Thai Minister of Finance Somkid Jatusripitak yesterday brushed off concerns about plunging foreign investment under junta rule, saying “there is light ahead” now that voters have approved a military-crafted constitution.
Generals seized power in 2014, vowing to end years of political instability and kickstart the lackluster economy. They have largely succeeded in bringing calm to the politically turbulent nation by stamping out dissent and banning political rallies.
However, the economy remains the junta’s weak point. High household debt, weakening exports and low consumer confidence have cramped growth for the past few years in what was Southeast Asia’s flagship economy. Foreign investment has fallen off a cliff since the military takeover. The latest figures from Thailand’s Board of Investment show no let up in that fall.
Approved foreign investment applications plunged in the first half of this year compared with the same period last year. Investment from Japan, Thailand’s largest overseas investor, dropped from US$2.7 billion to US$810 million. North American investment plunged 10-fold, from US$660 million to US$67 million, while the EU fell from US$1 billion to US$260 million.
Less pronounced falls were seen across Southeast Asia. China was one of the few countries to increase its approved investment footprint over the same period, from US$159 million in the first half of last year to US$723 million so far this year.
At a briefing with reporters Jatusripitak said he was unphased by the drop.
“I think we shouldn’t look back at the past, there is light ahead,” Jatusripitak said.
He said that political uncertainties were reduced following this month’s charter referendum, with elections scheduled for the end of next year.
“The climate for investment is now better, both for locals and foreigners,” he said. “Domestically, since the referendum has passed, the political uncertainties are decreasing in a good way.”
Thais approved a new constitution — the nation’s 20th — by a comfortable majority, although turnout was 59 percent and independent campaigning was banned.
The military says the document will bring stability and root out corruption among civilian politicians.
Critics say it entrenches the military’s hold over civilian politics.
Political turbulence is only partially behind Thailand’s foreign investment fall.
The country is rapidly ageing and it faces increased competition from neighbors like Vietnam and Cambodia, countries with large, young populations, increasing education standards and lower wages.
The Board of Investment yesterday said it was aiming to attract US$15.9 billion in total foreign investment this year.
The two bright spots on Thailand’s economy have remained tourism and ramped-up government spending on major infrastructure projects.
Both have propped up growth for now.
The economy expanded 3.5 percent in the three months to June, slightly higher than expected.
The World Bank estimates that Thailand’s economy will grow by only 2.5 percent this year, a low figure compared with most Southeast Asia neighbors. The economy expanded 2.8 percent last year.
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