July 25--The global economic slowdown, especially in China, rising interest rates and declining electronics demand are posing threats to Thailand's investment outlook in the second half of the year, says the Board of Investment (BoI).
Industry Minister Prasert Boonchaisuk, who oversees the agency, said demand for hard disk drives, for which Thailand is the major global production base, will likely be hurt by declining computer sales worldwide.
Meanwhile, the world economy will potentially grow more slowly than previously forecast, particularly China, and could affect demand for goods.
Interest rates are on an upward trend globally, raising the cost of investment, Mr Prasert said.
But thanks to positive factors _ the weakening baht, improving economic prospects of neighbouring countries and the growing tourism and automotive industries in Thailand _ the BoI remains confident this year's foreign direct investment (FDI) target of 1.1 trillion baht will be achieved.
"Investment should grow continuously in the second half, albeit at a slower pace than in the first half," Mr Prasert told a press briefing yesterday.
According to the BoI, operators of projects worth 633 billion baht applied for investment privileges in the first six months, up by 47% year-on-year. The number of projects surged 5.8% to 1,055.
FDI was flat at 279 billion baht from 619 projects.
BoI secretary-general Udom Wongviwatchai said the weaker-than-projected Chinese economy could discourage FDI sentiment in the short term in addition to the global slowdown.
However, investing is a long-term decision that normally takes 6-12 months. Consequently, second-half investment figures should not be hurt, he said.
"Chinese car makers are looking to invest in Thailand for right-hand-drive vehicles for both the domestic market and exports, while they produce left-hand-drive units at home," Mr Udom said.
Chinese firms are also keen to invest in farm machinery and chemicals here, he added.
Mr Prasert said his ministry is preparing to launch the second phase of the government's eco-car project to attract more investment in the auto industry.
Thailand has remained on track to become the world's fifth-largest vehicle-producing country by 2017 with annual volume of 3 million units, although industry executives recently cut the target this year to 2.5 million vehicles from 2.8 million on slowing domestic demand.
It ranked No.9 last year with 2.48 million vehicles, according to the Paris-based International Organization of Motor Vehicle Manufacturers.
In the first six months, the service and infrastructure sector ranked top in terms of investment value. A total of 256 project applications were submitted to the BoI for 302 billion baht, up by 190% year-on-year.
There were 227 projects in the machinery and automotive industry with investment of 148.4 billion baht, followed by agriculture with 243 projects worth 88 billion.
Japan remained the largest foreign investor in Thailand during the period with an outlay of 184 billion baht for 333 projects, followed by Malaysia, Hong Kong and Singapore.
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