Foreign investors staring into blackhole as Thai election approaches: economist

“Investors need to see policies that the next government will propose. If we [Thailand] do not have anything relating to [foreign] investors, of course, they will not come to invest in Thailand,” Aat Pisanwanich told The Nation in an interview.

This election is vital in terms of foreign investors, as Thailand still needs foreign direct investment to develop, said Aat, who heads the University of the Thai Chamber of Commerce (UTCC)’s Centre for International Trade Studies.

Overseas investors in Thailand are paying particularly close attention to environmental issues, he said. This is because if they set up factories in Thailand under current laws, the products they manufacture would be rejected by the European market due to Europe Union (EU) “green” standards.

The EU’s Carbon Border Adjustment Mechanism (CBAM) will impose a carbon tariff of about 85 euros (3,155 baht) per tonne of carbon emitted by manufacturers above a certain threshold. The CBAM goes into effect in 2026.

Aat urged political parties to outline their plans to take care of the environment if they become part of the next government.

He also encouraged parties to promote foreign investment in domestic agricultural raw materials, to boost the value of Thailand’s agricultural products.

“Some 80% of policies offered by political parties for this election concern the domestic economy,” he said, adding they had said little about managing climate change and its effects, including flooding as the rainy season approaches.

Parties have also failed to say how they will compete with Asean rivals like Vietnam, by developing international trade and transport links with neighbouring countries, he added.

“This is the right time to inform foreign investors about these plans,” he said.

Budget required to implement parties’ promises

Aat told The Nation that he has also calculated how much money political parties would have to spend to implement their domestic policies.

He said that the six major parties – the Democrats, Pheu Thai, Bhumjaithai, United Thai Nation, Palang Pracharath, and Move Forward – would need between 400 billion and 3 trillion baht to put their promises into practice.

Per his calculations, Pheu Thai requires the most money – roughly 3 trillion baht – to carry out its policies, followed by Move Forward (2 trillion) and Palang Pracharath (1.5 trillion).

He added that the figures could increase if parties announce more policies.

Populist policies vs real stimulus

The Nation has also asked him how people could distinguish between populist promises and policies that would actually stimulate the economy and ease their financial hardship.

Aat said populist policies are implemented repeatedly and last more than two years.

In contrast, stimulus packages will be carried out only once or twice before a government takes further steps to upgrade the economy as a whole.

Asked whether Pheu Thai's 10,000 baht giveaway pledge counted as a populist policy, he said it would depend on whether it was a one-off handout or a repeated giveaway.

“If Pheu Thai implements this policy only one time – and my suggestion is they do it only once, this year – it will be a stimulus package. If they use it again next year, I think it is populist.”

Aat forecast that the handout could boost the country’s GDP by 0.4 to 1%, at a budget cost of around 500 billion baht.

He added that he agreed with the policy, explaining that it would boost a Thai economy that has been sapped by the pandemic, the Russia-Ukraine war, and geopolitical tensions.

“I think it is the right time to stimulate the whole economy,” he said.

But the huge budget required for the handout prompts another question, he added.

“For me, 10,000 baht is not too much, but the question raised now is where will this money come from?”