Third phase is 'key to investor confidence'

The third phase of the package includes increased incentives to encourage foreign direct investment and the acceleration of government spending on infrastructures mega-projects including 17 Transport Ministry projects worth Bt1.6 trillion in total.
Bidding will start this year on construction contracts for Bangkok’s mass-transit East Orange (worth Bt110 billion), Pink (Bt31.2 billion), Yellow (Bt31.6 billion) and South Purple (Bt103 billion) lines and six standard-gauge dual-track rail routes worth Bt490 billion.
Kobsak said the stimulus package could help improve domestic confidence but warned that the measures to inject capital into the grass-roots economy might not boost consumption much as household debt is still high.
“What we have to hope for is the acceleration of infrastructure mega-projects such as the completion of 4G, the second phase of Suvarnabhumi Airport, mass-transit projects, and double-track railways and motorways. These will definitely change the view of the private sector, which is financially ready to invest … as they have abundant of but is currently experiencing a lack of confidence. This means that construction has to begin before the private [sector’s] confidence to invest can come back,” he said.
Meanwhile, Maybank Kim Eng Securities (Thailand) said several of the stimulus measures were important for the development of the economy. They include interest-free loans to small businesses via the Village Fund, prioritised procurement of supplies from small and medium-sized enterprises for government’s small projects, extra investment incentives, and the establishment of three SME-supporting funds worth Bt102.5 billion.
The three funds will be aimed at providing SMEs with liquidity and helping them compete in the global market, a proposal that will be submitted for Cabinet approval on Tuesday. The funds are to be drawn from the government budget and from state-owned banks and will mostly offer soft loans. Further details about other tax incentives, including tax amnesties and tax cuts, for SMEs have yet to be disclosed by the government’s economic team.
“We point out the importance of SMEs, with around 2.7 million entities, to the Thai economy as they account for 37 per cent of national gross domestic product and employ around 11 million people. While most of the SMEs are running domestic businesses, they represent 25 per cent of Thailand’s exports,” said Tim Leelahaphan, Maybank’s Thailand economist.
“Previously the annual budget for SMEs of around Bt10 billion from all [relevant] government agencies was quite small in our view. High-growth sectors including electronics, automobile parts, food and beverages, energy, tourism, healthcare, ICT [information and communications technology] businesses, education, spas and wellness will be supported,” he added.