Thai junta unfazed by foreign investment plunge
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. –