Petrochemical giant Dow Chemical will ask its board of directors in October for approval to invest in five petrochemical projects in Thailand, Deputy Prime Minister and Industry Minister Kosit Panpiemras said yesterday.

The five projects will be worth US$1 billion to $2 billion (Bt34.62 billion to Bt69.24 billion), he said.

Dow Chemical is one of a group of US companies whose representatives met with Kosit on Tuesday, on the recommendation of the Thai ambassador to the US. Kosit said the companies understood the current situation in Thailand, and he confirmed their interest in investment in Thailand.

"Dow Chemical is committed to turning Thailand into its largest production base in Southeast Asia," Kosit said, adding that the company's concerns lay in the government's measures to control toxic emissions in the Map Ta Phut Industrial Estate, where the new plants are expected to be located.

Earlier, Dow Chemical entered into an agreement with Thailand's Siam Cement Group to invest in an olefins plant in Map Ta Phut, which will require Bt44 billion in investment.

"In light of declining private investment amid the economic slow-down and political chaos, the Board of Investment is prepared to stage a road show in the US to provide facts on the country's political and economic situation," Kosit said.

He insisted the current political chaos was short- term and would not affect investor confidence. Gross domestic product could grow nearly 4 per cent in the second quarter and higher in the next quarter, due to accelerated government spending.

The figure for government spending to June 8 was only 1 per cent lower than the same period last year, he added.

However, the main factor driving the Kingdom's economy was investments from the private sector, particularly PTT and the Siam Cement Group. He said many big projects could start to take shape in the last quarter.

The Assets Examination Committee's decision on Monday to freeze the bank accounts of ousted prime minister Thaksin Shinawatra, his wife and their relatives could lead to confrontation with pro-Thaksin supporters. Fuelling these fears was an earlier announcement through Thaksin's lawyer that the ex-PM could return to Thailand.

On Tuesday and Wednesday, the Stock Exchange of Thailand Index dropped on concerns that the Army would stage another coup. The index yesterday gained 8.33 points, or 1.15 per cent, to close at 734.93 points.

"Foreigners seem to have continued buying today. They bought a lot and are not likely to pull out easily," one analyst at Finansa Securities told Dow Jones Newswires. Political risks remain, though, as protesters plan a major anti-government rally on Saturday, he said.

Thai Chamber of Commerce vice chairman Dusit Nontanakorn said the business sector and consumers were cutting spending, because of a lack of confidence. Many businesses have suspended overtime work and decreased manufacturing capacity. Some small- and medium-sized enterprises have shut down completely.

Dusit said the political crisis must be solved urgently, because economic activity would be affected by another three to nine months of the same uncertainty.

"The government stimulation measures are not enough to render successful results. There is no indicator to show the economy will be better in the third and fourth quarter, and it could get worse."

He said the government must implement measures to boost the economy next year. Once the political problems are cleared, the government must prepare for investment projects. He also said the government must ensure that the approved petrochemical projects materialise.

He added that ousted prime minister Thaksin should know well what his return would lead to.

Boonchai Chokwatana, president of the Thai Chamber of Commerce's Communications Committee, said although the economy had not yet reached a critical point, the government must move urgently to increase consumers' diminished confidence.

Chalida Ekvitthayavechnukul

The Nation