THAILAND

The government should take a leading role in investment abroad to encourage the private sector to venture offshore to seek business opportunities, a researcher says.

Few companies here have gone overseas compared with other countries. Their biggest problem is a lack of knowledge of investment regulations in their targeted countries, so they lack the motivation to explore business opportunities.

Firms also want to have more middlemen such as banks to help them invest in the targeted countries.

Patamaporn Nitichai, a research specialist at the Capital Market Research Institute of the Stock Exchange of Thailand, said yesterday that although Thailand's investment overseas is growing, it is still low.

The investment has come from big corporations and the same group of companies, particularly in the energy sector. Most were through mergers and acquisitions. Total investment overseas by Thai listed companies from 2006 to 2010 reached Bt204 billion, accounting for 93 per cent of total M&A value. Thailand's overseas investment focuses on Australia and North America.

Malaysia and Singapore are more aggressive than Thailand about investing outside their borders. Particularly businesses with close contacts with their government have great opportunities to invest around the world.

Banks in Malaysia and Singapore have reaped business benefits overseas by combining with local banks in targeted countries. However, Thai banks prefer to open branches to serve Thai traders and investors in those countries.

Thai investors also complain about double taxation. The Thai government collects taxes on dividends and their investment overseas. Parent companies have struggled with cash management and cannot spend their accumulated funds for further investment in their subsidiaries abroad.

"We found that dividend payment to shareholders increased by 28.6 per cent from the double taxation that companies had to pay to the government," Patamaporn said.

Thailand will lose business opportunities if those problems are not solved, he said, particularly with the coming of seamless trade under the Asean Economic Community. Companies cannot access resources and technology from expanding in major markets.

The government should draw up a more comprehensive investment-promotion plan and ease barriers to Thai investors. These steps should help upgrade Thailand into an investment hub in the region by drawing more foreign investors, Patamaporn said. Singapore, for instance, has waived corporate income tax derived from overseas investment.

The government should also draw up an aggressive plan by allowing state-run enterprises with potential to go ahead with investing overseas. This strategy would allow the state companies to grow from their return on investment.

Commercial banks should also do more to stimulate Thailand's investment abroad, especially by investing in banks outside the country. Customer bases in foreign countries will also support bank expansion, he said.