All eyes on tax reforms, Thai govt investment

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All eyes on tax reforms, govt investment
BUSINESS REPORTERS
THE NATION

BANGKOK: -- THAILAND is heading into 2016 with a tax-reform and investment-stimulus agenda as various government ministries are set to implement measures to drive the national economy amid increased global uncertainties.

The Bank of Thailand, the National Economic and Social Development Board (NESDB) and the Fiscal Policy Office, as well as Kasikorn Research and Siam Commercial Bank's Economic Intelligence Centre, forecast economic growth of at least 3 per cent next year compared with 2015's 2-2.7 per cent.

The growth in gross domestic product will be driven by government spending in infrastructure mega-projects worth up to Bt1.796 trillion, they say.

The government also has a policy to speed up investment in infrastructure projects worth more than Bt1 trillion in 2016 and 2017. They include 10 mass-transit routes in Greater Bangkok, railway double-tracking, and major highways. They are expected to be next year's economic growth engines.

Meanwhile, tax reform is under way, with the highest personal-income-tax rate to be reduced from 35 per cent, possibly to 20 per cent. In addition, import tariffs and land and building taxes will be reviewed.

At the start of the new year, a new excise-tax structure for vehicles and inheritance taxes will also become effective.

To boost private investment, which has been sluggish for several years, there will be new tax incentives for Thai and foreign investors offered by the Board of Investment for 10 new special economic zones nationwide.

According to the BOI, approval was granted to 2,320 projects worth Bt875 billion in 2014, with only 38 per cent of these schemes implemented, while new projects approved by BOI totalled 362 worth a combined Bt48 billion this year.

To speed up implementation of approved schemes, the Cabinet has offered more incentives and extended privileges to promoted investors, including those getting approval between January 1, 2014, and June 30, 2016.

Those starting operations before the end of 2017 will get more incentives in the form of a 100-per-cent corporate-income-tax exemption for nine to 12 years, up from the current eight years, plus an extra tax break of 50 per cent for another five years.

The government hopes these measures favouring private investment will help kick off another economic growth engine to achieve the GDP-expansion target of more than 3 per cent in 2016.

The chairman of the Federation of Thai Industries, Supant Mongkolsuthree, said the Finance Ministry's stimulus measures and BOI measures should encourage companies to consider investing more next year. However, if investors have greater confidence, they will go ahead with their projects anyway.

On downside risks, he said, a further slowdown in China's economic activity and global economy would affect Thailand 's exports, which account for 70 per cent of GDP.

The US Federal Reserve's increase of its policy rate for the first time in seven years, from 0.025 per cent to 0.25-0.5 per cent, should benefit Thai exports next year because of the depreciation of baht against the US dollar.

Agricultural and agro-industrial products, which have high local content, will be among the beneficiaries, said Nopporn Thepsithar, chairman of the Thai National Shippers Council.

The council now forecasts export value growing by more than 2 per cent next year, a change from the previous expectation of less than 2 per cent. However, there are a number of concerns such as unsolved financial problems in the European Union and sluggish Japanese and Chinese growth, as well as political problems and drought causing lower supplies of crops in many countries, he said.

If the export sector returns to a positive growth in 2016, it will boost GDP growth significantly, since exports account for the biggest share of GDP.

The Joint Standing Committee on Commerce, Industry and Banking, which consists of the FTI, the Thai Chamber of Commerce, and the Thai Bankers Association, has forecast GDP growth of more than 3 per cent next year.

The NESDB expects the economy to expand by 2.9 per cent this year and around 3.0-4.0 per cent next year.

However, these forecasts were made before the US rate increase, which was based on the perceived recovery of that country's economy. The US economic recovery is expected to benefit the Thai export sector, as shipments to the US market account for as much as 11 per cent of the Kingdom's total exports.

Source: http://www.nationmultimedia.com/business/All-eyes-on-tax-reforms-govt-investment-30275408.html


-- The Nation 2015-12-22

[peterpop]

Little mention of a reform to land taxes which are desperately needed. Unused land abounds within the centre of Chiang Mai. Not only another eyesore but also a waste of potential revenue for much needed civic projects like water and sewage. The wealthy however have had their taxes slashed. Fair distribution of wealth can be facilitated by sensible tax policies much more easily than other politically inspired initiatives.

[Srikcir]

Cited GDP growth projections for 2016:

- KResearch 3% Usually a little optimistic and high

- NESDB 3-4% Usually pro-government and high

- JSCCIB 3+% Usually very optimistic and high

But Deputy PM Somkid in charge of the Economy recently projected (The Nation 2015-12-18) 4%.

Guess who is worried about keeping his job?

[tomacht8]

One of the consequences of corruption is, that the stolen money is often transferred abroad and hides into offshore accounts.
The money then of course is missing in the domestic economic cycle.
If Thailand would really consistently fight corruption, and would confiscate all the misappropriated funds, that would really revive the economy.
However, as long as no state budget and capital flow controls take place here, there will still be this corrupt self-service shop.
There should be much higher penalties for these corrupt cockroaches without this bail games and decades of appeal procedures.
I guess the Corruption alone inhibits the growth of Thailand by 3-5%.