The BoI made the projection based on the total investment value of applications seeking promotional privileges in the first six months of the year, down 53% from a year earlier to 183 billion baht.

The value for the whole year was likely to total 400 billion baht or even lower, depending on investor sentiment.

Mr Chakramon said the sharp decrease had come as no surprise because several large-scale projects, including major steel and automotive projects worth a total of 200 billion baht, had applied for promotional privileges last year, when the value of investment reached 700 billion baht.

Investment would most likely be in small projects or industries related to the projects that applied last year, he added.

According to Mr Chakramon, certain industries deserved future promotion, such as medical equipment, medical services and pharmaceuticals, because they had been well received by foreigners who had been treated in private hospitals.

Currently, demand for medical equipment is being met by imports, even though Thailand has the potential to produce it.

The BoI normally grants promotional privileges to hospital businesses, but has yet to grant them to medical equipment or pharmaceutical ventures.

However, it plans to soon discuss promotions with state agencies including the Science and Public Health ministries.

Adisak Rohitasoon, the president of the Automotive Industry Association, said the reduction in investment in the country was not the main concern.

''We should consider each sector at the end of the year and see how much investment each has received,'' he said.

There had been less investment this year, because of over-investment last year, Mr Adisak said, especially from Toyota and Nissan in automobiles.

But, he believed that at least one or two automobile firms would announce additional investments this year, which would help improve the figures.

Santi Vilassakdanont, the chairman of the Federation of Thai Industries, said the BoI was promoting better understanding of investing in the country among foreigners, especially regarding politics. The FTI and the BoI are due to conduct roadshows in Japan and China soon.

Mr Santi said there had been concern about the political problems that would delay the establishment of a new government until late this year at the earliest.

But despite an economic slowdown, the agricultural and export sectors had continued to prove key drivers for the economy, he said.

But rising production costs, particularly oil prices, along with serious industrial competition, political uncertainty, increasing interest rates and a stronger baht, have shaken industrialists' confidence in their firms' performance.

The FTI's Thai Industries Sentiment Index for May continued its decline to 94.3 from 94.5 in April.

The index is based on a monthly survey of 521 executives in 35 industries. A figure of more than 100 indicates confidence in business conditions for the next three months is good. May was the second consecutive month that the index had dropped below 100 since December.

''The index has looked stable despite political pressure, it is a good sign that the situation may be not too bad,'' Mr Santi said.