For a decade, the Board of Investment has focused on drawing foreign investment projects to the country through the offer of tax incentives based in part on investment size and factory location.
But promotional policies in the future will shift away from investment budgets and location to factors such as value-added content, technology transfer and development, according to Sompong Wanapha, secretary-general of the Board of Investment.
Mr Sompong said even with economic uncertainties abroad and the impact of Sars on the region, foreign investment flows this year were on track to meet last year's project applications worth 240 billion baht.
Applications for the first four months of 2003 totalled 81 billion baht, a promising sign that the full-year target could be achieved.
Japanese investors ranked first in terms of 34 project applications, followed by European companies at 24 and Taiwan at 22.
``Even though the world economy remains uncertain, Thailand has been able to continue to attract investors,'' Mr Sompong said.
He said strong action by the government following crises such as the Cambodian riots in January and the Sars outbreak had helped maintain investor confidence.
``And the main factors for foreign investors are political and economic stability, two issues on which the government has been well on track,'' Mr Sompong said.
Even with investment applications this year at similar levels to 2002, Mr Sompong said the priority for the BoI now was not size, but quality.
Project applications stressing product innovation, research and development and high technology would receive the highest promotion privileges, regardless of their location within the country, he said.
This marks a break with the BoI's traditional focus of offering the highest privileges for factories located in the least developed provinces, part of a broader national strategy to develop rural communities.
Overall, industries showing the greatest interest for foreign investors in the first half included automobiles, agribusiness and electronics, all sectors targeted for priority development by policymakers.
The 312 investment applications received from January to April had a total project value of 81 billion baht, up 24% from the same period last year. If fully completed, the projects are estimated to create nearly 53,000 new jobs.
Electronics and electrical appliance projects ranked the top in terms of investment cost, with 54 projects worth 28.4 billion baht, followed by the auto sector at 15.8 billion and the chemical, paper and plastic industry at 14.5 billion baht.
Some 76% of the applications represent small and medium-sized businesses with an investment value of under 200 million baht. Major projects worth more than one billion baht primarily represent projects in the auto, electronics and textile sectors.
Mr Sompong said many US electronics manufacturers were increasinglyrelocating their ventures to Asia due to lower costs.
The automotive sector, meanwhile, was increasing investment locally to take advantage of the stronger domestic economy and growth opportunities offered under the low-tariff regime of the Asean Free Trade Area.
 Mr. Sompong said that over the rest of the year, the BoI planned to hold promotional roadshows to Japan, Germany, Italy, France and the US to brief investors about potential investment opportunities in Thailand.
Presentations in Japan and Germany would focus on the auto and supporting industry sectors, while talks in Italy and France would concentrate on fashion and the food industry. Roadshows to the United States will focus on electronics.
Private businessmen and analysts said while the economic recovery was helping draw greater interest to Thailand from abroad, sustaining growth would depend on pushing forward with structural changes and reform to improve the investment climate.
Pramon Sutivong, the chairman of Toyota Motor Thailand, said Thailand needed to improve management skills, productivity and the legal system to remain competitive in the battle for investment flows with other Asean nations and China.
He said new investment projects this year were likely to be smaller than in the past, save in several sectors such as autos.
The auto sector was currently producing at around 70% capacity, and likely to reach full capacity later in the year, Mr Pramon said.
Teerana Bhongmakapat, an economist at Chulalongkorn University, said the strong growth in the automobile sector and domestic consumption overall came from the government's low interest rate policy.
Economic growth this year was not rooted in investment, but rather exports, local demand and state spending.
``Even though BoI applications have risen, they only represent applications. The real investment has yet to occur,'' Mr Teerana said, noting that data from the central bank showed capital flows slowing in the first half of the year.
Investment overall was unlikely to rise significantly this year due to the weak positions of the US, European and Japanese economies. New investment from European companies was most likely to go to Eastern Europe ahead of Asia, he added.
By : CHATRUDEE THEPARAT
Source : The Bangkok Post |
