EABC upbeat about Thai investment
Despite experiencing prolonged street protests, a coup and the recent bombing at the Erawan Shrine, Thailand is still an attractive place for further investment to European businesses, according to a survey by the European Association for Business and Commerce (EABC).
However, the EABC said there were still risks of political uncertainty ahead that would need government attention.
The trade body also voiced concerns about protectionism in Thailand’s financial and service sectors that needs to be amended in order to capitalise on the
wider Asean market after the Asean Economic Community (AEC) kicks off late this year.
In terms of their perspective on the local economy, 80% of respondents believe that Thailand will improve in the next two years, according to the EABC survey that covered 16 European chambers of commerce and associations in Thailand and Europe.
“This indicates that Thailand is a favourite location for investment in Asean,” said Rolf-Dieter Daniel, president of the EABC.
The survey was conducted from April to May with a total of 127 respondents. About 90% of respondents were chief executives, presidents and senior executives of mostly small and medium-sized enterprises, employing less than 250 staff.
Most of the companies responding to the survey have been operating in Thailand for more than 10 years and post revenue of more than 5 million baht, according to the EABC.
More than 60% of respondents are still optimistic that there will be improvements in their business growth, profitability and sales over the next six months.
“However, they are still reluctant to expand investment in Thailand and Asean,” said Mr Daniel.
Besides, some 10% of respondents were affected by the cancellation of the EU’s Generalised System of Preferences (GSP) this year and they need to adjust in terms of increasing their competitive advantage, cutting costs as well as seeking new markets to help offset the drop in exports to the EU, he said.
However, the EABC has voiced concerns about Thai legislation that deters investors, such as the Foreign Business Act and the Foreign Employment Act.
“The government has issued a lot of policies to boost investment. And to achieve that, you need help from the outside and as you are bringing in foreigners and expertise you might have to amend the laws to be compatible with the situation,” said Jan Eriksson, EABC vice-president, referring to the amendment of the Foreign Business Act that requires Thais to own more than a 50% stake in a company.
The EABC insists the amendment to regulations, especially in the financial and service sectors, would help Thailand escape from the middle-income trap, transforming it from an economy that relies on labour-intensive industries to a new knowledge-based economy that relies on innovation and technology as well as an open financial system.