Flood prevention, increased efficiency vital to Thai FDI expansion

On the sideline of the 1st Honourary Investment Advisors General Meeting on Jan 16, UNCTAD secretary-general Supachai Panitchpakdi said FDI in Thailand remained low because the country had not increased its efficiency and adapted to strong growth in Asia.

The authorities should promote the integration of each supply-chain industry and allow stakeholders to help develop human resources in order to serve the growth of each targeted sector, he said.

He added that it was time for Thailand to focus its investment promotion plan by strengthening the development of the nation’s knowledge base, services, logistics, technology, innovation and energy, since those were the key factors for facilitating growth in related industries.

Supachai said that although FDI had rebounded in Asia since last year, Thailand had not enjoyed large benefits due to the impact of the severe flooding and its low efficiency when it comes to attracting investment when compared with other Asian countries.

UNCTAD projects that global FDI will be worth US$1.5 trillion to $1.6 trillion (Bt47.8 trillion-Bt51 trillion) this year, still much lower than the 2007 worldwide financial-crunch level of $2.1 trillion due to the fact that the global economy has not yet recovered.

Supachai expects 2012 will still be a difficult year for global investment, due to the European Union economy being caught in the middle of the euro zone’s financial crisis and the US economy having not yet fully recovered, while global banking will continue to experience slow growth.

However, FDI in Asia is expected to continue to increase this year.

Meanwhile, some multinational companies plan to suspend investment expansion in Thailand this year. Although they have said they are still confident about maintaining current investment in the Kingdom, flood-prevention measures are vital to giving them the confidence to extend their investment.

John Coyne, president and CEO of Western Digital, the world’s largest maker of hard-disk drives, told the CEO Forum the company would continue its current investment in Thailand, despite its two plants having been severely inundated.

"We are ready to work with the government for action to be taken to prevent a recurrence of the floods we saw last year," he said.

Western Digital’s flood-affected plants are expected to be back to full operation in the third quarter. Its factory in Bang Gradee Industrial Estate restarted production on November 30.

Kunitaka Fujita, executive vice president for human resources and general affairs at Sony, said the company would wait three to six months before deciding whether to expand its investment in Thailand.

"We want to see concrete plans on how floods can be prevented in the future, and will consider later when we might increase our investment here. Thailand is very solid in terms of facilitating investors, except regarding the flood problem," he said.

To maintain current FDI levels and promote future investment, the most important thing for the government is to recover the trust of investors by aggressively fixing the problem and launching clear preventive measures against future flooding, he added.