Mixed reaction to E85 fuel measure

While hailing the establishment of a clear direction, they complain that efforts are "too few", which could stifle demand for the alternative fuel.

Paul Stokes, president of Volvo Cars Thailand, which has expressed interest in importing E85-compatible vehicles, said yesterday's Cabinet resolution was disappointing and did not facilitate the import or localisation and development of this technology for Thailand.

"What was an economic and environmental opportunity uniquely available to Thailand as a bulk ethanol producer has clearly been missed," he said.

He said the government's decision to eliminate the import tax on E85 parts was almost negligible, because the main costs of a vehicle involved the body and transmission, none of which the government had decreased the tax on. The lower excise tax on vehicles, similar to that for E20 vehicles, also provides no difference in price for E85 vehicles.

Auto-makers are pursuing a larger cut in excise tax.

The Cabinet yesterday approved a cut in excise tax for E85 vehicles. Those with engines of not more than 2,000cc will be reduced to 25 per cent, from a minimum of 30 per cent now. Cars with larger engines are subject to progressive rates on excise.

The government has also decided to waive for three years the import tariff on auto parts used to make vehicles E85-ready and which cannot be produced locally. The excise tax on E85 is also cut to Bt2.5795 a litre, from Bt3.685 a litre now.

While Toyota Motor Thailand said it would not be the first to market E85 vehicles in Thailand, Asian Honda Motor senior vice president Adisak Rohitasune commended the government for showing a clear policy of support for the new fuel.

He said it was now possible that with lower excise taxes, E85 vehicles could be produced in Thailand and that auto-makers could also be convinced to refocus on E85 vehicles rather than E20 vehicles. He admitted this could hurt sales of E20 vehicles.

While oil prices will be a factor driving local manufacture, Honda is studying the possibility of making the vehicles, taking into account several other factors, such as the supply of ethanol.

Energy Minister Poonpirom Liptapanlop yesterday said her ministry would call a meeting with carmakers and refineries tomorrow, to show the government's commitment to E85 rather than E20.