PM sees http://www.blogger.com/img/blank.gifrevival in investment in Q2 Stimulus spending set to prime private sector

‘‘Government spending on its own is not sufficient for sustainable growth. The private sector is also needed,’’ Mr Abhisit told business leaders at a conference yesterday. NATTHITI AMPRIWAN

Private investment should start to rebound in the second quarter next year thanks to government stimulus programmes and the recovering global economy, Prime Minister Abhisit Vejjajiva says.

He said the Thai Khem Kaeng infrastructure programme would help lay the foundation for a return to sustainable growth and create up to 1.5 million jobs over the next three years.

The 1.45-trillion-baht programme will finance tens of thousands of projects nationwide, ranging from large mass-transit projects in Bangkok to small microprojects aimed at improving rural irrigation systems, health and education facilities.

Mr Abhisit said the private sector has already shown strong signs of recovery from the global crisis, at least as seen through tax revenues.

Economic growth in 2010 is projected to reach 3% to 3.5%, compared with a contraction of about 3% this year.

Mr Abhisit called on private businesses to co-operate with the government in supporting medium-term, sustainable growth.

"Government spending on its own is not sufficient for sustainable growth. The private sector is also needed to help support long-term growth," he told business leaders at a conference yesterday.

A panel of leading businessmen agreed that economic indicators point to a continued rebound through 2010.

Santi Vilassakdanont, the chairman of the Federation of Thai Industries (FTI), said private investment should turn positive in 2010 as a number of industrial sectors are already close to full capacity.

On average, industrial capacity utilisation is running at about 65%, with sectors such as electronics, construction materials, autos, textiles and jewellery showing clear improvement from earlier this year.

"Once capacity utilisation rates reach 70%, expected to occur in the first or second quarter of 2010, manufacturers will have to start investing again to expand," Mr Santi said.

He said the October industrial confidence index is expected to exceed the 100 point level for the first time in four years, as orders have risen sharply with the global rebound.

Mr Santi acknowledged that key risks such as oil prices and domestic politics could undermine the recovery, as well as uncertainties about the global economy itself.

"We want to see politics stable. This will at least help minimise the negative impact on the economy if the global economy does not recover as we hope," he said.

The Thai Khem Kaeng programme is coming at an opportune moment, Mr Santi added, as Thailand needs to strengthen its competitiveness as the Asean region moves closer to an integrated single market over the next several years.

Thai companies need to prepare for 2015, when investment is scheduled to be liberalised within the region and some companies may look to relocate production to neighbouring countries to take advantage of lower labour and operating costs.

But the government must ensure infrastructure funds, estimated to total as much as 1.06 trillion baht for 2010 alone, are spent with the greatest efficiency and transparency, Mr Santi said.

Dusit Nontanakorn, the chairman of the Thai Chamber of Commerce, agreed that the planned investments in logistics, renewable energy and water resources should help raise the country's competitiveness.

But political stability remains critical, he said.

"The political conflicts need to end. And the infrastructure investments need good execution and implementation to help the country prepare for liberalisation within Asean over the next five years. We need to be positioned to benefit from economic integration," Mr Dusit said.

The Chamber of Commerce is studying the current competitiveness of seven key sectors, including food and agriculture, health care, logistics and tourism, and would soon present the government with its recommendations, Mr Dusit said.