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Tue, June 27, 2006 : Last updated 19:46 pm (Thai local time)



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Home > Business > Thailand at risk of losing steam





FOREIGN INVESTMENT
Thailand at risk of losing steam

Malaysia may gain as US firms put local projects on backburner

Due to political uncertainty, Thailand has lost foreign direct investment from American companies as they shift investment to Malaysia.

According to Bernama, as wary US companies put their investments for Thailand on hold, waiting for the political dust to settle down as the country passes through a transition period from the old government to a new one, Malaysia could benefit from the current situation if it plays its cards well.

While US multinationals are well established in Asean and gather first-hand information on the ground, small and medium-sized enterprises (SMEs) have limited resources and not much authoritative information about opportunities in individual Asean countries, including Malaysia.

Malaysia could launch what is described here as a "shotgun approach" by individually contacting SMEs through various channels of communication, say investment experts.

Investment experts connected to different trade associations and bilateral business councils could help locate suitable partners for Malaysian businesses that are prepared to make the effort to make the right pitch.

There is basic agreement among various organisations connected with foreign trade and investments that US corporations are likely to take a wait-and-see approach before taking decisions on investing in Thailand, because of its current uncertain situation.

US corporations are worried the new government will rescind or change some of the policies of the previous government concerning foreign investment.

One such organisation promoting business and trade ties between US corporations and Asean is the Washington-based US-Asean Business Council, whose president, Matt Daley, an old Asia hand, recently said everybody understood that with a new government, there might be policy changes.

Daley maintained that if there were any doubts in an area, investors would simply wait.

American investors are likely to put their investments on hold as long as the political vacuum lasts in Thailand, because they fear a new government may reverse some of the previous one's investment policies, says the US Asean Business Council.

Daley recently spoke to journalists about the political vacuum in Thailand, adding that there was widespread expectation among US business circles that the country would soon have a new election.

He expressed the hope that the new Thai government, whichever party forms it, would not change the rules governing corporate investments in Thailand.

He was not sure about the attitude of a new government towards foreign businesses and banks and said it remained to be seen what the new government would do when it came to power.

He cited the case of the express-delivery business of big couriers UPS and FedEx, which exercise direct control over the movement of each package from pick-up to when it is handed over to the recipient at the destination.

These express couriers need to operate their own trucks and control delivery companies in an effort to oversee the timely delivery of the packages to the rightful recipients.

Daley said that if these corporations were not able to perform their tasks, they would limit their investments.

He said investment regulations played a key role in determining foreign investors' decisions.

He cited the case of chipmaker Intel, which preferred to set up a facility in Vietnam. That country has aroused the interest of US investors impressed by its moves to bring about market economic reforms.

Indeed, the administration recently held bilateral talks with the United States on accession to World Trade Organisation membership.

Daley urged the Vietnamese government to rescind some of its regulations that obstructed the flow of foreign investment.

He also urged Thailand to complete free-trade talks expeditiously, admonishing that if the talks were not finalised by next spring, they would be further delayed until after the 2008 elections.








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