- Published: 21/04/2009 at 12:00 AM
- Newspaper section: Business
Foreign investment in Thailand has started to flee the country following the red-shirt riots during Songkran last week, with at least three multinational firms hinting they may withdraw investments from the kingdom.
Nandor von der Luehe, chairman of the Joint Foreign Chambers of Commerce of Thailand (JFCCT), said unrest has definitely hurt investors' perceptions.
"So far, two expansion projects are likely to be put on hold," he said.
Existing investors know business continues as usual but most new investment is made by management overseas, who see Thailand through the media, he said.
"I have heard that at least one multinational fund-management company will withdraw its operations from Thailand. Some investors are taking a wait-and-see approach with some fear of political violence," said Peter van Haren, a former JFCCT chairman.
The Japanese Chamber of Commerce (JCC) said Thailand has about a year to stabilise its political conflict or Japanese investors may switch to other nations. "Bad images about protests and riots are still in the minds of Japanese investors," said JCC Bangkok president Fukujiro Yamabe.
The Board of Investment (BoI) has cut its 650-billion-baht target for investment applications to 400 billion baht this year. In the first quarter the agency saw a 16% year-on-year fall in investment applications to 127.3 billion baht.
The BoI will have a meeting today chaired by Prime Minister Abhisit Vejjajiva to discuss urgent measures to restore foreign investors' confidence.
Meanwhile, Moody's Investor Service warned yesterday about negative consequences for credit fundamentals if the country's political unrest continues.
"While the immediate risk that Thailand's Baa1 credit strengths would be rapidly undermined is low, recent events in the country signal a marked downturn in its economic prospects at a time when the government is trying to cope with the adverse effects of the global recession," said Thomas Byrne, a senior vice-president of Moody's Sovereign Risk Group.
"If Thailand's institutions are incapable of defusing an increasing destructive political dynamic, then the political situation could over time potentially have negative consequences on Thailand's credit fundamentals."