Stimulus to spur foreign investment
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Govt working on incentive package to boost economic growth, apisak says
IN A BID to rev up Thailand’s sluggish economy, the new economic team led by deputy premier Somkid Jatusripitak will shortly unveil more special incentives to jump-start private investment, Finance Minister Apisak Tantivorawong has said.
In an interview with Nation Multimedia Group, Apisak said private investment in Thailand had been lagging behind other Asean countries in the past decade due to domestic political instability.
As a result, the government would come up with a new tax and other incentives powerful enough to renew foreign investor interests in Thailand as the political environment had improved somewhat over the past year.
“We will announce details on this extra package of incentives in the next two to three weeks to convince businessmen and potential investors it would be economically worthwhile to invest here now,” he said.
According to the finance minister, additional tax breaks and other incentives would be more generous and match or exceed those currently offered by other Asean countries.
For example, Singapore offered a personal income tax exemption of up to 20 years for expatriates working in selective research and development projects like those in the pharmaceutical industry.
“We’re studying this possibility and learning from neighbouring countries. We also need to focus on new growth engines that will drive the economy, such as higher technology projects and R&D schemes,” the minister said.
“Singapore, for instance, is strong in R&D, especially for drugs, as they can offer special generous deals to foreign firms. Thailand has to find its own niche and focus.
“So far, our Board of Investment (BoI) incentives are quite general. However, the new economic team has announced six to seven new super-clusters of industries and businesses that we would like to focus on, including R&D centres.
“Vietnam is another example, where a lot of incentives are offered to high-tech and electronic firms such as Samsung. For Thailand, we need more high value-added investment,” he said.
Thailand’s corporate income tax rate, which is currently 20 per cent, is quite competitive among Asean countries, but the country’s highest bracket of personal income tax rate at 35 per cent is still much higher than Singapore’s 17 per cent rate.
Deputy Premier Somkid, who heads the economic team, earlier said that Prime Minister Prayut Chan-o-cha’s visit to the United Nations served as a milestone for Thailand in the international community. As a result, his team was preparing to hold a roadshow to several foreign countries in November and December to promote Thailand as a revitalised investment destination in Asean.
Japanese investors are among the target groups. Somkid told the leader of the Japanese Chamber of Commerce last week that Japanese firms should go ahead with investment plans within the next six months since the Thai government is finalising details of incentives for new super-clusters of industries.
Somkid’s team is banking on a dual-track economic strategy for both domestic and export components to revitalise GDP growth that may drop below 3 per cent this year.
The government has already injected Bt136 billion into village funds and small rural projects while providing soft-loans worth Bt100 billion to small and medium-sized enterprises.
In addition, BoI tax incentives have been extended from eight years to 13 years for selected projects, while the Finance Ministry is finalising additional tax breaks of up to 15 years plus an exemption of personal income taxes for experts in selected projects.
These extra measures are expected to boost foreign investment and to help revitalise the export sector in coming years as exporters have seen a significant drop of shipments this year.
