Has Thailand completely lost its shine as one of the most attractive investment destinations in Asia due to the escalating political turmoil?
The opinion of industry experts remains divided.
On the bright side, an influential body like the Ho Chi Minh office of the Japan External Trade Organisation (Jetro) does not believe Thailand is being neglected.
Managing director Yoshida Sakae said yesterday that though Vietnam is gaining more prominence among Japanese investors, they have not completely ignored Thailand.
"Thailand's advantages lie in the human resources and skilled labour. There are more supporting industries because it has developed the industrial sector for a long time," he said.
Japanese investors in Vietnam sometimes complain about inadequate raw materials and supporting industries such as the packaging industry, he added.
Sakae said although the political problem and the Map Ta Phut crisis were uncertain factors for doing business in Thailand, Jetro could not abandon the country. Thailand remains the production base for the automotive industry.
As if to confirm his opinion, Ford Motor has announced plans to invest another Bt20 billion to build a new factory in Hemaraj Industrial Estate for relocation of the production base of the new model Ford Focus from the Philippines.
Mitsubishi Motor on Monday also issued an official statement, confirming its plan to invest Bt8 billion in the eco-car manufacturing plant in Thailand. This followed the company executives' meeting with the Board of Investment.
Finance Minister Korn Chatikavanij on Monday showed his concern that foreign manufacturers may withdraw investments because of the political crisis. "From several discussions, there have been some indications that overseas manufacturers may be preparing to pull investments from Thailand," Korn said. "They are unsure when this political crisis will end."
Amata Corp said industrial land sale this quarter could drop due to the violent clashes on April 10 when a Japanese journalist was shot dead, aside from 24 local fatalities. Navanakorn, another industrial estate developer, also witnessed a negative impact.
Nipit Arunvongse na Ayudhya, managing director of Navanakorn, said the company had been affected by the prolonged anti-government protest. He said two Japanese investors had decided not to purchase land in the Navanakorn Industrial Estate in Pathum Thani and Nakhon Ratchasima. Both are electronics companies.
He said the two companies had been expected to purchase roughly 10 rai of land each, worth Bt40 million to Bt50 million each. If those firms had gone ahead with their investment in Thailand, they would have made other investments such as for machinery and factory construction, which would have created many jobs, he said.
"The political problem right now has an impact on not only Navanakorn's business but also the country's macroeconomics. I don't understand why some groups of people can create so much impact on Bangkokians' livelihood and create economic problems," he said.
Nipit said luckily the existing clients and suppliers wanted to expand their businesses in Thailand. The company's land sales in the first quarter of this year went very well as sales were above expectation. The world economic recovery is a key factor to drive land sales in the first three months of this year. However, he is not confident about the second-quarter performance.
He added that more than 10 foreign firms were negotiating with Navanakorn to purchase land in both Pathum Thani and Nakhon Ratchasima's industrial estates.
Kohsan Electronics (Thailand), the South Korea-based manufacturer of Scana air purifiers, ventilators and condensing units for air-conditioners, is considering whether to expand its production capacity in Thailand or choose India, mainly due to the political uncertainty here.
Kohsan Electronics (Thailand) is the third-largest South Korean company in Thailand in terms of investment size. It invested US$1 billion in Thailand at the Rayong factory and employs 800 workers.
Marketing manager Pornthip Vachirangkool yesterday said the company earlier planned to invest many hundred millions of baht to double its production capacity in the existing plant in Rayong province this year, but the plan has been suspended. The expansion is to support the export market, particularly to India.
Pornthip said the political turbulence had disrupted product shipments. But the parent company still prefers Thailand to India. Despite the lower production cost in India, the skilled labour in Thailand makes it more attractive.
"We will wait for two months before making the decision to continue investing in Thailand. If the political conflict cannot be ended within two months, we're likely to choose India to be the new production base instead," she said.
