Japanese investors have shown a renewed interest in Thailand of late and many new investors have been coming to the fore. The Japanese External Trade Organization (Jetro) says, however, that Thailand needs to solve the labour shortages and higher cost of labour if they hope to remain competitive when compared to other Southeast Asian nations.

Japanese investors have shown a renewed interest in Thailand of late and many new investors have been coming to the fore. The Japanese External Trade Organization (Jetro) says, however, that Thailand needs to solve the labour shortages and higher cost of labour if they hope to remain competitive when compared to other Southeast Asian nations.

The president of the Bangkok office of Jetro, Setsuo Luchi stated that about fifty per cent of the investors that approach his office are considering investing in Thailand. There are an average of about 100 queries to his office a month and this shows significant growth over the figures before the floods of the last year. Mr Luchi said, at a forum about Asean economic integration, that most of the interested parties have never invested money in Thailand before. The reason that some Japanese firms have relocated their product production, in part, is more for product diversification reasons and not simply because of the floods. Mr Luchi did emphasize that Japanese investors are still committed to Asean and that interest in investing in Thailand is rising. Despite this, there are still issues to be discussed when it comes to the business environment.

Jetro’s poll of the Japanese owned companies in Asia Pacific highlighted that Thailand had a larger labour shortage than other Asean countries and India. The survey was conducted in August and September of 2012 and was completed by almost nine hundred firms. Another area that is troubling is that the average cost of conducting business has jumped up after a 40% increase of the legislated minimum wage. The Thai government has been advised by Jetro to encourage research and development in order to increase the intellectual capital of the country. Mu Luchi stated that it was very important to become more competitive when it came to skilled labour, value-added products and infrastructure, especially seeing as Thailand has increased wages and a shortage of labour. His advice was to improve the education of the people and encourage vocational training. Mr Luchi also stated that Thailand had been replaced by Vietnam as the second-largest location of choice for Japanese firms in 2009 in Asean after Singapore.

As the drive toward the regional Asean Economic Community integration, slated for 2015, progresses, there needs to be more development along the lines of the deep-sea harbour. The Myanmar Dawei district having been set up as a special economic zone is a further example. Mr Luchi added that there was great potential in Myanmar – including a largely untapped market of some 60 million people. There is going to need to be some serious effort made when it comes to servicing the electricity and water needs of Japanese investments.