The cabinet on Tuesday approved a plan to double tax breaks for private investors this year to boost sluggish investment.
The government is seeking to arrest a long and slow decline in the share of regional foreign investment over more than a decade of political turmoil, during which competitors such as Vietnam have become increasingly attractive for investors.
Under the plan, investors will be able to double their tax deductions if they start a project or begin construction this year and new projects will not need to be completed within a year to qualify.
"This new law will offer flexibility for them until next year," Finance Minister Apisak Tantivorawong told reporters.
The regime has focused on driving public infrastructure investment and wants private investment to boost economic activity since assuming power in 2014.
"Political uncertainty has led to a slowdown in foreign direct investment and is weighing on competitiveness," Christian de Guzman, of credit rating agency Moody's, told reporters last week.
In 2004, Thailand attracted about 40% of all the FDI into Asean outside of Singapore, he said. A decade later, it attracted about 20%, he said.
Investors see a market struggling to grow, he said.
Consumption and exports have been persistently weak and Thais are deeper in the red than most in Asia, with record household debt at 81.5% of the gross domestic product.
The cabinet on Tuesday also approved measures worth 2.97 billion baht to help farmers stimulate the rural economy that is struggling with high debt.
The Finance Ministry on Monday reiterated its stance that the economy will likely improve in the second and third quarters compared with the first quarter, driven mostly by public investment.
The ministry predicts 3.3% economic growth this year, slightly higher than the central bank's forecast of 3.1%.