The Nation

Job training vital: Japan Chamber

As the representative of the biggest foreign investor in the Kingdom, the Japanese Chamber of Commerce (JCC) in Bangkok wants the new Thai government to focus more on human-resource development, clear customs procedures, currency stability and infrastructure development to draw more foreign direct investment (FDI) and prevent enterprises moving to other countries that offer lower production costs.

"Promoting human-resource development and productivity in conjunction with the policy to increase the daily minimum wage to Bt300 is essential for Thailand. Otherwise, foreigners will not inject new investment in the future, to avoid higher costs," said Kyoichi Tanada, president of the JCC, in an exclusive interview with The Nation.

Tanada said the new government needed to focus more on educational development, improving customs procedures and stabilising the baht to keep Thailand the major investment hub for Japan and other countries in the long run.

Although customs procedures here are better than in some other Asean countries, they still need to be brought up to developed nations' standards. Also the baht needs to be kept around the preferred rate of 30 to the US dollar, Tanada said.

"These developments will ensure Thailand remains a trading hub in the Asean region and 'export station' for foreign investors," he said.

Tanada pointed out that Thailand lacked both skilled and unskilled workers, especially technicians. To serve the demand, the government should promote more vocational education. The outcome would be a supply of technicians to serve not only industrial manufacturing, but also the agricultural sector and services.

"Japan used to face this problem, and now it is time for Thailand to do so urgently given its policy to increase people's incomes," Tanada stressed.

He suggested that the government needed measures to attract more legal cross-border foreign labour.

Japanese investors welcome the government policy to reduce corporate tax from 30 to 23 per cent to help them absorb the impact of the increased wages. However, the tax reduction would not benefit small and medium-sized enterprises (SMEs), so the government may need to consider additional measures to promote SME investment.

The Thai government should consider granting more incentives for foreign investors to establish their regional headquarters in Bangkok, he said.

Tanada is confident Thailand's economy will grow gradually over the coming years with its new government and clear policies to support economic growth.

Japan is the largest FDI source in Thailand, accounting for more than 40 per cent of the total value. The Board of Investment Office reported that Japanese enterprises applied for investment privileges totalling Bt97.33 billion for 312 projects with a combined investment of Bt205.19 billion during the first seven months of this year.

Major investments were in automobiles, services and retailing, such as convenience stores.

Tanada noted that Thailand was considered an "export station" for Japanese investors thanks to its good infrastructure, rules and regulations, and workforce. However, the increasing production costs here would reduce its attractiveness in investors' eyes.

The policy to increase wages will directly affect Japanese SMEs, Tanada said, as fixed costs are the main factor to ensure return on investment. If Thailand is not competitive in this area, he said, Japanese SMEs will go to Indonesia, India or Vietnam, which offer lower fixed costs, particularly cheap labour. An added incentive in those countries is that the investors will enjoy not only exports, but also domestic sales thanks to their large populations.

The chamber president also stressed that appreciation of the yen had encouraged Japanese investors, particularly SMEs, to explore business opportunities overseas. Thailand has great potential as their investment destination, he said.

Countries around the Mekong River and Burma are also seen as having potential as destinations for Japanese investment following Asean economic integration in 2015.

Japan and Thailand have a long relationship in both the political and economic arenas, particularly with the implementation of the Japan-Thailand Economic Partnership Agreement (Jtepa). The agreement has enhanced ties between the two countries through technology transfer and human-resource development.

The global economic downturn has encouraged links between Asean and the rest of Asia to become stronger, especially as the seamless trade of Asean regional integration will create more business opportunities for all, Tanada said. The Bangkok JCC has 1,436 members, the most of any JCC in Asean, accounting for about 30 per cent of the approximately 4,500 JCC members in Southeast Asia. The number of members in Thailand is expected to reach 2,000 after 2015.


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