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Foreign investment pledges in Thailand fall 83% y/y in Jan-Aug: BOI
[BANGKOK] Foreign investment proposals in Thailand slumped 83 per cent in the first eight months of this year from a year earlier following the introduction of new investment policies, an investment agency said on Monday.
The military government has struggled to revive Southeast Asia's second-largest economy after seizing power in 2014 to end months of street protests, as exports and domestic demand remain subdued. It has stepped up infrastructure plans and accelerated the approval process for private investment.
In January-August, foreign investment applications were worth 50.3 billion baht (S$1.97 billion), down from 288.3 billion baht from the period last year.
But the Board of Investment (BOI) said the fall should not be a concern as Thailand is gearing its incentives to more value-added sectors, which will enhance competitiveness, said Hirunya Suchinai, secretary-general of the BOI, which promotes domestic and foreign investment. "We reaffirm that Thailand remains an attractive country to invest in this region. We believe the trend from here on will be a gradual recovery, but it won't be at the same level as in 2014," she said.
In the first eight months of this year, project applications from Singapore were worth 13.1 billion baht, followed by China's 10.7 billion and Japan's 9.91 billion.
Suchinai said China was likely to emerge as the top foreign investor in Thailand, overtaking Japan for the first time in 20 years. "China will be the number one investor this year because many of their submitted applications are in solar cells and tyres, which require large investments," she told reporters.
Japan, which usually accounts for more than half of foreign investments in Thailand each year, will lose its top rank this year as Japanese firms had submitted most of their projects last year before the policy change, Hirunya said.
However, Japan is expected to take its top rank back next year as Thailand supports advanced technology, in which Japanese investors are interested, she said.
In December, the agency replaced the previous policy by gearing its incentives towards more value-added sectors and providing special incentives to those investing in the government's special economic zones and designated provinces.
Among the incentives are tax exemptions for up to eight years and exemption of import duty on machinery or raw materials for industries focusing on areas such as research and development.