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Investments in Thailand up 20%

Dec 2, 2017 | Emerging Trends Advisors, Thailand

Thailand is a very exciting prospect for investors at the present time. This may be businesses that are looking to make the most of the tax incentives offered by the Board of Investment (BOI), property investors looking to capitalise on relatively low land prices and the prospect of high returns on investment in terms of rental returns or even state enterprises looking to strengthen the infrastructure in the country.

In fact, such investment is thought to be in excess of THB1 trillion in 2017 alone, according to The Nation newspaper.

The figure of THB1 trillion is impressive in its own right, but when we put this into context, it is around 20% up from the previous year. The is extremely positive news and certainly suggests that there is expected to be an upturn in the Thai economy after growth had slowed. This is a huge boost, especially at a time when there is an element of global economic uncertainty.

It is good news that state enterprises are sharing the same levels of optimism. PTT has an investment budget of THB83.66 billion that will be used for investments both domestically and overseas. It is anticipated that around 55% of this figure will be invested in Thailand as part of their five-year investment plan that is rumoured to be over in the region of THB339 billion.

The huge investment by PTT involves improving the company’s infrastructure in the oil and gas industry including more pipelines, a greater number of service stations and improved facilities for imported liquified natural gas to increase the company’s competitiveness.

It is not only PTT who are investing heavily with Siam Cement also set to follow suit. The company has an investment budget of around THB70 billion this year, again for both domestic and overseas operations. Impressively, the company is looking to gain dominance in ASEAN countries – especially those whose economies are experiencing significant growth.

Speaking to The Nation newspaper, SCG president and CEO, Roongrote Rangsiyopash said, “Our investment this year is higher than last year, which was only Bt30 billion because our planned investment in the Vietnamese petrochemical industry was delayed until this year.”

Amazingly, and something that is testament to the company’s success is the prediction that their revenue will be up by 510% in 2017 from the previous year. Much of this has been attributed to the government increased spending on major infrastructure projects that will stand the country in good stead for years to come.

Private enterprises such as the Central Group have also expressed their intent to invest heavily in 2017. They will be spending a whopping THB45.5 billion this year on six shopping centres, five department stores, four hotels and three condominiums. This is expected to see sales rise by 14.9% following on from last year’s rise of 17.2% after the company invested THB39 billion – mainly in property.

The huge investment in property and indeed condominiums and hotels are following the pattern of increased demand for these types of properties from overseas investors. Properties that are valued at under THB10 million are highly sort after by investors from both mainland China and Hong Kong, many of whom are looking to gain attractive returns from rental income. The returns that many are getting at the moment is between 5% p.a. and 10% p.a. – something that would be almost impossible in their ‘home’ markets.

The demand for investment properties extends beyond Bangkok with cities such as Pattaya and Phuket also experiencing increased demand. With the ever-increasing number of tourists entering the country, this is hardly surprising and many hoteliers and developers are offering investors rental guarantees, such is the confidence in the market.

State enterprises, private domestic companies and property investors are not the only groups looking to invest heavily in the Kingdom. The BOI secretary general, Hirunya Suchinai was delighted to report that the number of applications for BOI privileges had surged to THB584.35 billion, smashing the target of THB550 billion in 2016 with this expected to breach the THB600 billion barrier in 2017.

In 2016, 1,546 projects were applied for and 70% of these were accepted. This expected to be larger this year both in terms of the numbers of those applying and in those approved. Once again, this goes to demonstrate that the country is viewed internationally as a great place to invest.

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