Foreign investment into Thailand nosedives 90%

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Thailand-Wall artForeign direct investment (FDI) into Thailand in the first half of the year fell by more than 90 per cent to just $347 million, the lowest mark in more than a decade, the Bank of Thailand said in a newly released report.

FDI declined from $4.2 billion in the first six months of last year to the lowest half-year value since 2005 as per end-June 2016. The central bank attributes the decline to the sluggish global economy in general, as well as China’s economic weakening, but also acknowledges home-made problems such as a lack of structural reforms in an industry that continues to produce low-technology products at higher prices and wages than other countries in the region and an economy whose large agricultural sector struggles with low productivity.

The continuously strong baht, which hit a one-year high against the US dollar on August 1, was another contributing factor.

The report also ascertains that political issues, including uncertainty over an upcoming general election, possible unrest and the way the country will be run in the future, “may have discouraged investment.”

However, looking at the numbers, the decline was mainly caused by a massive outflow of foreign direct investment in March this year, which observers say had to do with the junta revising plans for a high-speed rail link with China. All other five months saw net-positive inflows, although over a significantly declining trend pattern.

The central bank hopes the second half of 2016 will see an improvement in FDI as the world economy is projected to improve gradually and the Thai political environment may be clearer after an August 7 referendum on the country’s new constitution.

The Thai Board of Investment (BOI), the body responsible to attract foreign investment to the country, says that its own calculations look much rosier because – while the central bank is measuring the actual foreign capital in- and outflow – the BOI goes by the value of approved FDI applications.

According to BOI Secretary General Hirunya Suchinai, the investment value – but not the actual inflow – from 328 projects approved the first five months of this year was $2.3 billion, the Bangkok Post reports.

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Reading Time: 2 minutes

Foreign direct investment (FDI) into Thailand in the first half of the year fell by more than 90 per cent to just $347 million, the lowest mark in more than a decade, the Bank of Thailand said in a newly released report.

Reading Time: 2 minutes

Thailand-Wall artForeign direct investment (FDI) into Thailand in the first half of the year fell by more than 90 per cent to just $347 million, the lowest mark in more than a decade, the Bank of Thailand said in a newly released report.

FDI declined from $4.2 billion in the first six months of last year to the lowest half-year value since 2005 as per end-June 2016. The central bank attributes the decline to the sluggish global economy in general, as well as China’s economic weakening, but also acknowledges home-made problems such as a lack of structural reforms in an industry that continues to produce low-technology products at higher prices and wages than other countries in the region and an economy whose large agricultural sector struggles with low productivity.

The continuously strong baht, which hit a one-year high against the US dollar on August 1, was another contributing factor.

The report also ascertains that political issues, including uncertainty over an upcoming general election, possible unrest and the way the country will be run in the future, “may have discouraged investment.”

However, looking at the numbers, the decline was mainly caused by a massive outflow of foreign direct investment in March this year, which observers say had to do with the junta revising plans for a high-speed rail link with China. All other five months saw net-positive inflows, although over a significantly declining trend pattern.

The central bank hopes the second half of 2016 will see an improvement in FDI as the world economy is projected to improve gradually and the Thai political environment may be clearer after an August 7 referendum on the country’s new constitution.

The Thai Board of Investment (BOI), the body responsible to attract foreign investment to the country, says that its own calculations look much rosier because – while the central bank is measuring the actual foreign capital in- and outflow – the BOI goes by the value of approved FDI applications.

According to BOI Secretary General Hirunya Suchinai, the investment value – but not the actual inflow – from 328 projects approved the first five months of this year was $2.3 billion, the Bangkok Post reports.

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