Delays in establishing a new coalition government were partly blamed for a drop in the Thailand Industry Sentiment Index (TISI) for a second consecutive month, with the May reading at 92.5 points, down from 95 in April.
"The business sector is concerned about the political situation as the process to set up a government does not seem to be going smoothly," said Kriengkrai Thiennukul, chairman of the Federation of Thai Industries (FTI).
Though the Move Forward Party (MFP) won the most votes in the May 14 election and quickly joined hands with seven other political parties to form a government, some have questioned MFP leader Pita Limjaroenrat's alleged violation of Section 151 of the organic law on the election of MPs.
Whether the Senate will vote in favour of his candidacy for prime minister also remains hazy, said Mr Kriengkrai.
The domestic political scrum, the impact of geopolitical conflicts overseas and an export slowdown all affected business confidence, leading to a drop in the FTI's TISI, he said.
The May TISI was based on an opinion survey of 1,327 entrepreneurs across 45 industries.
The Joint Standing Committee on Commerce, Industry and Banking (JSCCIB) sees dim prospects for exports in 2023.
Last week the panel projected exports to be flat or shrink by 1% this year, in line with the global economic slowdown.
In the manufacturing sector, entrepreneurs continue to grapple with high production costs, particularly in relation to energy prices.
Adding to the challenges, loan interest rates are trending upwards, resulting in increased financial costs for operators.
Chartchai Panichewa, vice-chairman of the FTI, said the federation is preparing to ask the JSCCIB next month to set up a committee to push ahead with a plan to export plants to the Gulf Cooperation Council (GCC), which comprises Saudi Arabia, Kuwait, the United Arab Emirates, Qatar, Bahrain and Oman.
Saudi Arabia has indicated an interest in importing 55 billion plants from 38 species in Thailand.
The country will give the plants to other members of the GCC under its plan to reduce carbon dioxide, according to the FTI.
"This could be a new opportunity for Thailand, especially Thai farmers who can export their plants to the Middle East," said Mr Chartchai.
Mr Kriengkrai said Saudi executives are also interested in investing in the petrochemical business with a land bridge megaproject that would connect the Gulf of Thailand with the Andaman Sea, part of government efforts to stimulate the economy.
