Govt offers tax breaks in bid to boost investment

The latest package is the third in a series aimed at revitalising the economy, whose growth has slowed to less than 3 per cent this year due to sluggish exports and private investment.

The Finance Ministry will allow businesses to double their capital-expenditure deduction for corporate income tax, covering new investment in machinery and equipment, vehicles and other approved capex.

This will be valid for 14 months, until the end of next year.

In addition, the BoI will extend tax privileges for promoted firms by a maximum of another four years. Foreign investors are waiting for political stability, Deputy Premier Somkid Jatusripitak said yesterday, adding the government wanted to encourage those businesses capable of investing to go ahead with their plans now, instead of waiting any longer.

Companies granted BoI privileges between 2014 and 2016, and managing to complete at least 70 per cent of their investment project before June 2016, will receive four more years of privileges on top of the regular eight years.

As to BoI-promoted businesses managing to invest 50 per cent before June next year, they will receive three more years, while BoI businesses that are unable to invest more than 50 per cent before the given time will receive a two-year extension.

Regarding the Finance Ministry’s measure, it is applied to all businesses as the government wants to urge companies to invest now in order to increase their competitiveness.

"I am confident that this package will increase the level of domestic investment in the last two months of this year and next year, and allow them to compete better," said Finance Minister Apisak Tantivorawong.

Meanwhile, the Cabinet also approved the Public-Private Partnership (PPP) committee’s measure to fast-track six PPP projects worth Bt347 billion combined , under which the whole process – before bidding and procurement – will be completed within nine months, instead of one year and 10 months. The measure will cover six projects due to commence next year.

They are expected to include those already approved by the State Enterprise Policy Office, namely, Metropolitan Rapid Transit’s elevated Pink Line project and the Yellow Line, worth Bt56.7 billion and Bt54.7 billion, respectively.

"This is part of the economic reform [policy]," said Somkid, "and we are aiming to apply this PPP fast-track process to all government processes, where instead of sending papers to be signed for approval from 10 ministries, we will now try to bring all the representatives from related agencies to form one task force, in order to increase the ease of doing business in this country."

Prime Minister Prayut Chan-o-cha is set to have a meeting this Friday with all agencies related to the ease of doing business.

Sombat Thiratrakoolchai, director and member of the executive board of the Thai Chamber of Commerce, and president of the Thai-Russian Chamber of Commerce, said the fast-track PPP measure would help stimulate economic activity amidst the global slowdown.

While the Joint Standing Committee on Commerce, Industry and Banking welcomes the fast-tracking of PPP projects, some PPP projects should be open for foreign investors to join, said Isara Vongkusolkij, chairman of The Thai Chamber of Commerce.

Even though the Kingdom has sufficient reserves, the government should allow foreign investors to jointly invest in some PPP projects, which would help make infrastructure projects more transparent, he said.

Boontuck Wungcharoen, chairman of the Thai Bankers’ Association, said the fast-track PPP measure would help speed up private investment, which in turn would drive the flow of economic activity.

Chansak Fuangfu, senior executive vice president of Bangkok Bank, said the private sector would be happy with fast-tracking. It had proposed such a measure to Prayut’s first Cabinet, because fast-tracking would accelerate infrastructure projects, which would help growth.