After months of delay, Germany’s Volkswagen has received approval from the Thai government to build a plant near Bangkok. However, a VW spokesperson said the company has not yet decided whether it will go ahead with the plant.

According to previous media reports, this would be a EUR1 billion (USD1.14 billion) plant and would produce fuel-efficient, 1.4-litre petrol engine cars. At full capacity, it could produce 300,000 cars per year.

VW had applied to build this plant in Thailand because it sought to take advantage of tax breaks. The Thai government was offering tax exemptions for automakers investing at least THB6.5 billion (USD199 million) in local manufacturing. Volkswagen also wants to catch up with Asian rivals in the region such as Toyota Motor Corp.

The company produces Passat, Polo and Jetta models in Malaysia with a local partner, and a new plant in Indonesia will feed growing demand there.