Thailand's tourism is affected by new coronavirus originated from China (Source: bangkokpost.com)
The Fiscal Policy Office (FPO) of Thailand’s Finance Ministry cut its 2020 economic growth forecast to 2.8 percent from 3.3 percent projected earlier.
The ministry slashed its estimate for 2020 export, a key growth driver, to a rise of just 1 percent from an earlier 2.6 percent increase, Lavaron Sangsnit, head of the FPO said on January 29.
Despite the downgrades, the economy is still growing, he said, adding that the major drivers will be private investment and large public investment projects.
The Thai Government on January 29 approved incentives to spur private investment of 110 billion THB (about 3.56 billion USD) and add 0.25 percent to economic growth in 2020.
The measures include a corporate income tax deduction of 2.5 times expenditure on machinery, a one-year tax exemption for importing new machinery, and special-rate loans offered by the Export-Import Bank of Thailand for exporters to alter their machinery for export.
The tax measures apply to new machinery purchased from Jan 1 to Dec 31, 2020. The 2.5-time tax deduction is not applicable to leased machinery.
The measures are estimated to cost the government 8.6 billion THB in forgone tax revenue, said Narumon Pinyosinwat, a government spokeswoman.
According to Narumon, the cabinet has approved a 350-million-THB budget to compensate Exim Thailand for the special interest rates.
The Thai Finance Ministry said the fresh measures are essential to stimulate private investment and the local economy this year because of the uncertain global economy and the US-China trade war's impact on the export sector.
Tourism, another key driver, is being affected by China's ban on all group tours because of a new coronavirus originated from Wuhan, China (2019-nCoV).
The Tourism Authority of Thailand expects the number of Chinese tourists, Thailand's biggest source of visitors, to fall by two millions this year from last year's nearly 11 million./.