Investment in Thailand is expected to maintain momentum in the coming year as funds flow into the Eastern Economic Corridor (EEC).
The government's flagship investment zone will play a vital role in driving the economy from this year onward, say industry and government officials.
The Board of Investment (BoI) reported hefty new investment in 2017 and is confident that investment will rise further in the new year, particularly in EEC areas.
In the first nine months of 2017, investment reached 171 billion baht from 460 projects, according to BoI data.
"The government is confident that new investment in 2018 will reach 600 billion baht, up from last year's 530 billion baht," said BoI secretary-general Duangjai Asawachintachit. "It is because investors have more understanding about the Thai government's policies to lend full support to investors. The economic recovery is clear to investors.
"Most of the new investment is in S-curve industries, which is a trend that should help push Thailand towards higher technology."
The BoI expects more investment applications to come in for 2018, particularly in new S-curve industries, robotics and automation, as industrial factories are looking to switch from labour-intensive production to more automated means.
For the new investment value target in 2018, Ms Duangjai said the BoI will meet with Prime Minister Prayut Chan-o-cha and related agencies to set up a new target soon.
In 2018, the EEC will play a major role in attracting new investment to help boost the economy, she said.
Duangjai Asawachintachit.
Most new investment will be directed towards the 10 targeted industries, which are next-generation cars; smart electronics; affluent, medical and wellness tourism; agriculture and biotechnology; food; robotics for industry; logistics and aviation; biofuels and biochemicals; digital; and medical.
The bulk of foreign investors that have invested so far are from the 10 Asean countries, China, Japan, Germany, India and Scandinavia.
The BoI projection correlates with the Federation of Thai Industries (FTI) forecast, which expects more investment in robotics and automation to help drive the economy in the new year towards Thailand 4.0, with more advanced technology in industries to create added value.
FTI chairman Chen Namchaisiri said investment in the coming year will not only comprise new money being poured into the economy, but also investment that helps modernise the economy in the long run.
"It is the incoming trend for 2018 that people will start investing more in higher technology to increase efficiency, accuracy and productivity of industries," Mr Chen said.
He said more Thai factories are on alert to change and modernise their production system by investing more in higher technology to avoid risks from relying too much on cheap labour.
"Most high-tech industries will be in the EEC area," Mr Chen said.
He predicts investment in e-commerce related industries, including applications, technology and logistics to serve the growing e-commerce business.
With rising investment and hefty exports, Mr Chen said the economy should continue in the growth trend it is on.
He noted some concerns about external uncontrollable risks in 2018 that could weigh on investment and the economy in 2018, such as Brexit, the EU political situation and US economic policies that might have a negative impact on the Thai economy.
Moreover, the business sector is highly concerned about the baht's movements given its strength in 2017, and the currency is likely to have volatile movements in the coming year, which could affect the competitiveness of Thai firms.
"That's why we need the Bank of Thailand to step in or issue measures to help stabilise the baht," Mr Chen said.
He said the private sector expects GDP to grow by 3.7-4.0% for the whole of 2018 on the assumption that exports, which account for more than 60% of GDP, grow by 6.5-7.5%.
FTI vice-chairman Kriangkrai Tiannukul said the private sector is still confident that the first civilian EEC law governing all business activities in the EEC will be implemented in the first quarter of 2018.
"With the new EEC law starting on time, we expect real investment in the EEC to start by the first half of 2018," he said.
The EEC is the government's flagship policy to develop 30,000 rai in the eastern provinces of Chon Buri, Rayong and Chachoengsao as a ready-to-invest industrial zone to accommodate next-generation industries that will create added value for the economy, Mr Kriangkrai said.
With rising investment and increasing demand in exports as the global economy recovers, he said he expects industrial capacity utilisation to reach 80% in 2018, up from 60% in 2017.
Most high-tech industries will be in the EEC area Chen Namchaisiri Chairman, Federation of Thai Industries