Businessmen in the deep South yesterday welcomed the government's plan to turn the five troubled southernmost provinces into a special development zone, and urged the administration to take the lead in bringing investment back to the area.

"The announcement will not help if the government doesn't act as a pathfinder by investing in the area to regain the confidence of investors from other provinces," said Supat Sunantakantaros, chairman of the Federation of Industries in Narathiwat.

"The special economic zone is like digging a river for the private sector's vessels but if the government doesn't help in constructing the piers, the private sector won't be able to maximise the benefits."

Prime Minister Surayud Chulanont said on Thursday that his government would designate the southernmost provinces as a special development zone to aid the area's economy, badly hurt by the violent insurgent attacks which have scared away many investors.

Although he has not yet been informed of the details of the incentives, Foong Suserisap, chairman of the Federation of Industries in Yala, thanked Deputy Prime Minister MR Pridiyathorn Devakula for understanding the problems of local businessmen.

"I hope the measures will keep businessmen in the area and prevent them from moving away. At the same time, the measures should help attract businessmen from other provinces. If the plan succeeds, the problems should be eased," he said.

Foong said that the initiative to waive corporate income tax and social security contributions for three years should encourage investors back to the area. "We have been urging the government to create a special economic zone since 2004, but our requests have received no response," he added.

Earlier, businessmen complained that their enterprises had been severely affected by the violence, and commercial banks have been reluctant to provide loans for new investment in the area because of the volatile situation.

Satit Chanjavanakul, secretary-general of the Board of Investment, said the agency planned to add incentives to encourage both existing and new investors to do more business in the five southern provinces.

For instance, it will expand the period for receiving incentives to eight years, and to 16 years for continuous investment.

However, he said that despite the violence, business activity in the deep South was still reasonably healthy, and there has even been a small increase in new investment.

Santi Vilassakdanont, chairman of Federation of Thai Industries, said his body welcomed the economic-zone idea, adding that it was a proposal that the major business associations had made to the government before. He said the private sector was ready to work with the government to cure the economic woes of the area.

Kongkiat Opaswongkarn, managing director of Asset Plus and president of the Federation of Thai Capital Market Organisations, said he thought this was the right policy. "But the government should provide incentives covering at least 10 years to keep investors in the area."

He added that over the past two or three years, the number of new investments had barely increased because investors were operating in a climate of fear and uncertainty.

The zone will cover the provinces directly affected by the insurgency - Pattani, Yala and Narathiwat - the only ones in Buddhist-dominated Thailand with Muslim majorities. It will also include Songkhla and Satun provinces, which also have substantial Muslim populations.

Most southern factories produce canned seafood for export.

Kongkiat believe that if peace comes to the deep South, investors will return to the area.

Meanwhile, PM Surayud suggested yesterday that Thais put into practice the principles of the sufficiency economy for the sake of a better life.

Delivering the keynote speech on "Approach to Administering the Country under the Sufficiency Economy Philosophy" to 750 representatives of state and private organisations, he said sufficiency economy would be incorporated in the 10th National Economic and Social Development Plan.

Surayud said he believed all Thais understood sufficiency economy, but did not know how to put it into practice.

Watcharapong Thongrung

The Nation