'Smooth government formation key to bring investments into Thailand'
The process of forming the next government could have a positive or negative impact on Thailand's investment sentiment, and it was up to all parties to decide which was the best way forward for the kingdom, Kobsak Pootrakool, chairman of the Federation of Thai Capital Market Organisations (Fetco), said at a press conference on Thursday.
He urged all eight coalition parties to reach a compromise in order to find the "proper" solution that provides a common stand in which no one wins or loses.
"They [coalition parties] should be aware that no party has a clear majority. Therefore, none of the two main parties can get everything they want. They must determine what is the best option for them as well as the nation," Kobsak noted.
The remarks came as Thailand prepares to appoint Pita Limjaroenrat, leader of the Move Forward Party, as the country's new prime minister on July 13.
Given the prolonged deliberations between the two parties on the House speaker and deputies, Kobsak was concerned that the vote to confirm Pita as prime minister could follow a similar path.
The parties may take their time talking until the last minute before reaching an agreement, he said.
In addition, he noted that this ambiguous scenario would cause Thai and foreign investors, both individual and institutional, to pause investments.
According to the June 2023 Fetco Investor Confidence Index (Fetco ICI), while the new government formation following the elections is the most supportive factor to boost investor confidence, the issue is also of the greatest concern due to the uncertainties.
Other factors supporting the country's economy remain consistent with the previous survey, namely better-than-expected tourism recovery and active local economic recovery.
Meanwhile, geopolitical tensions, US Federal Reserve policy, and fund outflows all contributed to a negative sentiment in the country's capital market.
According to the Fetco report, the SET Index rose during the first half of June 2023, tracking global market gains as the Fed slowed the pace of its interest rate hike.
Nonetheless, the benchmark index underperformed global markets in the first half, dragged down by uncertainty over government formation, the accounting fraud at Stark Corporation, which harmed investor confidence, and foreign investors' continued selloffs.
Although Thailand's economy has shown promising long-term progress due to the strength of the Thai private sector, there are still numerous challenges to overcome.
"What is best for the Thai economy and market right now is to make ourselves more attractive, and the one method that can help is the country's stability," he explained.
The overall Fetco Investor Confidence index for the next three months (September 2023) is in the "neutral" zone, up 5.1% from the previous month to 81.62.
Meanwhile, retail and proprietary investor confidence is in the "bearish" zone, while institutional and foreign investor confidence is in the "neutral" zone. The banking sector is the most appealing to investors, steel and metal products are the least appealing, reflecting weak demand amid the global slowdown.
