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Published on July 30, 2007

The improving private-investment climate flows from low interest rates coupled with high liquidity and high capacity utilisation in many sectors, notably petrochemicals, petroleum, pulp and paper and electronics. Moreover, the strong baht will encourage cheaper imports of machinery and raw materials.

Investors obtaining privileges from the Board of Investment (BoI), accounting for 30 per cent of overall private investment, are likely to start their projects and import machinery over the next three years. The bulk of their capital spending will take place in the first year.

In the first half of the year, 662 projects worth Bt244.7 billion were granted BoI certificates of investment promotion. Most of them are in the service and public-utility sectors, followed by electronics and private electricity generation.

The BoI's figures are in line with the BOT survey for the second quarter, which indicated that the business sector was ready to invest in the near future due to fewer concerns and improving confidence in the country's economic fundamentals.

According to the BOT's inflation report, the vehicles and auto-parts, petrochemicals, electronics and energy sectors are likely to invest over the next five years.

The report said the property sector had shown signs of recovery, with improving performance in industrial-estate, rental and sale businesses. The sector is also likely to recapitalise in the second half of the year.

The BOT said public investment would begin to play an increasingly key role in boosting economic growth in this and future years, taking over from private spending and investment. Investment by government and state enterprises is expected to expand by 10 per cent once the administration's investment plans are explained clearly and get the final go-ahead.

The government investment budget for the next fiscal year is 8 per cent higher than this year, the increase being mainly for mass-transit, power-generation and petrochemical projects.

According to the BOT report, 65 per cent of overall investment is in machinery, of which 87 per cent is accounted for by the private sector.

Anoma Srisukkasem

The Nation