Thailand’s Board of Investment says companies spending at least TB10 billion ($294 million) to produce new types of vehicles will be exempt from corporate income tax, no matter how much money they make.

The board, chaired by Prime Minister Abhisit Vejjajiva, says the strategy to boost the recession-hit automotive market is aimed at projects that will produce vehicles not previously built in Thailand.

Applications for the new investment privileges must be made by next year. The tax exemption period is expected to last five to seven years and includes a waiver of tariffs on machinery imports.

Companies listed on the Stock Exchange of Thailand generally pay a 25% corporate income-tax rate for an initial net profit of TB300 million ($8.8 million).

“We expect to lure giant car makers to move their production base to Thailand and stir up stagnant automotive investment,” board Secretary-General Atchaka Brimble tells the media.

“We want to attract new investments from auto makers to use Thailand as their production base for exports of new-technology vehicles such as hybrid cars.”

The Nation newspaper says qualifying projects must produce at least 100,000 vehicles annually within the first five years of operation.

“These vehicles must be models that have never been produced locally," Atchaka says.

The auto maker also must invest in a new assembly line. Additionally, the TB10 million outlay must exclude land cost and circulated capital.

Atchaka says Toyota Motor Corp., which produces hybrid vehicles in Thailand, does not qualify for the new scheme because it previously expanded its existing manufacturing lines for such vehicles and, therefore. has not made a new investment for production relocation.

The Bangkok Post reports Atchaka as saying Ford Motor Co. is considering increasing its investment in Thailand, among other countries in the region.

Finance Minister Korn Chatikavanij tells the newspaper he met with representatives from both Ford and General Motors Corp., and says both expressed interest in new investment in the country.

GM Southeast Asian Operations and Chevrolet Sales (Thailand) Ltd. CEO Steve Carlisle recently was quoted by The Nation newspaper as saying, “We will not let the economic crisis affect our investment plan in Thailand. Even though GM in the U.S. will lay off some of its workforce, we have no such plan here.”

Korn says Thailand will offer the two auto makers special privileges, but they will not be given low-interest loans because the government would then have to provide similar loans to other companies.

“I am confident the two companies will invest in Thailand,” he says. “If the political situation is peaceful, like (it has been) the previous weeks, investors will be more confident about doing business here.”