Seiya Sukegawa, vice-president of the Japan External Trade Organization, said Thailand will continue to be the main production base for Japanese firms to facilitate operations of their subsidiaries in Laos and Cambodia.
Thai managers are also capable of providing technical training to Laotian and Cambodian staff, he said.
Nonetheless, Japan no longer views Thailand as a low-cost manufacturing base following the hike in the daily minimum wage.
Japan has already invested 40% of its foreign direct investment in the region and is likely to increase its portfolio here once the Asean Economic Community takes effect in a couple of years.
Geographically, Thailand is an ideal logistics centre for accessing the Greater Mekong Subregion, he said.
Since the Asean economy consists of emerging markets with growing populations and rising purchasing power, Japanese firms see good business opportunities to increase their investment and services here.
The labour markets in Laos and Cambodia provide Japanese manufacturers with a cheaper alternative to set up production plants as China’s labour and investment costs continue to rise, said Mr Sukegawa.
He added that Thailand must address issues that can affect investors’ confidence such as political instability and the lack of skilled technicians.
Bonggot Anuroj, executive director of the Investment Marketing Bureau of the Board of Investment of Thailand (BoI), said Japanese investors still have confidence in Thailand despite the impact of the 2011 flood crisis.
Japanese companies might relocate their manufacturing plants to eastern and northeastern provinces to avoid inundation in the future, she said.
Ms Bonggot said Japan will continue to invest in the automotive and electronic sectors.
But the 300-baht minimum wage policy might have a long-term effect on foreign direct investment because the wage hike adds to other expenses manufacturers have to shoulder, she said.
According to the BoI, Japanese investment totalled 150 billion baht in the first four months of this year, up from 93 billion baht a year earlier.
Last year, Japanese investors accounted for 872 projects in Thailand with a combined value of nearly 374 billion baht.
Source : Bangkok Post | June 18, 2013