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Japan PM’s trip to Thailand to strengthen partnership

It is no exaggeration to say that Thailand’s economy depends crucially on the exports of manufactured goods made in Japanese plants in Thailand including
automobiles and parts, electronics, machinery, rubber products, chemicals, and plastics. Because of Japanese direct investment, Thailand now counts among the top ten exporters of automobiles in the world.

Olivier Languepin

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Japanese Prime Minister Shinzo Abe will make his first official visit to Thailand on January 17-18, his first official trip since assuming the post. The trip is part of his visit to strengthen ties with three Southeast Asian countries, including Indonesia and Vietnam.

The visit will be the first official visit by Japanese Prime Minister to Thailand in 11 years since the Former Prime Minister Junichiro Koizumi’s trip in 2002. According to Ms Yingluck, this visit is not just about strengthening ties between the 2 countries, but she is also looking forward to discussing the possibility of forming economic partnership with Japan, as well as to supporting Myanmar in country development.

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Because of Japanese direct investment, Thailand now counts among the top ten exporters of automobiles in the world

It is no exaggeration to say that Thailand’s economy depends crucially on the exports of manufactured goods made in Japanese plants in Thailand including automobiles and parts, electronics, machinery, rubber products, chemicals, and plastics. Because of Japanese direct investment, Thailand now counts among the top ten exporters of automobiles in the world.

From the Japanese side, Thailand is not important on the same scale. Yet Thailand is far from insignificant to Japan. For many Japanese firms, their investments in Thailand have helped them to retain their profit levels and their world market shares in the face of new competition.

High-speed train and flood-prevention projects on the agenda

Newly elected Japanese Prime Minister Shinzo Abe will focus on economic cooperation with Thailand as part of his regional strategic move when he visits the Kingdom next week during a tour of three Asean countries, his first official visit since assuming power.

Japanese investors in Thailand were pleased to comply with the Thai government’s high-wage policy although it might affect investment cost, he said. The hawkish Abe, who has taken a tough stance against China on their territorial dispute, apparently wants to boost Japan’s role in the region in rivalry with Beijing.

Abe will discuss with Prime Minister Yingluck Shinawatra cooperation on a high-speed train project and flood-prevention schemes.

The trip is part of Abe’s effort to strengthen ties with three Southeast Asian countries, including Indonesia and Vietnam. Abe will discuss a wide range of bilateral and multilateral regional cooperation issues with Yingluck, including Thailand’s infrastructure development, the high-speed train, and flood-prevention projects.

Thailand and Japan are important economic partners, benefiting from the JTEPA (Japan-Thailand Economic Partnership Agreement), according to a statement by the Thai Foreign Ministry. In 2012 (January – November), bilateral trade value reached Bt2.11 trillion. Japan is Thailand’s biggest trading partner while Thailand is currently Japan’s sixth-biggest trading partner.

Under the JTEPA Agreement signed in 2007, Japanese firms are allowed to hold a higher equity share than the 50 percent allowed under local law in a number of service areas. These include consulting; logistics (excluding all transport); maintenance and repair; and wholesale and retail in household electrical appliances and automobiles produced or wholesaled by Japanese firms under the same brand either in Japan or in Thailand.

Japan is Thailand’s biggest source of foreign direct investment

Japan is Thailand’s biggest source of foreign direct investment, totalling Bt312 billion, or 63 per cent of total FDI in Thailand. Japan is currently Thailand’s third-largest source of tourists, after Malaysia and China. In 2012 (January-November), 1,239,555 Japanese visited Thailand while a total of 211,076 Thais visited Japan in the same period, a 62.4-per-cent increase from the previous year.

Presently, there are 40,957 Thais living in Japan, while 47,251 Japanese people live in Thailand.

Ahead of Prime Minister Abe trip, Jetro president Yokoo said Japanese investors continued to plan further investment in Thailand, and his organisation would play its part in supporting such investment both here and in other countries.

“Despite the serious floods in 2011, Japanese investors still have confidence about investing here. The country’s promise to promote investment and its status at the centre of Asean will continue to draw investment from Japan,” he said.

Yokoo said Jetro would be proposing that Japan and Thailand collaborate in three areas. First, in the joint development of investment projects, particularly in third countries. Industries with potential for such cooperation include lifestyle products, foods and spas, he added.

Second, the organisation will invite Thai companies to invest more in Japan. Jetro will provide information support and seminars to educate Thai investors, he said. Third, Jetro will continue to promote collaboration in the Regional Comprehensive Economic Partnership, or Asean + 6, as the pact will help ensure strong growth in Asia.

The Sino-Japanese Conflict Has Diverted Travelers To Thailand

Political stability and the increasing popularity of tourist attractions in Thailand have contributed to the tourism boom, while the ongoing Sino-Japanese conflict has diverted travelers from both countries to Thailand.

Number one ranked in numbers of visitors to Thailand this year is from China with 2.5 million travelers.  Russia placed second with one million visitors, while India, South Korea and Japan each produced almost one million people from each country.

Japan and Thailand have been maintaining a long cordial relationship. Historical records attest to the existence of relations between Ryukyu (Okinawa) and Ayudhaya as far back as the 15th century. Trade between the two countries became active during the 17th century, at which time the Japanese community in Ayudhaya flourished. But after Japan adopted the policy of Sakoku, a policy of closing the country to the outside world, in 1639, the community began to decline.

Centuries later, a new chapter of the relations in modern history began with the Declaration of Amity and Commerce between Japan and Siam in 1887. At that time, Japanese experts on law, education, sericulture and so forth were dispatched to Thailand to contribute to the modernization of the country. At the time of World War II, Thailand, allied with Japan, declared war against the United States of America and the United Kingdom, but made the said declaration null after the War.

Symbolized by the close relationship between the Imperial Family of Japan and the Royal Family of Thailand, the two countries now engage in many forms of personnel exchange, carried out in various fields, such as politics and economics, among others. In 2007, Japan and Thailand celebrated the 120th Anniversary of the establishment of diplomatic relations with many memorial cultural events. In 2009, Prime Minister Abhisit visited Japan and had a bilateral meeting with Prime Minister Aso, and shared the view to strengthen the Japan-Thailand relation and cooperation to enhance economic development of Mekhon Sub-region.

Bangkok Correspondent for Siam News Network. Editor at Thailand Business News

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