Foreign direct investment (FDI) for the whole of 2016 is expected to grow by just 2.7%, indicating that confidence in the Thai economy remains fragile, says Vallop Vitanakorn, vice-chairman of the Federation of Thai Industries (FTI).
He said the likely FDI growth of 2.7% is low when compared with the 10%-20% seen when the Thai economy is performing well.
As a result, the FTI expects the Thai government to hold more roadshows in order to attract more foreign investment and help offset contractions in investment caused by political turbulence over the past few years.
"At this time, foreign investors have less confidence in the Thai economy, which deters further investment," Mr Vallop said. "This shows that the global economy and the Thai economy have not yet recovered fully."
In contrast, the government has set an annual foreign investment target value at as high as 550 billion baht, up from the previous target of 450 billion baht.
The Board of Investment has reported that real investment value in the first half of this year (January-June) was at 300 billion baht.
Mr Vallop said the Thai government needs to adjust investment conditions and privileges to attract foreign investors.
Besides investment, Mr Vallop said businesses are also concerned about exports, which are expected to contract.
"The FTI expects Thai exports to recover, but it will not fully recover by the end of this year as the global economy remains weak, which dampens demand," he said.
He said the FTI expects 2016 exports to fall between 0.8%-1.25%.
The FTI is maintaining its projection of Thai economic growth at 3.3%-3.5% this year and expects next year to see 3.5%-4.0% growth.
FTI's chairman Chen Namchaisiri admitted that it is a very tough time for all Thais, in face of the passing of His Majesty the King.
Even so, he said the nation's bereavement will not impact the economy as every sector will continue to work towards bettering the Thai government.
The FTI also reported that the Thai Industries Sentiment Index (TISI) rose to 84.8 in September from 83.3 in the previous month, thanks to increasing volumes of orders in automotive, cosmetic, food processing and electronics.
As a result, the FTI forecasts the TISI will rise to 102.4 over the next three months due to political stability, he said.