BoI plans to boost expansion spending on SMEs

The Nation

The Board of Investment (BoI) plans to open an SME unit next month in a bid to alleviate obstacles facing small and medium-sized enterprises and boost their investment in the tough years ahead.

Secretary-general Atchaka Sibunruang Brimble told The Nation that the new unit would be similar to the BoI Unit for Industrial Linkage Development (Build), which was set up to match local parts-makers and global manufacturers in the automotive and electronics industries.

The SME unit will work as a middleman to coordinate financing between operators and banks and help them access information more easily, she said.

SMEs submitted 873 applications for BoI incentives this year for a combined investment value of Bt46 billion, up from 823 applications worth Bt44.2 billion last year.

BoI statistics show SMEs accounted for about 10 per cent of the value of all applications this year.

Atchaka said the new unit would probably improve the incentives available for SME investment by providing encouragement through non-tax measures.

"The adjustment of incentives is our medium-term plan, because it must be approved by the Cabinet. However, we have other measures, such as funding SMEs to do research and development, with a budget of Bt47 million in the coming year," she said.

Meanwhile, Atchaka expressed concern about the country's investment outlook in 2009, particularly for export-oriented manufacturers, who have been hard-hit by the global economic crisis.

She referred to Industry Minister Charnchai Chairungrueng's projection of investment totalling Bt650 billion, saying this would be possible if mega-investments like that required for steel smelters could be achieved.

"Without those mega-investments, we usually record applications with a total value of about Bt400 billion. However, it is possible [investment will] fall sharply to about Bt200 billion in 2009, much the same as when the 1997 crisis happened, if the government does nothing," she said.

BoI statistics show a total value of Bt475 billion for applications in 1997. The figure slumped to Bt267 billion in 1998 and Bt224 billion in 1999.

Nevertheless, Atchaka is optimistic the investment outlook will not be as bad as that during the 1997 crisis, because companies with good accumulated profits can invest at lower cost as a result of low-priced construction materials, cheap labour and a weaker baht.

To lure those investments into Thailand, the BoI's strategy is to restore investor confidence as soon as possible.

It has a budget of Bt700 million, which will mainly be used to stage roadshows around the world.

The BoI's roadshows next year will be different in that it will team up with the Department of Export Promotion and the Tourism Authority of Thailand.

"It is most important to boost consumption domestically and internationally before stimulating investment. The more demand, the more confidence [there will be] for making investments," she said.

The roadshows will target Japan, China, India, the Middle East and Russia and concentrate on industries involved in alternative energy, food, medical equipment and environmentally friendly products.