Japanese focus shifts from china to Asean for auto production

"Thailand is feasible for Japan to invest in, as the government is consistent in its foreign direct investment (FDI) policy regarding duties, taxes and incentives," said Asean-Japan Centre secretary-general Nobutoshi Akao.

Thailand is one of the Asean countries that Japanese manufacturers, especially in the automotive industry, have paid the most attention.

Japan is Thailand's largest foreign direct investor.

Akao said that in the Chinese automotive market, Japan had a market share smaller than that of the European Union and the United States, because it entered the market later than the other two.

He said in China's automotive market, Japan had focused only on the domestic sphere, where it earns a narrower margin rate than in Thailand, due to factors like overproduction. Meanwhile, Japan can target both domestic and export sales for its automotive industry in Thailand.

Akao said television sets and mobile phones were now being overproduced in China.

"The next product [to be overproduced] may be vehicles," said Akao.

In Thailand, privileges and tax incentives announced by the Board of Investment are satisfactory, he said. Akao said there were several risks in concentrating too much on China, such as anti-Japanese sentiment and demonstrations, rising labour costs in coastal areas, a shortage of electricity and water, environmental degradation and food safety.

Other risks include the value of the yuan, increased competition with local and foreign companies, problems with overproduction and frequent changes in FDI policy, especially regarding duties, taxes and incentives.

Meanwhile, Akao said Japan was one the better-known countries to Asean.

In one survey, about 67 per cent of Thailand's respondents said they could trust Japan. Ninety per cent of Indonesian respondents said Japan was having a good effect on the world.

From Japan's perspective, Asean has a combined population of 570 million and rapidly growing economies. It has important sea lanes at a time when more than 90 per cent of Japan's oil imports depend on the Middle East.

There has also been a relationship of mutual trust between Asean and Japan for more than 30 years.

From Asean's perspective, Japan is a major trading partner along with the US and the third-largest source of investment after the US and the UK.

Japan is also the largest source of investment in the manufacturing sector and a source of tourists from outside the region, said Akao.

He said although Vietnam had promoted its FDI policy, that country was experiencing rising costs of building materials, especially steel, as well as soaring inflation.