Thai Govt Considers Tax Breaks To Stimulate Economy

Government considers tax breaks to stimulate economy

By John Le Fevre

BANGKOK (thaivisa.com): -- Tax breaks on imported capital goods and delaying planned foreign borrowing are two items the government is currently considering to help boost the domestic economy.

Deputy prime minister Korbsak Sabhavasu said yesterday that tax breaks would help public and private enterprises cut costs and promote expansion and economic recovery, while delaying foreign borrowing would ease pressure on the government budget.

Korbsak also said that state banks should be pushed to speed up lending for domestic investment projects.

''I think the government needs to put more energy into pushing state banks to offer loans. We've discussed this for a long time, but there is no action,'' he said.

According to Korbsak, the Finance Ministry should offer more tax incentives to promote the import of capital goods and machinery by private firms, as well as work with state enterprises to capitalize on the baht's appreciation to buy more capital goods for their new investment projects.

The deputy PM said the Bank of Thailand's decision on Wednesday to keep interest rates unchanged at 1.25 percent will put more pressure on the baht, as a low-interest environment will make the baht stronger and affect exports.

''Supplementary measures are essential as the government remains worried about the country's economic prospects, as it is still unclear whether the global economy will recover as expected,'' he said.

According to Mr Korbsak, the government may postpone foreign borrowing and instead opt for more domestic borrowing to finance imports of capital goods.

Under the Bt1.5 trillion (about $US44 billion) Strong Thailand investment program, state enterprises are to invest Bt300 billion (about $US8.8 billion), excluding projects such as mass-transit development which needs public and private participation.

-- thaivisa.com 2009-07-18