Speaking at an economic seminar organised by the Industrial Economics Department of the Industry Ministry, Virabongsa said a number of industrialists had planned to increase capacity this year because production had almost hit the ceiling. However, they have slowed their investments due to the political uncertainty.

"The economic policies between the government and the opposition party are so different that the investors fear that investment policy may not continue smoothly. So now they are putting their expansion plans on hold," he said.

He said that, in fact, the demand for Thai products overseas in the next couple of years was expected to continue rising. Thailand has signed free-trade agreements with the biggest-growth economies in Asia: China and India. A number of Japanese investors set up plants here to export to these two markets.

For instance, the automotive sector, food, electrical appliances and pulp are still doing well in foreign markets.

Virabongsa said that four factors affecting the economy were rising oil prices, inflation, interest rates and the domestic political situation.

He said that the oil prices were not an isolated problem because they affect all countries. He predicted that the oil price would remain high into next year.

Watcharapong Thongrung

The Nation