Applications for boi fall on uncertainty

The Board of Investment (BoI) is likely to miss its investment promotion target of Bt600 billion this year due to the global weak economy and the country's continued political turmoil.

"In the best case, I believe the BoI's investment applications will be close to last year's. If the government is unable to accelerate its mega-projects, it will be difficult for the country's investment climate to recover this year," said Thai Industries Federation chairman Santi Vilassakdanont.

In the past Thailand's investment was mainly driven by huge projects in the petrochemical, automotive and electronic industries, but the soaring oil price has impacted strongly on their business performance and investment.

"The BoI needs to stimulate investment with more aggressive strategies and to improve tax incentives so that they are as attractive as our rivals such as Vietnam," Santi said.

Director of the Centre for Economic and Business Forecasting at Thai Chamber of Commerce University Thanavath Phonvichai said rapid changes in oil prices and political uncertainty made it difficult to predict the future of the economy.

However, he believed the recovery of investment and domestic consumption in Thailand would be nearly impossible this year unless the current murky political and economic climate cleared.

Net applications submitted to the BoI in the first half of this year were worth Bt203.7 billion, declining from Bt235 billion year on year. Most of submitted projects were for expansions in the service, infrastructure, electric and electronic industries.

The number of approved applications dropped from 659 projects worth Bt352.6 billion in the first six months of 2007 to 555 projects worth Bt185.7 billion in first half of this year.

Deputy Prime Minister and Industry Minister Suwit Khunkitti admitted that most operators had become more careful in making decisions on investment at the moment as a result of negative economic factors, both domestic and global.

However, he has yet to revise downward the BoI's investment target this year because of his confidence in the country's strong infrastructure.

BoI secretary-general Satit Charnjavanakul said lower investment figures did not always reflect a worsening investment climate.

"We will accelerate to promote investment in new-wave industries such as alternative energy and bio-related industries, which may not need a huge budget, along with promotion of our high-potential industries including automotive, petrochemical, steel, electronics and food," he said.

Instead of competing with other countries by offering more tax incentives, the BoI has shifted to set up a counterpart fund to enhance competitiveness and promote investment by providing financial support for R&D and innovative creation.