BANGKOK, Nov 8 (Reuters) - Thailand's investments should improve next year as a December election is expected to remove uncertainty and restore shaky investor confidence under an interim government, a senior Thai official said on Thursday.
Although political turmoil dampened domestic consumption and sentiment this year, companies given incentives by the Board of Investment still fared well, BoI Secretary-General Satit Chanjavanakul told Reuters in an interview.
"Politics may be a worry, but they have no direct impact on doing business here," unlike foreign exchange movements and the health of the global economy, he said.
"The investment trend is still good. We believe after the election, the situation will be better. Reluctant investors should decide to come in," he said.
Despite expectations the election will produce a weak coalition government, most parties have promised market-friendly policies.
The Democrat Party, one of the leading candidates to head a coalition, is promising to remove much derided capital controls imposed in December last year and scrap proposed revisions to foreign business laws which have upset foreign investors.
Large state infrastructure projects stalled under a government appointed by the army after last year's military coup will also be revived, analysts say.
The economy is expected to grow 4.8 percent in 2008, up from 4.2 percent this year, the slowest in six years, a Reuters poll shows.
Already things are looking up, at least in part because of a general confidence that a return to civilian government will benefit the economy.
The manufacturing production index grew 9.0 percent in the third quarter of this year, up from 5.8 percent in the first half and against 7.4 percent for the whole of last year.
The private investment index eased only 0.6 percent in the third quarter from the same 2006 period after a 3.2 percent drop in the first half.
The value of all projects applying for incentives from the BoI rose 20 percent in the first 10 months of this year to 498 billion baht ($14.7 billion), already matching the whole of 2006.
Some involved firms from
Satit gave no specific application forecasts for next year but said they should be similar to this year.
"We will not focus on numbers but on quality. We don't want to promote industries in which we are not competitive," he said, referring to labour-intensive projects.
BoI, which focuses on automobiles, electronics, petrochemicals, steel, transportation and services, promotes investment by foreign and domestic firms, offering tax breaks and other incentives to help them.
In 2006, the value of all applications fell about 10 percent to a revised 498 billion baht while foreign applications slid 38 percent. The fall could be attributed to an unusually large 120-billion-baht steel project from
Last month, Ford Motor and Mazda Motor said they would build a $500 million plant in
The BoI's promotion of foreign investment was unaffected by the interim government's bid to change foreign investment rules which excluded those with BoI benefits, Satit said.Foreign direct investment also escaped capital controls requiring 30 percent of inflows to be held at the central bank for a year, interest-free. Several exemptions have been made. ($1=33.95 Baht)