Thailand's Board of Investment (BOI), the principal government agency for promoting investment in the country, has approved a series of measures aimed at restoring investor confidence and rehabilitating existing companies following the flooding that hit the country in July 2011.
One of the measures will enable investors and operators to move machinery and materials away from the areas affected by the flood to prevent damage to their facilities, with BOI-promoted companies entitled to the import replacement machinery duty free. Companies affected by the flood have also been permitted to outsource some of their manufacturing chains on a temporary basis to avoid business interruptions, and a series of measures have been implemented to relax the approval procedure for foreigners requiring immigration visas.
Investors in manufacturing, one of the sectors hardest hit by the floods, figure chiefly among those targeted by BOI’s urgent relief measures. With damages and losses in the sector estimated by the World Bank to stand at Bt900bn($29bn), the BOI is keen to introduce a series of incentives to maintain investor interest in the country's leading business area.
According to fDi Markets greenfield investment database, manufacturing was the leading sector in Thailand between 2003 and 2011 attracting 901 projects, which accounted for 56% of all projects in the period. Between January and November 2011, manufacturing attracted 68 projects, representing 57% of all projects in Thailand, therefore suggesting that the sector will continue to play a central role in the country’s economy.
The floods, which hit Thailand in late July 2011, were the worst the country had experienced in 50 years. Nasdaq subsequently revised Thailand’s economic growth prospects down from 4% to 1.5% for 2011. The World Bank estimates the impact of the floods will slash Thailand's current account surplus to Bt80bn from Bt345bn in 2011, and it calculates a further deficit of Bt77bn in 2012 as reconstruction leads to a rise in imports. It has shaved over 1% from Thailand’s GDP growth, and it calculates the cost of reconstruction could reach Bt739bn.