TOKYO - There is little risk to investing in Thailand despite last week's military coup, the head of Japan's carmaking sector said Tuesday, as vehicle production returns to normal in the politically divided kingdom.
Japanese automakers with major operations in Thailand watched nervously as the army seized power and declared martial law, the latest chapter in years of political turmoil.
Japan is Thailand's single biggest overseas investor and the nation has become increasingly important for Japanese firms, which shifted operations from home to counter high wages and a strong yen and mitigate the effects of natural disasters on the supply chain.
"Thailand is where companies can invest with security," Honda chairman Fumihiko Ike told reporters during his first group interview as chief of the Japan Automobile Manufacturers Association.
"I personally don't think there are huge risks to the economy."
Honda, Japan's number three automaker, said Friday it has cut production at its Thai plant by 40 per cent, but blamed a drop in demand rather than the political situation directly.
The automaker cancelled one overnight shift in the wake of the crisis.
"Although there are some risks surrounding Thailand, they haven't had a huge impact on our business activities," Ike said.
Last week Toyota, the world's biggest automaker, said it was watching events carefully but all three of its Thai plants were operating normally, despite a brief shutdown Thursday evening when the coup was announced.
Nobuyori Kodaira, Toyota's executive vice president, said Tuesday the automaker was keeping a close eye on Thailand, but the country was a "very important base for us".
"In the long term, I think emerging economies will see increased demand and economic growth. In the meantime, they will also face fluctuations, up and downs," he told reporters.
Nissan, Japan's second-biggest automaker, had not adjusted its operations.
Nearly 4,000 Japanese firms operate in Thailand with investments which the Bank of Thailand said were worth $6.89 billion in 2013 -- half of the total inward investment.