Published on 26/11/2011
BoI: Investment on course despite floods Investment in Thailand will remain intact despite heavy floods, with applications for Board of Investment (BoI) privileges likely to top 500 billion baht this year, says Industry Minister Wannarat Channukul.
Kittiratt: To start with quick fixes
Applications last year reached 447.4 billion baht, but over the first seven months this year they already reached 470 billion. The BoI approved 16 licences yesterday for investment privileges worth a combined 32 billion baht. Automotive and renewable energy had the highest investment values among the approved projects. Japanese auto-parts manufacturer Jatco (Thailand) Co applied for 9 billion baht of investment to be located at Amata Nakorn in Chon Buri, followed by state-majority-owned Bangchak Petroleum Plc's investment project in solar electricity worth 3.6 billion baht in Ayutthaya and Chaiyaphum. Next was a 2.8-billion-baht radial tyre production plant for China's Linglong Tyre Co, with annual output at 2 million sets in Rayong.
Mr Wannarat said the government expects to finalise a study on a tax holiday extension and other incentives for flooded factories next week. The board instructed the Revenue Department to study how much revenue collection would be affected by the tax holidays. Some 937 flooded factories were given BoI privileges, 553 in industrial estates and 384 outside. Most of them are located in Ayutthaya and Pathum Thani. Their combined investment capital is 700 billion baht. Factories located in the affected industrial estates paid corporate income tax of 12 billion baht last year. Income tax from factories outside the industrial estates was not available. In another development, Deputy Prime Minister Kittiratt Na-Ranong said yesterday Thailand's economy is likely to grow by more than 7% next year as the government spends heavily on post-flood reconstruction despite the gloomy global outlook. "Thailand's GDP growth in 2012 should be exceptionally good, and it could reach as high as 7% or more," he said at the Foreign Correspondents Club of Thailand on Thursday night. Mr Kittiratt shrugged off the global slowdown, saying the rise in domestic spending, coupled with private and government investment, would lead the way in driving the economy. The government, he said, would continue to support the rebuilding process of various industries. It will also spend large amounts of funds to prevent the flood crisis from recurring next year. "We have to start with quick fixes and also work to improve the water flow, as we do not want to see sandbags to protect against the flow of water next year," Mr Kittiratt said. He said that the country's infrastructure would be adjusted to handle issues arising from climate change, though this was a long-term plan that could take years. The government has vowed to invest as much as 800 billion baht to prevent future flooding problems.
Mr Kittiratt conceded that there was little time to undertake the various moves with the rainy season set to begin in May next year; but he added that once the rebuilding starts it will most likely create a labour shortage, quelling fears of massive layoffs. Apart from this, he said as much as 15 billion baht would be provided to various industrial estates at 0.01% interest for a period of seven years to build dykes. This would be part of the government's effort to rebuild the country aside from fostering confidence among investors, for which purpose the various ministers have been travelling around the world. Mr Kittiratt said the government would go ahead with its planned policy of raising minimum wages, which is set to begin April 1, 2012, postponed from Jan 1. He said the government was not too concerned about companies threatening to leave or not invest because of higher wages, as the country must move up the value chain. His notion is that companies would want to maximise output and therefore invest in the skill development of their labour force, which would be a good thing for Thailand.
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