The Thailand Research Fund (TRF) has found that Thailand ranks lowest among four attractive investment destinations for Australian investors in spite of the free-trade agreement between the two countries.

Sunee Sathaporn, an adviser to the Board of Investment in the Australian state of Victoria, yesterday said a recent TRF survey that the board had commissioned among Australian investors on the investment atmosphere in Thailand revealed that Australians were worried about the unstable Thai political and economic situation.

In particular, Australian investors are concerned about the proposed amendment of the Foreign Business Act and capital control measures. These factors have become more influential in their decisions than the Thai-Australian free-trade agreement.

The Australian investors said they preferred to wait until the general election before they decide whether to invest in Thailand, which Sunee said ranked lowest on a list of attractive investment destinations in the eyes of Australian investors, after China, Vietnam and India respectively.

The TRF survey was conducted between November and April among 125 Australian investors in Thailand and Australia from 10 business groups. The survey compared the investment atmosphere in Thailand with the other three countries. Sunee said Australian investors had negative perceptions towards Thailand because they viewed the coup was against democratic principles.

Although the coup was bloodless, the investors were concerned about subsequent incidents such as the bombs in Bangkok and the violence in Southern Thailand. These factors have a stronger impact on the investment atmosphere because investors think the country is unsafe and the government cannot control the situation.

On economic matters, most respondents said they were concerned with the 30-per-cent reserve requirement and the amendments to the foreign business law. Most said the government should open up the service sectors in Annex III, including agriculture, education, financial, property development, construction, railways and airports.

The Australian investors also felt that the emergence of a nationalistic sentiment in the country under the sufficiency-economy concept might result in a slowdown in infrastructure investment. Therefore, they have suspended their plans to come to Thailand, preferring to wait for the general election.

"The most attractive sector for Australian investors is automotive, because Thailand is a centre for Japanese car production. However, the image of Thailand is negative," Sunee said.