Foreign investors turning away

Thailand's prolonged political turmoil may have already spooked prospective foreign investors to switch to other Asean countries, according to the European Asean Business Centre.

"Political instability always prevents investment flow. One obvious sector is tourism, but new investment will flow to other Asean countries," said Rolf-Dieter Daniel, president of the Bangkok-based agency.

"Long-term investment, particularly Board of Investment-sponsored projects, may be reconsidered and other locations may be reassessed.

"There will certainly be negative implications for the Thai economy from the demonstrations. It has happened already. Whether the demonstrations last one week or one month does not make a huge difference _ it is just the amount of gravity."

Thailand is on track to leave the EU's Generalised System of Preferences (GSP) in 2015, and this will see the country lose its competitive edge.

"That will make Thai products much more expensive in Europe. As a consequence, Thai exports will be hit," said Mr Daniel.

A free trade agreement with the EU could compensate for Thailand losing favourable duty treatment, but negotiations will be delayed by the political turmoil.

"The demonstrations will certainly extend the time frame beyond the GSP's expiry date," said Mr Daniel.

"Due to the caretaker position of the government, many important decisions cannot be taken and infrastructure projects have been cancelled or stopped, which will reduce growth considerably."

Mr Daniel said a democratic system is a key point for foreign governments when considering the political situation of a country.

Thailand must achieve political reform via constitutional means, or else it will place itself outside the international community, which would be a disaster for the country, he said.

The Joint Foreign Chambers of Commerce in Thailand shares Mr Daniel's sentiments, saying it supports positive developments but opposes threats that would undermine the development of Thailand.

"To boost foreign investment, we need predictability and a stable political environment where the rule of law prevails, with zero acceptance of corruption," it said in a statement.

Judy Benn, executive director of the American Chamber of Commerce in Thailand, said US companies remain committed to the country, with employee safety and business continuity the primary considerations.

Toyota Motor Thailand president Kyoichi Tanada said the political crisis may influence foreign direct investment plans.

The situation now is not like the 2011 floods, when most foreign investors remained committed to Thailand and even expanding here, he said.

"Japanese businesses right now are worried about the situation and want to see it end as soon as possible," said Mr Tanada, also vice-president of the Japanese Chamber of Commerce, Bangkok.

Share your thoughts

Discussion 1 : 16/01/2014 at 08:16 PM
Foreign investors turning away ? Well ,you can really't blame them , can you ? I most certainly don't !!!!
Discussion 2 : 16/01/2014 at 10:50 AM
Totally agree with your comment...cannot understand why people are backing Suteph.....I wonder if Yingluck is wise enough to become her own person after this. ...disown her brother and get on with the HUGE task of trying to retore some credibility for the Thai nation
Discussion 3 : 16/01/2014 at 10:26 AM
Thailand is such a great place this is so sad to see....As an outsider surely there must be a better solution to this mess..An election on the 2 Feb should resolve the issue..majority rules that's a democracy...If the Thai people think the current government is corrupt then they can vote them out or the people should call for a judicial commission to be set up to investigate those politicians and government officials who are not playing by the rules...Sutep Thaugsaban's idea of putting a group into power who is not democratically elected is extremely dangerous. Dictators once established just rape a pillage a country
Discussion 4 : 16/01/2014 at 09:17 AM
Disolving parliament,and giving up control only to appease a protest leader really was a critical all that must be re-acquired after a long drawn-out ordeal.
Discussion 5 : 16/01/2014 at 09:15 AM
I am sure corruption is a much larger deterrent to foreign investors.
Discussion 6 : 16/01/2014 at 08:48 AM
All Thais, especially all Politicians, must realise that Thais cannot live in isolation; we are depended on the Global grid - Economics and such. If we do not conform and adjust to the Global Realities and exploit these to our advantage.....our neighbours will!! We will slide back to the Feudal System that Suteph Thaugsaban wants to revive in Thailand!!

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