Business leaders local and foreign have reiterated that Thailand is at risk of falling behind other Asean countries if the political impasse goes unresolved.
"Japanese investors that plan to invest in Thailand may adopt a wait-and-see stance until the political situation is settled, and we believe the sentiment is the same whether investors are Thai or foreign," said Setsuo Iuchi, president and chief representative for Asean and South Asia at the Japan External Trade Organisation in Bangkok.
"However, investments in Vietnam, Indonesia and the Philippines are on course for continued growth. So if the situation does not return to normal, Thailand may fall behind in terms of development and investment."
Mr Iuchi said Thailand's economic slowdown, delays in infrastructure projects and the stalled Thailand-EU free-trade talks are concerns that Japanese investors have expressed.
Nonetheless, he insisted that Thailand remains a preferred destination for Japanese investment in the medium to long term, owing to its centrality in the Greater Mekong region. The country also enjoys good infrastructure in comparison with neighbouring countries.
"Investment has steadily decreased since 2012, but there was a boom that year," Mr Iuchi said. "Whether investment will be above or below the 2012 level will depend on the political situation."
Board of Investment (BoI) secretary-general Udom Wongviwatchai said political stability is a key factor for investors, so it makes sense that political protests may deter private investment.
Investors may delay their investment plans, since it normally takes about two years to kick-start real investment after an application wins BoI approval.
From January to April this year, investment applications fell 13% from the year-earlier period to 230 billion baht. But projects submitted by foreign investors surged 30% to 195 billion baht.
According to Mr Udom, the BoI's new investment promotion policies, scheduled to come into force next January, are likely to be suspended if a functioning government is not formed.
Vikrom Kromadit, vice-president of the Thailand-China Business Council, called it a stroke of luck that the BoI's new board is finally in place, allowing new investments to go ahead this year.
"Despite the new board being without the premier to sit as chairman, the consideration process for pending investment applications is unlikely to be affected," Mr Vikrom said, adding that the BoI vice-chairman is in fact eligible to proceed with the vetting process.
Mr Udom said acting caretaker Prime Minister Niwatthamrong Bunsongphaisan can serve as BoI board chairman.
"Our work plan will proceed even without those ministers on the board," he said.