Govt banks on investments as engine for economy
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ALONG WITH tourism, investment seems to have become the high hope of the Prayut Chan-o-cha government as the engine to drive the Thai economy.
Amid high expectations from him, Deputy PM Somkid Jatusripitak, who is also in charge of overseeing economic affairs, recently announced efforts to rejuvenate the country’s investment growth at 10 per cent like in the glory days, pushing Thai economic growth to 5-6 per cent. This is intended to have “multiplier effects” on the economy.
Exports, which accounted for 60-70 per cent of gross domestic product (GDP), are now powerless to drive growth, and have seen contraction for nine months in a row.
The new Cabinet, with Somkid heading the economic ministers, has launched a series of stimulus measures by injecting money directly into the system and providing more tax incentives. The measures cover low-income earners, small and medium-sized enterprises, middle-class people, and foreign and domestic corporates.
That’s a good start after the government had zoomed in on what sectors it would focus on as “future” sectors. They are: next-generation cars; smart electronics; affluent, medical and wellness tourism; agriculture and biotechnology; food; robotics for industry; logistics and aviation; biofuels and biochemicals; digital; and medical.
In the meantime, several mass-transit projects that are part of the infrastructure projects worth Bt1.7 trillion were also scheduled to kick off next year. To quicken the pace of the projects, the consideration process via the “super” fast lane under the Public Private Partnership (PPP) scheme will be shortened to less than 12 months from over two years previously.
The Chinese-Thai railway development project, which involves an investment of B0t400 billion, also moves on after the Cabinet on Tuesday approved a draft framework of cooperation.
The next round of the two nations’ meeting will be held in Bangkok next month. If the funding rate can be finalised between the two countries, project construction could begin next year.
Statistically speaking, when investment growth was around 9-10 per cent, the country enjoyed GDP growth rate of 5-6 per cent a year.
The Board of Investment recently revealed a poor investment ratio, saying only 38 per cent of total projects that received BoI’s tax incentives last year actually materialised.
A PricewaterhouseCoopers survey on CEOs’ confidence in the Asia Pacific in 2015 showed some interesting findings that Thailand, despite ranking seventh among the top 10 industries favoured for investment over the next 12 months, lagged behind its Vietnam and Indonesia.
“Confidence” and “discontinuity” in addition to uncontrollable external factors such as a slowdown in the global economy and terrorism are the fear factors for investors. How can they plan long-term investments under a government that has only a short time left? In Thai politics, policies are always changed when the government changes, resulting in the discontinuity.
However, irrespective of how long the present government stays in power, and when a new government is elected, one way or the other we can see an influx of private investments again.
