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7 May 2014
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FDI needs state support

Darana Chudasri

Foreign direct investments into Thailand still require government support measures for long-term competitiveness, especially in the service and agricultural sectors, says Deunden Nikomborirak, research director for Thailand Development Research Institute.

Ms Deunden said Thailand is Asean’s second-largest economy, contributing 20% of Asean’s gross domestic product (GDP). However, the FDI into Thailand was only 13.8% of total FDI for the region.

“We should ask ourselves why 47% of FDI to Asean is heading to Singapore when that country’s contribution to Asean GDP is 9%,” said Ms Deunden at a seminar for SET-listed companies.

She suggested it is because Thailand has paid too little attention to service and agricultural sector development.

Some 60% of FDI is in the industrial sector, while 40% is in the service sector. Average investment in services in Asean is 70-80%.

Only 0.0008% of FDI went to agriculture, though the farm sector contributes 10% of Thai GDP and employs 40% of the workforce.

She said the Asean Economic Community slated for late 2015 will allow foreigners to hold stakes as high as 70%, up from 49%, in the hospital and logistics sectors in Thailand.

Ms Deunden said the government should draft a policy to support the country’s labour demand for professionals such as engineers and international lawyers.

“We are likely to see a huge migration of skilled labour, and some professions in Asean depend on demand and regulation in each country. We should have a clear plan to make sure we get what we need,” she said.

Kobsak Pootrakul, executive vice-president at Bangkok Bank, said the financial crises in 1997 and 2008 were a lot harder to deal with than the current political turmoil.

“The situation is more like fisherman waiting to get back out on the water after the storm, once the turmoil ends,” he said.


First published: Bangkok Post, May 7, 2014


Deunden Nikomborirak, Ph.D.
Research Director, Economic Governance