Krungsri Research of Krungsri Bank forecasts Thailand’s tourism sector will gain more of a financial boost due to the government’s various stimulus measures and additional Covid-19 relaxations, but private investment’s growth is still limited.
According to the research, the total cancelation of the Thailand Pass in early July to attract foreign tourists and the reduction of the Covid-19 alert level from level 3 to level 2 are expected to gradually boost domestic businesses and economic activities. This includes easing the outdoor mask mandate, a major issue for many international foreign tourists.
Moreover, the Ministry of Finance is planning to propose additional measures by the third quarter to reduce corporate income tax to stimulate tourism in the country, by granting private companies the ability to organize trips for their employees to travel domestically to secondary tourist cities and receiving a double tax reduction and reductions in the main tourism cities.
Despite positive signals from the Foreign Direct Investment (FDI) in some industries, there are still a number of factors that may limit the growth of private investments. According to the BOI report in the first quarter of 2022, business projects applying for investment budgets are at 77.3 billion baht, expanding by 29.1% YoY.
The majority of the investments applied are the metal equipment, machinery, and transportation equipment business, accountable for 61 percent of total FDI (gradually increased to 169% from 2021), followed by electronics and electrical products (13%), and other light industries (11%). By October 2021-March 2022, the Krungsri research estimated that the FDI will expand by 31.7% YoY, especially in the EEC area which is still a prime industrial location.
However, in general, Krungsri Research estimates that private investment growth may still be limited this year due to many factors, such as concerns about the sluggish global economic growth, the increase in production costs, the volatility of the baht, and lower customer confidence.
Need Covid-19 insurance for your next trip to Thailand? Click here.
Follow us on Facebook
Join us on LINE for breaking alerts!