The Finance Ministry plans to adopt both tax incentives and deterrent tools to rev up the investment ratio from the existing 20% of GDP to 40%.
The government wants to simultaneously offer investment incentives and discourage other investments to increase the investment ratio in Thailand, said Finance Minister Arkhom Termpittayapaisith.
The tax structure, which facilitates investment incentives, will cater towards the digital industry, the bio-circular-green economy, and the healthcare and wellness sector, said Mr Arkhom.
The ministry plans to use a tax policy to reduce the use of fossil fuels for energy, supporting the wider use of electric vehicles in the future, he said.
Thailand's investment ratio remains low, standing at around 20% of GDP, according to Mr Arkhom.
"In the future, we want to see the investment ratio rising to 40% of GDP," he said.
"At present, Thailand is in the process of developing second-phase infrastructure projects, particularly mass transit electric trains."
Mr Arkhom said sustainable economic development should include three considerations: fiscal stability, risk management and good governance of the manufacturing and service sectors, as well as a good savings habit among Thais for retirement.
The ratio of investment to GDP in Thailand is just 20-25%, below the average for countries at a similar development level, which show an investment ratio of 30.5%, according to KKP Research by Kiatnakin Phatra Financial Group.
SET-listed companies experienced a decline in capital expenditure, from 16% a year during 2004-09 to 1.6% at present.
Industries that have seen a significant decrease in capex include energy, construction, transport, IT distribution, electronics and automotive parts, according to KKP Research.
Only industries related to tourism such as hotels, restaurants, retail, healthcare and property are able to maintain investment growth in line with past performance, reflecting how Thailand's economy relies on tourism and services, while output from the real sector and manufacturing has continued to decline, said KKP Research.
In addition to lower economic growth and manufacturing output, an ageing society, reduced consumer purchasing power, higher labour costs and Thai firms' ambivalence to changing global demand are other factors discouraging investment in Thailand, KKP Research found.
Domestic political instability and the uncertainty of continued economic policies have also influenced the outlook and investors' decision-making.