BMW to build 7-series in Thailand

Agence France-Presse, Bangkok

German carmaker BMW said Tuesday it will invest 600 million baht (US$14.3 million) on expanding its Thai plant to produce the flagship 7-series for export within Southeast Asia next year.

Indonesia will be the first nation to receive a shipment of the luxury 7-series built at the Rayong plant outside Bangkok, which also produces BMW's smaller 3- and 5-series models.

Under eligibility requirements for ASEAN Free Trade Agreement (AFTA) benefits, the locally made 7-series vehicles will use at least 40 percent of components made with the Association of Southeast Asian Nations.

"Together, Rayong and BMW have taken an important step towards creating a regional hub in our network of premium plants," said BMW board member Norbert Reithofer, who is responsible for worldwide production.

"We look forward to the day when Rayong will be hailed as the center of the premium car industry in Asia, not only because of BMW but also for the suppliers and other companies that will locate here," he said in a statement.

Reithofer said the AFTA agreement was key to the successful development of BMW's Thailand manufacturing base.

"We are counting on the support of the Thai government to promote the opening of the markets in neighbouring countries," he said.

"It is not the isolation but the liberalisation of the Asian markets that will lead to growth and prosperity. Free trade should be the primary goal of the AFTA."

AFTA, which came into force on Jan. 1, envisages a tax reduction from five to zero percent on 85 percent of goods traded between Brunei, Indonesia, Malaysia, the Philippines, Singapore and Thailand.

Malaysia, anxious to protect its Proton national car, secured an extension that exempts it from the new tax structure until 2005.

Thailand has become a Southeast Asian manufacturing base for global automakers, thanks to its central geographical position, good infrastructure, generous tax and legal incentives, and a supply of equipment and spare parts.

Japanese automakers Toyota and Nissan pioneered the industry in the 1960s and 1970s, helping establish an auto-making industrial belt in the provinces around Bangkok.

They were joined in the 1990s by U.S. firms General Motors and Ford, and BMW heralding the European presence.