The private sector has expressed concerns that the new, stricter Government Procurement and Supplies Management Act of 2017 may hamper public investment this year.
Chen Namchaisiri, chairman of the Joint Standing Committee on Commerce, Industry and Banking (JSCCIB), said the business sector is afraid that public investment may not grow as forecast after contracting 6% year-on-year in the first quarter of fiscal 2018 (October-December 2017).
"The government's investment budget can't boost the domestic economy as hoped because of the new, stricter Government Procurement and Supplies Management Act, which has led many provincial governors to baulk at signing any contracts," Mr Chen said.
The new act, which came into effect last Aug 23, is centred on preventing corruption and anti-competitive behaviour, with an increased level of transparency and monitoring. The act completely replaces the long-standing procurement regulations of the Office of the Prime Minister Act of 1978. It will dominate more than 90% of government purchases and construction projects, mega or small, across all regions of the country.
New to the government procurement process are criminal penalties imposed on government officials. Those criminal penalties have been extended to private sector players who give bribes, giving pause to some.
According to data from the National Economic and Social Development Board (NESDB), Thailand's public investment contracted 6% in the fourth quarter of 2017 against a 1.6% drop in the third quarter, a 7% decline in the second quarter and 9.7% growth in the first quarter.
For the entire year, Thailand's public investment contracted by 1.2% in 2017, after expanding strongly by 28.4% and 9.5% in 2015 and 2016, respectively.
The government's planning unit forecast public investment to grow 10% this year, leading the country's total investment to expand 5.5% after a slight increase of 0.9% in 2017 and 2.8% in 2016.
The JSCCIB forecast the country's GDP to grow in a range of 3.6-4.6% this year after a 3.9% increase in 2017 and a 3.3% rise in 2016.
The JSCCIB itself projects Thailand's GDP to grow 3.8-4.5% this year, boosted by export growth of 3.5-6%.
Mr Chen said private investment is expected to continue growing because of greater confidence in the country's economic prospects and the Eastern Economic Corridor Act, which was approved by the government earlier this year.
"The JSCCIB expects to see real investment in the second quarter of this year," he said. "At present, many private companies are actively looking for new land for business expansion and investment in the EEC."
According to the NESDB's data, Thailand's private investment grew marginally last year by 1.7%, up from 0.5% in 2016. The board forecasts private investment to expand 3.7% by the end of this year.
Mr Chen said the export and tourism sectors will remain the key drivers of economic growth, but he warned that a strong baht may weigh on the country's export sector and competitiveness.
