Thailand's New BOI Jumpstarts Investment with Approval of Projects Totaling $3.7 Billion
The first meeting of Thailand’s new Board of Investment (BOI) was held on Wednesday, June 18. After taking over control of the country in a military coup, Gen. Prayuth Chan-ocha assumed chairmanship of the new 18-member board. The old BOI had accumulated a backlog of projects awaiting approval. Mirroring the quick action it has taken in other areas of governance since coming to power, the military jumpstarted administration of the new BOI by approving new projects worth 120 billion baht, or approximately US$3.7 billion.
This comes after the junta successfully distributed—in a matter of weeks—nearly 90 billion baht in overdue payments to about a million rice farmers who had failed to receive any compensation for many months from the previous government when the funds from a controversial rice-pledging scheme were mismanaged and mysteriously dried up.
The biggest winner in the announcement from the BOI was Toyota Motor Corp, which is planning to spend 51.5 billion baht to expand its production of pickup trucks and parts.
The projects winning approval were mostly industrial in nature. Some of the other projects receiving approval included:
- A tire production plant in Rayong by LLIT receiving 9 billion baht of investment
- A glass bottle production plant in Saraburi worth 1.9 billion baht
- A plant for producing laminated steel plates in Rayong receiving investments of 10 billion baht.
- A ceramics plant in Saraburi with an investment of 1.7 billion baht
- Cold storage projects by CPF in Nakhon Ratchasima, Chachoengsao and Samut Sakhon totalling around 2.7 billion baht.
- A new auto plant built as a joint venture of China’s SAIC Motor and Thailand’s CP Group worth 9.2 billion baht
- A data center by Luxemburg’s Supernap International for a 6.9 billion baht investment
The project approvals are a welcome shot in the arm to the Thai economy after approval for BOI projects had reached a backlog under the previous government of former Prime Minister Yingluck Shinawatra.
The good news for investors is that this is just the beginning for the newly revamped Thailand BOI, which plans to continue to support both domestic and foreign investment in the country.
General Prayuth listed four principals that he thinks investors should be mindful of:
- Research work by Thais and a transfer of technology to Thai people should be encouraged.
- Thailand’s raw materials should be used more for adding value to products for both domestic consumption and export.
- Projects applying for BOI investment support need to have made some effort to reduce their energy consumption, including making use of alternative energy sources.
- The manufacturing processes used in the proposed projects must not be destructive to the environment, and any large-scale projects need to have a full environmental impact study pass evaluation.
The announcement of the newly approved projects is encouraging for the future of investment in Thailand. Applications for BOI projects had dropped by 42% during the first five months of 2014 while the political deadlock brought uncertainty and slowed progress down to a halt. But with the military government keen to get the economy moving again, we can expect to see more action being taken by the BOI in the coming months.