Economic policies bringing results: Oxford Business Group
Thai government policies to stabilize the economy after a period of turmoil have begun yielding results, although weak demand in Thailand’s export markets remains a challenge, but the country’s economic czar said tax exemptions and other incentives should help draw more foreign direct investment, according to an analysis published by Oxford Business Group last week.
“Tax exemptions and other incentives are set to spearhead Thailand’s efforts to boost foreign direct investment (FDI) in targeted areas of the economy,” Oxford Business Group, which produces economic and sector reports on 37 countries, wrote on its website last week.
“The initiatives form part of a broader range of incentives and reforms aimed at increasing capital inflows into Thailand, with a particular focus on tapping investment for planned industrial clusters in the Eastern Economic Corridor (EEC) project, an initiative of the public-private Pracha Rath scheme,” the Group wrote.
Exports remain the main pillar of the Thai economy, but investment and consumption form the two other key foundations. As growth has slowed in many of Thailand’s traditional export markets, such as the European Union and China, Thai shipments and gross domestic product growth have also slowed. The government expects growth of about 3.2 percent in 2016, which would be an improvement on recent figures, but still below average growth rates of the previous three decades.
To cope with external volatility, the government has been seeking to garner more investment and encourage consumption. Oxford Business Group wrote that the approach has started to bring positive results, but weak external demand and other uncertainties are still issues to be reckoned with.
The Group noted that economic czar Deputy Prime Minister Somkid Jatusripitak was recently in China, and Prime Minister Prayut Chan-o-cha visited India, and that both were seeking to drum up more investment from those Asian giants.
“The government is transforming the economy to a higher level,” Oxford quoted Somkid as telling investors. “During this period of change, we need more investment from outside – and China is one of the targets.”
The Deputy Prime Minister said the government’s planned incentives include corporate and personal income tax privileges beyond those already provided by Thailand’s Board of Investment (BoI). The government is also enacting regulatory and legislative reforms aimed at improving the laws governing industrial management, financial services and investment.
A major project to draw investment is the Eastern Economic Corridor, and the government has said it willprovide land and infrastructure to develop and support industrial estates along the corridor dedicated to biotech, biofuel, aviation, information and digital technology, and medicine and medical equipment. Expected total investment will be between $55 billion and $58 billion.