Auto firms petition govt for urgent financial aid

RESCUE PACKAGE

A rescue package for the automotive sector will go before the cabinet next week.

The plan will include low-interest loans, funds for skills training and excise tax cuts on car sales. Participation will be open not only to local parts firms but foreign manufacturers as well, including ailing US giant General Motors.

GM, the world's second-largest carmaker behind Toyota, is seeking US$6 billion (210 billion baht) in support from Thailand, Germany, Britain, Sweden and Canada to help avoid bankruptcy. The funds are on top of $21.6 billion in loans GM is seeking from the US government.

Deputy Prime Minister Kobsak Sabhavasu and Industry Minister Charnchai Chairungruang are to meet GM executives today.

"[The government] convinced [foreign carmakers] to invest in Thailand. So I think the government does have to have some role in helping in these difficult times," Mr Kobsak said yesterday.

Prime Minister Abhisit Vejjajiva stressed the government aimed to help the industry, not just any single firm.

"The government has no policy to use taxpayer funds to help any one company," he said. "We are looking at the problems in the auto industry. We need short-term measures, including financial aid, to help the industry stay afloat."

GM, which employs 3,000 people in Thailand, earlier this week confirmed plans to lay off 790 of them. Worldwide, GM plans to cut 47,000 jobs, including 26,000 outside the US.

Car production in January fell by one-third from the year before due to weak local sales and exports. The auto industry, one of the country's largest, employs up to 600,000 people nationwide.

One Industry Ministry official said the size of the programme had yet to be finalised, adding state banks would likely take the lead in providing loans.

"It's a programme that will be open to anyone in financial trouble. If any company needs help, it can ask for assistance from the government," he said.

In addition to soft loans, the rescue plan includes excise tax cuts to help reduce retail car prices by up to 50,000 baht and funds of up to 5,000 baht per person for training auto workers.

A plan to procure 4,000 new public buses by the Bangkok Mass Transit Authority would also require local production.

Local bankers were sceptical about a rescue package for foreign carmakers.

"The problem they face isn't that they lack capital or liquidity, it's that they can't sell cars," Krung Thai Bank president Apisak Tantiworawong said.

Exim Bank president Apichai Boontherawara acknowledged that GM had approached the bank for funds. He declined to specify the amount.

"The request was quite large and beyond our resources. But if other banks also participate, we will consider the application," Mr Apichai said.

"But the Exim Bank already has a large burden to help Thai exporters in other sectors as well."

A loan review would consider GM's impact on the auto sector, job market, exports and the domestic supply chain.