Japanese investors bemoan political turmoil

In spite of current political crisis, the majority of Japanese businessmen were still optimistic on business and industrial development in Thailand, although some of them have voiced concern of adverse consequences should the political deadlock last too long.

Japanese investors are the most important foreign investors in Thailand, and so far have remained mostly unfazed by poitical mayhem. They promised to continue doing businesses in Thailand. However if political conflicts prolong, they may have to shift their production bases elsewhere, like Laos or Malaysia.

Thailand clamping down on nominees for businesses

The Japanese business community in Thailand has called on the caretaker government to urgently end the political turmoil and warned that prolonged conflicts will affect spending and investment in the public sector.

Setsuo Iuchi, economic survey chairman of the Japan Chamber of Commerce, said the unfavourable political climate would pose a negative psychological impact on the tourism industry.

The Japanese private sector, which has been a business partner with Thailand over the years, is hoping for urgent resolution of the political stalemate so that mutual economic development will not be disrupted, he said.

Thailand’s political unrest has affected the tourism and hotel industries, but coordination with the public sector on customs and other procedures remains unaffected.

The majority of Japanese businessmen were optimistic on business and industrial development in Thailand in the first six months of the year, especially in metal and non-metal industries, machinery for the transport industry and non-production transport industry.

Japanese Chamber of Commerce in Bangkok’s Chairman of Economic Survey, Setsuo Iuchi said according to the Survey of Business Circumstances on Japanese Corporations in Thailand for the first half of 2014 , Japanese investors in Thailand hope to see an end to political turmoil as soon as possible.

They promised to continue doing businesses in Thailand. However if political conflicts prolong, they may have to shift their production bases elsewhere.

According to a survey on economic trends in the first half of this year, 73 per cent of Japanese joint venture companies called on the government to return political stability to the country, 46 per cent urged the public sector to improve the customs and taxation system, 44 per cent said the public utility system in Bangkok and outlying areas should be improved, and 36 per cent called for more serious government action on flood prevention.

He said the study also found that 73 percent of Japanese firms in Thailand called on the Thai government to maintain political stability especially in times of the Bangkok Shutdown protests.

But they, however, are optimistic that the situation will improve later this year while also reported that more than 50 per cent of Japanese firms in Thailand are still suffering from labor shortage.

Japanese investors moving to Laos

Laos is becoming a new investment target for Japanese firms amid rising labour costs in China and political uncertainty in Thailand, according to a Japanese investment promotion body.

The Japan External Trade Organisation (JETRO) will open an office in Vientiane next year because of the rising number of Japanese investors coming to Laos for its relative economic and political stability, it announced earlier this week.

There are now about 60 Japanese companies investing and running businesses in Laos up from only 27 in 2009, the Japanese government-sponsored organisation was quoted as saying in The Japan Times on Wednesday.

JETRO said Laos was appealing to Japanese investors because of its political stability, cheap labour and robust economic growth.

Most of the firms establishing themselves in Laos are based in China, where labour costs are rising, and Thailand, which is facing both political turmoil and flooding.

The latest investors from these countries include Nikon and Toyota, which will both be building parts in Laos for their production bases in Thailand.

JETRO said the timing of its opening in Vientiane was still being determined by the Lao government.

The organisation will help expand trade and investment between Laos and Japan. It will also build ties with Asean as the 10-nation bloc tightens its economic integration to achieve the Asean Economic Community in 2015.