Foreign projects promoted by the Board of Investment (BoI) are likely to fall by 40 per cent from Bt498.86 billion this year, said KResearch, a unit of Kasikorn Bank Plc.

The government should provide tax privileges for investments in targeted industries and help them conduct roadshows overseas, it said.

FDI has increased considerably as a result of huge foreign outlays in the telecom and industrial sectors. In the first seven months of this year, net FDI was up by 151 per cent on year to US$4.4 billion (Bt164 billion).

That seven-month figure has already beaten the full-year figure for last year.

In the first eight months, the value of foreign projects applying for tax privileges from the BoI dropped by 22.7 per cent to Bt187 billion from Bt242.1 billion last year.

A major reason is that the scale of each project is smaller this year on average.

In the first eight months, 548 projects applied for BoI privileges compared to 551 projects in the same period last year.

The largest projects were in the electric and electronics industry, followed by the chemical, paper and plastic industries, and infrastructure, metal, machinery and transport equipment.

For next year, FDI would depend on several internal and external factors including local economic sentiment, the government's policies on the economy and investment, domestic politics as well as the trend of world economies and trade.

Next year foreign interest in investing in large Thai firms would cool off, so net new FDI should drop by 39 per cent to $3.03 billion, compared to the government's estimate of 60-per-cent growth to $4.94 billion, the research house added.