Flood-hit auto industry gets relief with tariff exemption

business November 30, 2011 00:00

By Nalin Viboonchart
Wichit Chai

7,840 Viewed

The government is offering much-needed respite to the auto industry with an exemption from import tariffs for eight months on completely built units (CBU), parts and machinery in a bid to save the jobs of more than 200,000 workers.



 

While Honda Automobile (Thailand) is the only company to benefit from the CBU imports as its assembly plants in Rojana Industrial Park are inundated, others will enjoy zero tariff on the import of parts and machinery. The Finance Ministry says without the waiver, Honda would have had to pay 80 per cent of car value as CBU import tariff. Tariffs on parts range from 0-30 per cent, while that on machinery is 0-5 per cent. 
Honda executive vice president Pitak Pruittisarikorn yesterday hailed the decision, which will ease the supply-chain disruptions as several suppliers are recovering their flooded plants.
“I believe the government understands the tough situation the automotive industry is facing. Without any help, some workers will lose jobs,” he said. 
Honda will work out the number of vehicles to be imported and the number of units to be imported from each of the other manufacturing sites. Some difficulties remain as each site caters specifically to demand in their local markets, but the imported CBU must be the same models produced here. He expected the imported units would arrive in Thailand within a month. 
Honda’s assembly plants, which have suspended production since early October, can produce 240,000 units per annum, with models ranging from City, Jazz, Civic, Accord and CR-V. The firm shifted 3,200 units out of the site, leaving some 800 submerged. 
Pitak said the company is working out when the plants could resume operations, as water has been completely drained out since last weekend. 
Honda’s North American plants will return to normal production by tomorrow. Thailand is a large supplier of computer chips that control engines and other functions.
Following the Cabinet’s |decision on the waiver until June 30, 2012, the Office of Industrial Economics will look into the details of tax exemption and import permits.
Government Spokeswoman Thitima Chaisaeng said the Finance Ministry will cut the import tariff for truck assemblers by 10-20 per cent. |The Labour Ministry and Immigration Department are being instructed to ease rules and regulations on work permits for flood specialists.