Thailand has the potential to overtake Vietnam and regain its spot as the third most attrac¬tive investment destination for Japanese investors in the near future, although the prolonged Map Ta Phut crisis could affect its prospects, according to the Japan Bank for International Cooperation.
Susumu Ushida, chief representa¬tive of the JBIC in Singapore, yester¬day said Thailand had stronger facil¬ities necessary for industrial develop¬ment than Vietnam. Besides, the country is already a hub for many major industries like automobiles and petrochemicals.
Thailand last year manufactured about 1 million vehicles, while auto output in Vietnam was only 100,000 units.
Ushida said Japanese investors had concerns about the political system of Vietnam and that this was a factor likely to affect their decisionmaking with regard to new investment in the region.
The JBIC official was speaking at yesterday's release of the annual
"Overseas Business Operations by Japanese Manufacturing Companies" survey, covering manufacturers with at least three foreign affiliates.
The survey covered 625 respon¬dents, which have about 12,000 operating units abroad. Covering the peri¬od from July to September last year, it does not include the impact of the Map Ta Phut crisis.
The survey showed Thailand was ranked the third most promising country for Japanese corporations in 2005 but lost that position to Vietnam in 2006 and 2007.
In the 2008 survey, Thailand's ranking slipped to fifth behind Russia, but last year's survey showed the Kingdom back in fourth place.
China has been ranked first and India second each year from 200509.
"In the near future, I believe Thailand has the potential to overtake Vietnam. However, the survey last year occurred before the Map Ta Phut crisis. If it had included this factor, the Map Ta Phut problem may have negatively affected the Thai ranking for most attractive investment locations for Japanese investors," he said.
Ushida said Thailand's disadvantages in the eyes of Japanese investors were the intense competition it faced from other countries, the difficulty of securing managementlevel staff and security/social instability.
Vietnam's disadvantages are seen as its underdeveloped infrastructure, the unclear execution of its legal sys¬tem and difficulties in securing managementlevel staff.
He said Japanese investors were expected to continue to shift more investment overseas, because the Japanese population had not grown for years. This stagnancy means demand in Japan is limited.
Some 55.2 per cent of survey respondents said they would main¬tain their present level of production in Japan, 27.2 per cent said they planned to expand domestically, and 6.7 per cent said they would scale back their businesses.
Some 65.8 per cent said they would expand their businesses overseas. However, the figure was lower than in the 2008 survey, because of the damaging effects of the global recession.
Only 2 per cent of respondents said they had decided to withdraw their foreign investment.
Ushida said the food and textile industries had remained strong during the recession, as they produced essential items. The auto industry was dented by Japanese investors' lower confidence regarding the future outlook.
Meanwhile, Yo Jitsukata, president of the Japanese Chamber of Commerce in Thailand, said the Kingdom's attractiveness as an investment destination was weakened by its having the highest rate of corporate tax among Asean countries and its com¬plex customs system.
"I would like to see the Thai government enhance several strengths and improve in its weak areas. I think the government should consider adjusting the tax rate and changing the customs system to meet the international standard," he said.
