Foreign Direct Investment in Thailand Nosedives

On 18 August 2015, Thailand military government appointed Dr. Somkid Jatusripitak to steer his economic program, returning to service with an ambitious plan to restore consumer confidence and spur small and medium sized enterprises to increase spending. But foreign investors remained skeptical.

Foreign investment in Thailand plunged 78% on the year for the January-November period of 2015, according to figures from Thailand’s state-run Board of Investment (BoI) sent to AFP.

The total amount listed in direct investment applications fell to 93.8 billion baht ($2.62 billion). And the number of applications tumbled 37% to 513.

Japan maintained its pole position as main investor in Thailand, but its figure sank 81% to 28.3 billion baht. EU investment also sank heavily from 86.7 billion baht in 2014 to just 2 billion baht last year. Investment from the United States was also heavily down, while China tumbled 21% to 13.3 billion baht.

This is not good news for Prime Minister Prayut Chan-o-chat who has shown a commitment to revitalizing and strengthening Thailand’s economy, and recently put in place a new team to lead the economic program during the next phase.

On 18 August 2015, he appointed Dr. Somkid Jatusripitak to steer his economic program, returning to government service with an ambitious plan to restore consumer confidence and spur small and medium sized enterprises to increase spending.

Investment incentive reforms launched last January cut the number of qualifying industries from 243 to 190 as Thai authorities tried shifting the economy away from labor-intensive industries and toward ones requiring advanced technologies and providing added value.

Foreign Investors remain skeptical

Somkid Jatusripitak, also launched the so-called Super Cluster strategy as part of his stimulus package : qualifying companies are exempt from corporate taxes for eight years, then get a 50% tax cut five years after that.

But traditional investors in the country like metalworking and some garment businesses, among others, found themselves shut out, and a further decrease in private investment will create more headwinds for the stalled Thai economy.

The Thai economy currently faces headwinds from the slow return to growth in the United States, European Union, and now from China and elsewhere, but its economy is nevertheless fundamentally sound.