BANGKOK: Thailand saw a huge plunge in the value of foreign investment in 2015, mostly due to changes to its foreign investment rules, implemented in January last year. This will likely add to the country’s already sluggish economy, since investment accounts for about 50% of Thailand’s total domestic investments.
According to the latest statistics by Thailand’s Board of Investment, investment applications by foreign businesses tumbled by 98% in value to 12.7 billion baht ($368 million) in December last year from a year earlier, the lowest level in nine months.
The drop can be largely attributed to reaction to a rush of front-loaded demand at the end of 2014 ahead of the new rules. In all of 2015, the value of such investment applications also dropped by 90% on the year to 106 billion baht.
In January 2015, the Thai government revised its investment rules and cut the number of industries qualifying for tax benefits by 20%, particularly in labor-intensive sectors such as sewing, amid rising labor costs and a growing shortage of workers. The government reduced other benefits for investor businesses as well. As a result, foreign companies scurried to file investment applications and receive better tax and other benefits under the previous system by the end of 2014.
By country, Japan kept its top spot in terms of the value of investment applications in 2015, although its share came to about 30%, nearly a half of its peak level a few years earlier, according to the Board of Investment data. Instead, Singapore and Indonesia — neighboring countries of the Association of Southeast Asian Nations — grabbed large shares of the total foreign investment value on an application basis. China also came in fourth with a 12% share.
