BOI urged to find new ways to lure investment in post-Covid era

June 16, 2020

With worldwide foreign direct investment hit badly by the Covid-19 crisis, the government is looking to come up with new investment incentives to lure businesses into relocating their manufacturing base to Thailand. 

Deputy Prime Minister Somkid Jatusripitak said he has instructed the Board of Investment (BoI) to redesign incentive packages to specially cover companies that are looking to relocate their factories. 

He was speaking after he met senior BoI officials on Monday (June 15). 

The global economy is expected to slump for the next year or two in the fallout of the pandemic, which has also had a serious impact on FDI worldwide.

However, he said, investors from China, Japan, Hong Kong and Taiwan are showing interest in Thailand. 

The areas of their interest are food, processing of farm products, logistics and manufacturing of metal equipment, he said, adding that Thailand’s relative success in controlling the spread of the virus has contributed to the rise in investor confidence. 

“The global economy will not recover in the next year or two and it will have an impact on FDI, so BoI’s challenge is to turn Thailand into a real hub for CLMV,” he said, referring to Thailand’s neighbouring countries, namely Cambodia, Laos, Myanmar and Vietnam. 

He said BoI should look beyond tax incentives and consider options such as making use of Thailand’s Bt10-billion competitiveness fund, he said. 

In a move to promote small-scale investment, BoI recently gave the go-ahead for projects worth no more than Bt100 million to get approval without having to wait for a final okay from the BoI board chaired by Prime Minister Chan-o-cha, he said. 

So far, BoI has been concentrating on promoting manufacturing for export, and now it is time to support more local businesses in both manufacturing and service sectors, the minister said. 

BoI also needs to help local start-ups become “unicorns” with an annual revenue US$1 billion within five years, he said. 

Duangjai Asawachintachit, BoI secretary-general, said the office has yet to set a target for FDI this year due to the impact of the pandemic. The United Nations Conference on Trade and Development (UNCTAD) has estimated that the fallout of the virus will bring worldwide FDI down by 30 to 40 per cent this year. 

“Whether Thailand can do better than the global average will depend on new incentives to promote factory relocation, which will draw in FDI in the second half of the year,” she added. 

Last year, BoI launched a package to lure large projects worth Bt1 billion each, but to promote manufacturing relocation, the agency will have to target smaller projects, she added. 

The BoI board will meet on June 17 to discuss incentives on promoting the agricultural sector, especially indoor farming where lights, humidity and fertilisers are controlled to produce high-quality vegetables fast and efficiently, Duangjai said.