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Home is not just A Place, it’s a Feeling

Public Land Company Limited

Home is not just A Place, it’s a Feeling

Public Land Company Limited

articleImportance of Chinese investment in Thailand

Importance of Chinese investment in Thailand

 

 

Thailand is seeking Chinese investment to help stimulate a five-year, 1.7 trillion baht ($51 billion) development plan for its eastern seaboard to bolster the economy.

The Thai military government assessments is its Eastern Economic Corridor project is well placed to link with China’s Belt and Road Initiative. The corridor’s goals include adding infrastructure and advanced industries, such as biotechnology, robotics and aircraft maintenance, in provinces better known for traditional manufacturing like auto parts.

During an interview in London last month, Prime Minister Prayuth Chan-Ocha said "China is very important in terms of trade and investment". He also insisted that. "China's One Belt, One Road policy, which is crucial for the region and it would create connectivity within the region and throughout the world."

Investment as a proportion of the Thai economy fell after Prayuth seized power in a 2014 coup and halts behind neighboring nations, as International Monetary Fund data shows.

Investment in Thailand as a proportion of GDP fell post-coup and lags Asean

 

 

 

The government expects the corridor to help close the gap and enacted a law this year offering firms perks such as tax breaks to invest. But apart from the all huge investment some challenges remains to be conquered which include a workforce skills deficit and elections due next year in a country with a history of unrest and military intervention after polls.

The five-year plan for the corridor covers 2017 to 2021 and spans the provinces of Rayong, Chachoengsao and Chonburi, which Thailand says are well located for trade links to other Asian nations.

China’s Alibaba Group Holding Ltd. is one of the highest profile investors so far, pledging about $350 million to build a distribution hub in the region. The value of foreign direct investment applications from China approved by Thailand, for the corridor and beyond, jumped almost 1,500 percent in January through March from a year ago to 14 billion baht.

The government is encouraging investment from other nations too. That includes Japan, traditionally the top industrial investor in Thailand, as well as Europe and the U.S. Airbus SE last month signed a joint venture agreement with Thai Airways International Pcl to construct an aircraft maintenance, repair and overhaul facility in the corridor.

Thai gross domestic product growth reached a five-year high of 4.8 percent in the first quarter but remains slower than in Indonesia, Malaysia and Vietnam.

Accordingly, Pavida Pananond, an associate professor at Thammasat Business School in Bangkok., “The corridor shouldn’t be viewed as a panacea for Thailand’s economic ills”. She also added that "To engage in more advanced industries, investors need more sophisticated inputs, such as skilled labor, an efficient public sector and transparency in business operations and all these require longer term development and cannot simply be ordered from top-down law and regulation".

The Eastern Economic Corridor is linked to the military government’s 20-year national strategy, which the generals expect will guide policy makers in future, potentially setting up flash-points with civilian administrations that wish to adopt different priorities.

 

 

 

 

 

 

 

 

 

 

 

 

Source  : Bloomberg

Credit : Anuchit Nguyen, and Natnicha Chuwiruch

 

16 July 2018

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