GM's rethink on Rayong a welcome ray of hope for BoI

GM Thailand earlier said it would suspend the Bt15 billion plant plan due to the global economic crisis, which has led to severe financial losses at its US-based parent.

The news came amid fears that foreign investment flows to Thailand could dry up.

However, the Board of Investment yesterday expressed optimism for the investment outlook this year, saying net investment applications this month alone were up 181 per cent on year to Bt90 billion.

The positive spin came despite the fact that the number of applications for incentives dropped in half to 50 and the investment comes mainly from two power plant projects requiring Bt40 billion each.

"Unless GM can find loans, this project may be postponed," Industry Minister Charnchai Chairungrueng said after the meeting with GM Thailand executives. He said he would talk to the Export-Import Bank after the carmaker shows him its investment plan.

GM reduced its production target from 100,000 units to 77,000 this year, but insisted it had no lay-off policy for the time being. The cutback was mainly caused by falling demand across the world because the assembly plant in Rayong usually exports 80 per cent of its output.

Despite the bad news at GM, the BOI is optimistic that the country's investment is likely to pick up.

"Higher investment value (in January) indicates both local and foreign investors in many industries are not hit by the global economic crisis," BOI secretary-general Atchaka Sribunruang Brimble said.

"Especially, long-term investors who look forward to growth when the economy recovers will proceed with their investment during the tough economic times," she said.

With a target of Bt650 billion in net applications this year, the BOI is preparing to stage a roadshow next month led by Prime Minister Abhisit Vejjajiva and Charnchai.

It will focus on luring more investment from auto-parts makers to serve the future production of eco cars and hybrid vehicles. She said some parts makers expressed interest in making an investment here in March.

The Thailand Automotive Institute will also sign an agreement with the Japan External Trade Organisation to enhance competency in Thailand's human resources for the automobile industry during this roadshow.