Kuroda's pronouncement yesterday runs counter to what Japanese business have been asserting in recent weeks. He cited the overall economic environment as well as free-trade agreements Thailand has with many countries as factors that have maintained the Kingdom's attractiveness to Japanese investors.

Although there have been concerns that Thailand is losing its investment attractiveness, Kuroda, whose term ends next month, said Thailand remains attractive to Japanese investors.

Thailand and Japan have a long-standing relationship that extends from the level of the royalty to manufacturing, Kuroda noted. Japanese firms can sell products made at their production bases here to countries that Thailand has free-trade pacts with, including India, he said.

Although China has overtaken Thailand as the most attractive investment destination for Japanese firms, Japanese investors prefer to adopt a "China-plus strategy" by distributing investment to other countries to minimise risk, Kuroda said.

Japanese investors are aware of possible investment risks from the simmering anti-Japanese sentiment in China, he said.

Kuroda last week informed caretaker Deputy Prime Minister Somkid Jatusripitak that Japanese investors had become increasingly concerned about Thailand's political situation.

On a list of 23 worrisome factors compiled by the Japanese Chamber of Commerce, the political situation rose from 18 to six. However, the survey was conducted before the election date was announced, according to Karuda.

"It was the unpredictable situation [that was] very unstable. There was no finance policy for the mega-projects, or the budget disbursement," he said. "Japanese investors are waiting to see when the caretaker government will be replaced by a formal government through the election," he said.

Kuroda said Japan-Thailand economic ties should be enhanced by a prospective free-trade agreement between the two countries.

Jeerawat Na Thalang

The Nation