By Kitiphong Thaichareon
BANGKOK (Reuters) - Thailand's finance ministry will submit to the cabinet on Tuesday a package of tax incentives to encourage investment, a deputy prime minister said on Thursday, as the government looks to revive a flagging economy.
The Thai economy has lagged most of its peers for years, with exports weak and investment sluggish. The government estimated growth of 2.6% in 2019, a five-year low.
The finance ministry has been asked to consider more generous tax incentives to attract domestic and foreign investment this year, Somkid Jatusripitak told reporters.
"Currently, we offer a tax deduction of 1.5 times on investment. But the new package will offer more, plus many other measures, Somkid said. "This will definitely increase investment even more".
Finance Minister Uttama Savanayana told reporters that the ministry planned to offer a tax deduction of 2.5 times on investment, and there would be tax exemptions on imports of machinery.
Both measures, to be introduced during January-December, are expected to draw investment of more than 100 billion baht ($3.29 billion), he added.
"It's the first time that we will offer this high 2.5 times (tax deduction)," he said. "Both measures will cost the government about 9 billion in lost revenue. But it's worth it".
Uttama said the government would also offer soft loans for businesses.
Somkid said the Board of Investment was also planning additional measures to support investment. Last year, Thailand offered a relocation package to draw foreign companies seeking to move production because of Sino-U.S. trade tensions.
Somkid said the government would also accelerate large transport projects, the auction of 5G spectrum and offer investment by state companies to help improve business activity.
On trade, the government is working on membership in the Comprehensive and Progressive (NYSE:PGR) Agreement for Trans-Pacific Partnership (CPTPP), Somkid said. A fund will be provided to help business that may be affected by the deal, he said.
Membership could be a boon for Thailand as competition heats up in electronics, seafood and agriculture from rival export and manufacturing economies, such as Malaysia and Vietnam.