Government expects over $13 billion in new investment
Finance Minister Apisak Tativorawong said he expects Thailand will receive at least $13.2 billion in new investments from both the public and private sectors in the second half of 2016 and that the funds will create over 67,000 new jobs. The actual investment figure should be even higher, he added, if companies investing without Board of Investment privileges are counted.
Economists have been waiting for the government to begin disbursing funds for investments in its massive infrastructure upgrade and building program, predicting that the public investments will serve as a stimulus to increase private sector investment. But of the $13.2 billion forecast, just $1.8 billion will come from government investments in infrastructure, while the rest will be investments by the private sector.
That indicates that despite the slow launch of many infrastructure projects, the private sector’s confidence in the Thai economy is on the upswing. Recent increases in the manufacturing production index and factory output support that view. In addition, the Bank of Thailand’s Business Sentiment Index rose in June compared to May as falling commodity prices led manufacturers to expect lower production costs and higher profits.
Finance Minister Apisak said that increased investment should push Thailand’s gross domestic product growth this year to 3.2 percent. The second half of the year should see significant investments by the private sector in high-potential industries such as food, biotechnology, software, auto accessories and electronics. The 67,000 jobs he believes will be created by these investments should help push Thailand’s already low unemployment even lower. Unemployment in May stood at 1.2 percent.
“Aggressive investment in the last quarter will boost the country’s economic growth to 3.2 percent for this year, although the country could face unpredictable situations from global economic risks,” he said.
Chief among those global risks is the fallout from Brexit, the decision by Great Britain to leave the European Union. Thailand is already laying the groundwork for a new free trade agreement with Great Britain in light of its departure from the EU in order to minimize any negative repercussions.
Nonetheless, government pump priming through infrastructure spending is still a spur to greater investment overall, and the minister of finance said the government is poised to sign 18 or 19 contracts for infrastructure projects with an investment value of $39 billion. Those projects, although they will begin this year, will take several years to complete, and so the investments will also be made over time.
While exports are the main driver of the Thai economy, investment is an important pillar of growth. Investment has been weak over the past two years on a combination of domestic factors and global economic headwinds, but has started to improve.