Thailand may lose huge foreign investment

Thailand could lose as much as Bt40 billion a year in foreign investment as the country's comparatively high import tariffs prompt investors to shift their focus to other Asean countries, the Federation of Thai Industries warns.

The federation has urged the government to put pressure on Asean members to cut import duties in line with the Asean Free Trade Area (Afta) agreement, and to cap all local tariffs at no more than 10 per cent to help Thai producers compete with Asean rivals.

Other Asean members are poised to win shares of Thailand's domestic and export markets if Thai manufacturers lose their competitive advantage due to high production costs, the federation said.

Its vice chairman Chavalit Nimla-or said recently that the federation and the Finance Ministry had agreed tariff reductions under the Afta agreement would boost the chances of Thai investors and exporters to expand into other Asean markets.

"Whether the tariff cut will really benefit Thai operators depends on government efforts to speed up dialogue and encourage all Asean members to comply with the agreement," he added. Thai operators must be prepared to take advantage of tariff privileges, he said.

At the same time, Chavalit said, the country's whole customs-tariff structure should be harmonised with tariffs under the Afta framework and the bilateral and multilateral trade agreements the government has negotiated with other nations.

The federation has also urged the government to accelerate tariff cuts on 4,000 remaining products by early 2003 to maintain domestic markets. If the new tariff structure is delayed, Thai operators may be hurt, owing to import tariff differentials.