanwhile, four other companies are waiting for the BoI approval early next year.

Due to the BoI's condition that each auto-maker must produce at least 100,000 units per year in its fifth year of operation, sharply increasing demand for high-quality steel will make Thailand much more attractive for steelmakers to build blast furnaces here.

It also created a strategy of synergy by stipulating that steelmakers do research and development with other involved industries including automotive manufacturers.

Adisak Rohitasune, senior vice president of Asian Honda Motors, said this condition would support steel and automotive manufacturers to develop their products to meet specifications set by demands in the market.

"For example, auto-makers need special light and strong steel because it will help our cars consume less fuel," he said.

He said a steel blast furnace would secure their raw material, which would help sustain many industries' competitiveness in the future.

However, the BoI's conditions for upstream premium steel plants are slightly different from eco-car projects because steelmakers need to propose a corporate social responsibility plan towards the environment and communities. They must hold public hearings and get approval from the Office of the National Economic and Social Development Board before applying for BoI incentives their projects.

"It is very important for both state agencies and private companies to consider every dimension, not only business benefits but also their impact on the environment and society, so they can sustain their businesses as long as possible," Kosit said.

Chalida  Ekvitthayavechnukul

The Nation