Future Industries Fund to be established
The government has recently taken serious steps to attract foreign businesses engaged in 10 industries it views as being the best economic drivers of the future. A new law has been drafted which would allow for the creation of a 10 billion baht fund which would be used to provide extra privileges for the targeted industries.
The reason for the desire to establish such a fund comes on the back of a Finance Ministry report which suggested GDP growth in Thailand could reach between five and six percent if the country seriously promoted investment in 10 industries which are deemed the future of economic growth.
The industries which are to be encouraged to set up bases in Thailand are affluent, medical and wellness tourism; food; aviation and logistics; biofuels and biochemical; agriculture and biotechnology; next-generation cars; smart electronics; robotics for industry; digital and medical.
In November last year, the Cabinet approved, in principle, the Finance Ministry proposal to set up a specific fund to promote these industries. The fund would spend between five and six billion baht annually, with every one baht spent on investment expected to add economic value of 1.5 baht.
The incentives provided by the fund would vary from industry to industry and depend on negotiations with various investors. Incentives could include offering operators seed money as well as, if necessary, cheap loans. They could be given a longer period for income tax exemption than that presently offered by the Board of Investment (BoI). There is also a suggestion of offering cuts in personal income tax to zero, or as low as 15 percent for specialists.
In separate news, the Finance Ministry is firmly of the belief that GDP in 2016 will reach 3.8 percent, a definite improvement on the 2.8 percent witnessed in 2015.
The Bank of Thailand, reacting to the news that the European Central Bank (ECB) was showing a clear divergence with the United States in terms of monetary policy, has stated that investors and operators engaged in international trade pay very close attention to the risks associated with foreign exchange when making their plans and prognostications for 2016.
In late 2015 the ECB cut its deposit rate by 0.1 percent to be minus 0.3 percent while extending its asset purchase scheme for an extra six months. Global financial markets reacted less than favourably to the ECB move.
Yet, in mid-December the US Federal Reserve raised interest rates by 25 basis points, or a quarter of one percent, for the first time in seven years. Global markets generally reacted favourably to the news.