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New rules mean cost for Toyota - Thailand

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Toyota Motor Thailand Co, the country's largest car maker, pledged yesterday to continue its investment in Thailand even though the Bank of Thailand's capital controls will make doing business more expensive. ''We will proceed with our investment plans here even though our costs will rise significantly from the central bank's restriction,'' said new president Mitsuhiro Sonoda, who succeeded Ryoichi Sasaki on Jan 1.

He said Toyota had been doing business in Thailand for more than 50 years and would continue to lay a solid foundations for the Thai automobile industry.

But the Japanese auto maker is worried that its cost of financing could increase dramatically because of the central bank rule that effectively ties up 30% of foreign capital inflows for a year in an attempt to rein in the baht.

''Our cost competitiveness will dwindle despite the fact that we have made every effort to cut our costs in every aspect,'' said Mr Sonoda.

Higher financing costs would have an impact on automobile as well as parts production and should be reviewed and revised, he said.

When Toyota had business problems in any country, it normally looked to address them through the local Japanese chamber of commerce, he said.

Additionally, Toyota usually raises funds from both local and overseas sources to expand its business in Thailand, and tends to prefer sourcing loans from its parent company in Japan.

Commenting on the impact of the New Year's Eve bombings in Bangkok, Mr Sonoda said the incident had not affected Toyota's plans and he believed the Thai government could control the situation peacefully and rapidly.

''The bombings have had no effect on our new assembly plant at Ban Pho in Chachoengsao, where production will start this week,'' he said.

In the case of the amended Foreign Business Act, Mr Sonoda said Toyota was not affected since the automobile business was exempted from the regulations.

Mr Sonoda said last year was a record-setting year for nearly all aspects of Toyota's business but it was a tough year nonetheless for the auto industry in Thailand.

Total sales for the industry were about 682,500 units, a 3% decrease from 2005.

Car sales amounted to 191,885 units, a 2% increase from 2005, due to the introduction of various new models. However, total commercial vehicle sales declined 5% to 490,615 units. Leading the category was one-ton pickup trucks, for which sales were down 4% to 449,796 units.

Toyota last year recorded a 4% increase in total sales to 289,108 units, a record for the fourth consecutive year, and remained the local market leader.

''We also increased our market share by nearly three points over the previous year, to 42.4%,'' said Mr Sonoda.

Toyota expects total automobile sales this year to recover to about 700,000 units, a 3% increase over last year, of which 190,000 units will be cars and 510,000 will be commercial vehicles.