BoI plans boost in tax cut for affected firms

The Board of Investment (BoI) is preparing to increase tax incentives for those companies whose businesses were damaged by the shutdown of Bangkok's two airports from November 25 to December 3.

"We will increase the amount of tax deductions to compensate for losses caused by the airports' shutdown. However, this proposal is not effective until it gets approval from the new government," Industry Ministry permanent secretary Damri Sukhotanang said yesterday.

Damri, who chaired the BoI's meeting, said the agency would form a committee to gather and evaluate losses arising from the weeklong shutdown of Suvarnabhumi and Don Mueang.

If approved, the measure will only be for businesses that previously won BoI incentives, he added. Most of the badly hit businesses are in the electronics, gems and jewellery and processed-food sectors.

Some electronics companies had to pay penalties of US$100,000 (Bt3.56 million) per hour for delayed shipments. Some also had to temporarily shut down operations, as their raw-material supplies were cut due to the shutdown of the airports.

Because of the huge impact of the closures, Damri accepted it would be very difficult to restore confidence among foreign investors.

"We cannot reimburse for all the losses from this situation, but what we can do is to explain the facts to them and stress that it did not lead to violent clashes," he said.

BoI secretary-general Atchaka Sribunruang Brimble said the agency would voice its concern about law and order and the investment situation when the new government is completely formed.

"We want the new government to get stricter about enforcing law and order. Foreign investors will lose even more confidence if they believe the country fails to use law and order to control any turmoil that arises," she said.

She accepted that overseas road shows would not be of much help in restoring investor confidence after the shutdown of the two main airports.

Meanwhile, the BoI reported that investment applications in the first 11 months totalled Bt436 billion, a drop of 25 per cent from the same period last year.

Foreign direct investment was worth Bt290 billion, down 38 per cent from Bt473 billion last year. Japan remained the largest foreign investor with Bt97 billion, followed by Bt64 billion from European countries and Bt38 billion from Singapore.

Atchaka said the BoI had approved 354 applications worth Bt350 billion in the past two months, while 253 applications worth Bt190.256 billion are awaiting a decision on tax incentives. She added that many companies with long-term investment plans were still moving forward, despite the global crisis and political turmoil.

The BoI yesterday approved tax incentives for 10 projects with a combined investment value of Bt56.344 billion.