Thai junta un­fazed by for­eign in­vest­ment plunge

The Myanmar Times - - International Business -

THAI­LAND’S fi­nance min­is­ter has brushed off con­cerns about plung­ing for­eign in­vest­ment un­der junta rule, say­ing “there is light ahead” now that vot­ers have ap­proved a mil­i­tary-crafted con­sti­tu­tion.

Gen­er­als seized power in 2014 vow­ing to end years of po­lit­i­cal in­sta­bil­ity and kick­start the lack­lus­tre econ­omy.

They have largely suc­ceeded in bring­ing calm to the po­lit­i­cally tur­bu­lent na­tion by stamp­ing out dis­sent. But the econ­omy re­mains the junta’s weak point.

High house­hold debt, weak­en­ing ex­ports and low con­sumer con­fi­dence have cramped growth for the last few years in what was South­east Asia’s flag­ship econ­omy.

For­eign in­vest­ment has fallen off a cliff since the mil­i­tary takeover.

The lat­est fig­ures from Thai­land’s Board of In­vest­ment (BOI) show no let-up in that fall. Ap­proved for­eign in­vest­ment ap­pli­ca­tions plunged in the first half of 2016 com­pared to the same pe­riod last year.

In­vest­ment from Ja­pan, Thai­land’s largest over­seas in­vestor, dropped from US$2.7 bil­lion to $810m.

US in­vest­ment plunged ten­fold, from $660 mil­lion to $67 mil­lion while the Euro­pean Union fell from $1 bil­lion to $260 mil­lion.

Less-pro­nounced falls were seen across South­east Asia.

China was one of the few coun­tries to in­crease its ap­proved in­vest­ment foot­print over the same pe­riod, from $159 mil­lion in the first half of 2015 to $723 mil­lion so far this year.

Fi­nance Min­is­ter Somkid Ja­tus­rip­i­tak was un­phased by the drop.

“I think we shouldn’t look back at the past. There is light ahead,” he said, point­ing out that po­lit­i­cal un­cer­tain­ties were re­duced fol­low­ing the re­cent char­ter ref­er­en­dum, with elections sched­uled for the end of 2017.

“The cli­mate for in­vest­ment is now bet­ter,” he said. “Do­mes­ti­cally, since the ref­er­en­dum has passed, the po­lit­i­cal un­cer­tain­ties are de­creas­ing.”

Thais ap­proved a new con­sti­tu­tion – the coun­try’s 20th – by a com­fort­able ma­jor­ity al­though turnout was 59pc and in­de­pen­dent cam­paign­ing was banned. Po­lit­i­cal tur­bu­lence is only par­tially be­hind Thai­land’s for­eign in­vest­ment fall.

The coun­try is rapidly age­ing and it faces in­creased com­pe­ti­tion from neigh­bours like Viet­nam and Cam­bo­dia, coun­tries with large young pop­u­la­tions, in­creas­ing ed­u­ca­tion stan­dards and lower wages.

The BOI said it was aim­ing to at­tract $15.9 bil­lion in to­tal for­eign in­vest­ment this year.

The two bright spots on Thai­land’s econ­omy have re­mained tourism and ramped-up gov­ern­ment spend­ing on ma­jor in­fra­struc­ture projects.

Both have propped up growth for now. The econ­omy ex­panded 3.5pc in the three months to June, slightly higher than ex­pected.

But the World Bank es­ti­mates Thai­land’s econ­omy will grow by only 2.5pc this year, a low fig­ure com­pared to most South­east Asia neigh­bours. –

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