Published on 20/12/2012
European still ready to invest here European companies are keen on investing more in Thailand in the next two years, as the positive outlook for its economy next year and the upcoming Asean integration outweigh concerns, according to the first confidence survey among European business communities. "A single market under the Asean Economic Community will help promote the Thai economy and increase the attractiveness of Thailand among investors. A potential Thailand-EU free-trade agreement is also a positive factor," Rolf-Dieter Daniel, president of the European Asean Business Centre (EABC), said yesterday. Half of the 221 executives polled from November 1-18 expressed optimism about the potential growth of the Thai economy in the next two years, compared with only 6 per cent with a negative outlook. Europeans will continue to invest in Thailand and the Asean region after the AEC is implemented in 2015, he said. The Asean FTAs with key trade partners such as China and India, as well as service liberalisation, are the main opportunities for Thailand in the next five years, Daniel said. European investors harbour some concerns over political stability and the government's stability. They are also worried about human resources, citing the shortage of skilled labour and limits on foreign-labour employment. Costs of production are rising in some industries. A lack of transparency and corruption are major negatives hindering investment. Infrastructure and the logistics system need further development to facilitate more investment, he said. More than 80 per cent of the respondents are considering new major investments in the next two years, the majority of which plan to invest in Asean, followed by Thailand and other countries. This is particularly the case for large-scale enterprises.
About 80 per cent envisage improvement, both strong and moderate, in their company's growth, profitability and sales during the first half of next year. The executives' perspectives are even more positive in the longer period. The poll also showed that more than half of respondents think that external factors have been affecting their business in a negative way. They view the European economic crisis as their main external challenge, while the US economic slowdown and the slower economic performance of China are ranked significantly behind. To reduce costs effectively in the upcoming year, more than 40 per cent of the business respondents consider the reduction of procurement expenses as their first priority. Also, to increase revenue and profitability, increasing sales and acquiring customers were indicated as top priorities, Daniel said. Supavud Saicheua, executive director, managing director and head of research at Phatra Securities, expects Thailand's gross domestic product to grow by 4.5-5 per cent next year and by 5 per cent in 2014. In the short term, economic growth will come from rising domestic consumption but in the long run, GDP growth will come from government spending. However, government spending has to reach the targeted level. Enforcement of laws and regulations is still the area that the government has to improve the most to serve the Asean seamless market. Prospects for the AEC are questionable because the road map is there but Thailand has not implemented any legislation preparing for full integration, he said. The survey was an undertaking of the EABC in collaboration with the Consortium of 16 European Chambers of Commerce and Associations in Thailand and Europe.