The Finance Ministry is preparing an economic stimulus package to heal the flood-ravaged economy, more than doubling private investment to 15% of gross domestic product (GDP) from 7% now, says the Fiscal Policy Office (FPO).
"The finance minister wants 2012 to be the 'Year of Investment', and to this end attractive investment promotion measures will be offered as a package," said director-general Somchai Sujjapongse.
He said the department is studying efficient ways to promote investment by Thai companies domestically and abroad.
The ministry is also seeking to waive import duties for auto parts and vehicles in a bid to ease the burden of flooding on the hardest-hit industry.
The tax reform process will also be continued to accommodate investment, while small and medium-sized enterprises will be provided with productivity improvement packages.
Dr Somchai admitted that the lack of a long-term water management plan could undermine the investment privileges but expressed confidence the government's working groups will come up with one soon.
As well, the Board of Investment and the Finance Ministry are continuing to amend their investment privilege criteria by shifting the focus to strategic industries rather than broad promotions.
The flood-affected investors will continue to enjoy their current privileges for another 1-2 years beyond the normal seven years.
Dr Somchai said Thailand will never get out of its "middle-income trap" unless the investment value is on a par with the savings amount.
Like other economic think tanks, the FPO has cut its GDP forecast to between 1.7% and 2% from a pre-crisis estimate of 4.5%.
However, it is more optimistic about next year, forecasting 5% GDP growth on an aggressive injection of funds that will result in a deficit of as much as 400 billion baht.
Thailand will have room for an additional 400 billion baht, not including the new public investment programme that will allow the country to spend more, Dr Somchai added.
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