Politics will remain a critical challenge for the Thai economy next year, says Sombat Thamrongthanyawong, rector of the National Institute of Development Administration Nida.

Since anti-government protests erupted in April, Thailand has been listed as one of seven countries that are not safe to visit or invest in, he said.”If next year the red shirts escalate the level of protests, you’ll have to consider how disastrous it would be for Thailand,” warned Dr Sombat.

tourism island
Many tourists are still frightened of the possible danger if they come to visit Thailand, so they avoid Bangkok and opted for other regions in the country, especially in the south, which is well-known for beautiful beaches

However, Atchaka Sibunruang, the secretary-general of the Board of Investment BoI, argued that investors’ decisions were unlikely to be affected should political dissent remain moderate, adding that BoI incentives would not change even with a change in government.Dr Atchaka predicted growth next year in key sectors including processed food, automobiles and auto parts, electronic components, hard-disk drives HDD and HDD parts, and energy production.

She said the BoI was in the process of including more industrial sectors that qualify for BoI incentives, including those with low technology.

“We will not be able to compete if we continue to depend on industries that do not use a lot of skilled labour,”

she said.

BoI applications next year are estimated to reach 400 billion baht, the same as this year. “This is because we are not yet sure whether large projects worth hundreds of billions of baht such as the upstream steel project can occur,” she said.

via Bangkok Post : Politics key to investment.

Thailand’s political turmoil in 2010 has had little impact on the kingdom’s economic growth, although it did affect the tourism industry.

Analysts said Thailand’s worst flooding in half a century has impacted economic growth, more so than politics.

The full-year forecast for GDP growth is 7.9 per cent, down slightly from forecasts, but the Thai economy is not technically in a recession. Global demand is sluggish and exports are expected to slow to 10 per cent growth in 2011, compared with 24.7 per cent this year.

And the baht continues to rise against the dollar.

For next year, however, political instability remains a big risk factor.

After the worst street violence in over 15 years, some analysts maintain that it is becoming a mainstay of doing business in Thailand.

Kavee Chukitkasem, head of research at Kasikorn Securities, said:

“I think the political issue is a normal situation in Thailand. Everybody gets used to it and (despite) the political problems, companies still have to do business.”

With the arson at Central World Mall being an image that many visitors now associate with Bangkok, tourism fell sharply during the rallies in April and May and was slow to recover.

Surapol Sritraku, president of the Association of Thai Travel Agents, said: “Many tourists are still frightened of the possible danger if they come to visit Thailand, so they avoided coming to Bangkok. Consequently, foreign tourists opted for other regions in the country, especially in the south, which is well-known for beautiful beaches.”

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