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Published on February 27, 2008

Respondents to the survey of 600 Japanese investors around the world showed a considerably increased interest in China, India and Vietnam as investment targets over the next three years. Thailand ranked fourth.

The Board of Investment (BoI) says the value of Japanese investment in Thailand reached Bt164 billion last year, out of a total of Bt505.6 billion. This made them the top foreign investors.

The JBIC survey, conducted during July and August last year, shows the factors that are making Thailand lose its competitive advantage include the strengthening baht, rising labour costs and increasing production costs.

However, JBIC senior economist Susumu Ushida said Thailand would remain a top investment target for Japanese investors, particularly in the automobile sector.

These investors would stay in Thailand and expand their business here. However, new investors focused on low-end products with a demand for cheaper labour would turn to invest in Vietnam.

Ushida said the survey showed that Thailand was the second most popular area for Japanese investment expansion in all industries after China. It accounted for the most responses with regard to strengthening and expanding automobile business.

However, Vietnam had significantly increased its popularity among electronic equipment and electronics manufacturers and general machinery, at Thailand's expense.

He said rising labour costs and appreciation of the baht in recent years had diminished investors' interest in Thailand. Vietnam, on the other hand, had low labour costs and its exchange rate was very stable.

Ushida suggested the Thai government draw up concrete plans to develop human resources to serve business expansion. It should also focus on the production of value-added products that did not rely on low production costs.

Most survey respondents said they were not satisfied with profits in Thailand last year because of difficulties in attracting customers and reducing costs, as well as foreign exchange losses.

BoI secretary-general Satit Charnjavanakul said that despite having lost some advantages to emerging countries, the government would proceed to promote Thailand as the most favourable destination for Japanese investors in Asean.

Petchanet Pratruangkrai

The Nation