INVESTMENT Government says foreign investors continue to be welcome as economy develops
Battle for FDI is hotting up

uch of the economic development of Thailand and other members of Asean over the past three decades has been based on foreign direct investment. However, the volume of FDI into South East Asia has slowed in the past four years.
This is partly as a result of the 1997 regional financial crisis making some European and US companies cautious and, more recently, because of increasing investor interest in the potential offered by China.
Deputy prime minister Pitak Intrawityanunt says that Thailand continues to welcome foreign investment – “not only British investors but others who are interested in investing in our country.
“We have to expand our trade and participation in the world community,” he adds. “Thailand has to increase its capacity by working with its Asean partners. At the same time, we are strengthening our local economy and creating more job opportunities.”
Exports and tourism are both important areas with potential for development, according to Mr Pitak. “Our exports need to be made more competitive and efficient. We need to maintain our traditional markets and seek new markets,” he says.

“This is only the beginning for the Thai tourism industry. We have 10 million visitors, which is a small number compared to the size of the country. We have a lot to offer with a great variety of attractions, but we need to
do more promotion worldwide and raise the standard of services.”
China is a major importer from South East Asia, buying twice as much from the region as it exports. However, many Asean businesses which export to the US fear that China will become a more favoured trading partner.

British investment in Thailand rose 25 per cent over the past year

Former Thai deputy prime minister Supachai Panitchpakdi, who takes over as director-general of the World Trade Organisation (WTO) next year, says China represents a huge competitive force. Other countries in the region will “have to get our act together, deepen our domestic reform, because now the competition is at the front door,” he adds.
Thailand is itself a big investor in China. Recently, the Multilateral Investment Guarantee Agency (Miga), a member of the World Bank, and the Export-Import Bank of Thailand signed an agreement to jointly promote Thai investment in emerging economies. Domestic businesses invested $437 million in 120 projects in Thailand last year.
Chakramon Phasukavanich, secretary general of the Board of Investment (BOI), says last year saw a high investment growth rate in the country, with the BOI handling 1,000 applicants with projects worth more than
$3.6 billion. In the first six months of this year, however, the total worth of investment schemes fell to less than half their value in the same period of 2000.

“Of every 100 project applications from foreign investors, only six or seven are dropped,” says Mr Chakramon. On average, eight out of 10 projects succeed. He wants the investment promotion agency to be more policy-based, providing foreign and local investors with more information about Thai investment opportunities.
“We have to provide some intelligent information for the government, such as which industries and what types of investment are urgently needed in Thailand. At the moment, BOI just promotes what is popular. But we have to lay a solid foundation for the future industrialisation of this country,” says Mr Chakramon.
Another factor, in many ways harder for the agency to counter, is the instability in other countries in the region that has an affect on Thailand. “When people hear bad news about unstable governments or terrorists in countries like Indonesia or the Philippines, they assume wrongly that Thailand must be like that because we are in the same region,” he says.

VORASUGDI VORAPAMORN, government advisor on transport, would like to see investors take a 49 per cent share of Laem Chabang port

British investment in Thailand rose 25 per cent in the past year. Greg Watkins, executive director of the British Chamber of Commerce in Bangkok says there are “opportunities across the board”. He says investors should look at niche sectors where they could add value to products, but advises: “Investors must do their research before coming here.”
Privatisations of state enterprises in which foreign investors are likely to take a keen interest include the upcoming partial sale of oil and gas giant PTT and, in the longer term, the country’s airline, Thai International, and the two main ports.
The sale of the ports, Klong Toey in Bangkok and Laem Chabang, has been delayed for three years. Laem Chabang’s growth has been meteoric and it handles more cargo than Klong Toey.
Vorasugdi Vorapamorn, an advisor to the ministry of transport and communications, says Laem Chabang has become a hub for the region, connected to the rest of the country by good roads. “We would like investors to take a 49 per cent share in the port,” he says.

KOSOL PETCHSUWAN, government advisor on communications, wants to increase telephone penetration from today’s one in 10

Kosol Petchsuwan, another advisor to the ministry, says the government intends gradually to privatise the country’s international airports and increase private participation in the management of provincial airports as well.
Both advisors say that development of telecommunications is a priority. “In the past, it has been the least developed sector,” says Mr Vorasugdi. “The government is trying to make the whole system work more efficiently now.”
Mr Kosol emphasises, however, that the privatisation process as a whole will not be rushed. “Our focus is on development. The main policy is to reduce the role of the state and encourage the private sector. We welcome foreign investors, particularly from Britain, but things must proceed gradually.
“We need to make sure local people understand and we need to perform a smooth conversion. Everything must be transparent.”