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Foreign Investment: Can It Save Thailandís Economy?

By Burmese Writer

At a time when foreign investors have taken flight from crisis-torn Thailand, there is still at least one confident investor waiting for the upturn.
 
"At this moment, Thaiís condition is still promising and foreign investors still have an opportunity to make money," said Kenneth S. Brown, the director of Auto Alliance Thailand, a joint venture between Ford of the US and Mazda of Japan.
 
The question is whether foreign investment could be the fuel for the recovery of the Thai economy. A visit to the Eastern Sea Board Industrial Estate might lead one to believe that this is possible. There are big auto plants of the world giant automobile companies such as Mitsubishi and Toyota, in addition to the Ford and Mazda plant, producing many colourful designs of cars, and the huge amount of cars.

"We are waiting for the recovery confidently because the weak point of Thailand is the increase to 80% of import duty on built up vehicles. So only and strong domestic industry will have the capability to compete in the highly competitive global export market," said David L. Snyder, Executive Vice President of Ford. The Thai government would also like to see foreign direct investment play a role in the recovery.
 
The government has implemented a number of measures to encourage and facilitate foreign capital inflows. The Ministry of Finance said they were making firm progress with their privatization programme and had successfully sold shares in PTT Exploration and Production and the Electricity Generating Company. The cabinet has also authorized the further sale of a 23% government stake in Thai Airways International.
 
The government has also amended laws to facilitate the sale of assets of 56 closed finance companies by the Financial Restructuring Authority. These sales have received considerable interest from foreign investors. Furthermore, the Securities and Exchange Commission has allowed increased foreign investment in listed companies. It has also created different types of funds to allow foreign and domestic investment in the financial sector and real estate.
 
The government recognises that attracting foreign inflows requires not only increases in the number of available channels for investment, but also improvements in corporate governance. Together with the Securities Exchange of Thailand, we have improved disclosure standards and strengthened transparency and accountability among listed companies".
 
The vice president of the Stock Exchange of Thailand was sure the country would recover Ė but donít expect any more miracles, said Dr. Surat Palalikit. "If you are talking about 8 percent growth, never, never Ė and it shouldnít " If you are talking about 5 percent, yes O.K.
 
A recent rise in share prices on the Stock Exchange of Thailand (SET) was the result of investors looking for higher returns than they could get by putting their money in the bank. In the last September the cabinet had approved the draft of a new foreign business law, creating a more modern and liberal legal framework for foreign businesses in Thailand. Mr. Supachai, Deputy Prime Minister of Thailand said foreigners in the near future would be able to lease for more than 30 years provided they met certain conditions set by the government. According to the Thailand macroeconomic framework, exports between 1996-1998 is US$56.7 billions and imports is 61.3 US$ billions in 1997. Today export earning is 57.5 US$ billions and import is 50.5 US$ billions. Generally speaking, exports were more than imports. If the government promote foreign investment, Thaiís economy will develop in the year 2000. Nowadays both foreign and local businessmen are watching the external effects on Thaiís economy because they are not controlled by the government.
 
But the government and the Thai people hope that foreign investment will continue to play a big role in the Thai economy, especially now when it is needed more than ever.

 

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