Japanese concerns over Thai economy
THAILAND’S biggest foreign investor, Japan, has said that it will offer support to its firms in the kingdom as concerns grow that the death of its revered monarch could derail the Thai economy.
Japan has more than 4000 companies operating in Thailand, dubbed the “Detroit of Southeast Asia” due to the huge number of auto manufacturing plants.
“The government will offer appropriate support to Japanese companies if necessary so that the impact on them would be kept to a minimum,” top Japanese government spokesperson Yoshihide Suga said.
He did not elaborate on what sort of help – financial or otherwise – Tokyo might give.
Concerns over the future of the country have been lingering with the ailing health of the world’s longestreigning monarch, who has played a role of mediator at times of political turmoil during his 70-year reign.
King Bhumibol Adulyadej passed away on October 13 at the age of 88 after years of ill health.
“Significant near-term disruption is likely,” John Marrett, research analyst at the Economist Intelligence Unit, said in a commentary.
“We are expecting a slowdown over the next 12 months.”
Thai stocks rebounded sharply on October 14 after plunging earlier last week as analysts warned about the possible fallout – political and economic – from the king’s death.
Japanese auto giants Toyota and Honda said it would be business as usual for their factories in Thailand.
But Japanese media have quoted unnamed insiders at firms operating in Thailand who said they worried they might have to shut plants because Thai employees could be reluctant to work as the nation mourns the king’s death.
Releasing new products during the one-year mourning period could be seen as insensitive, they added.
“Our factories in Thailand will keep operating as usual,” Toyota spokesperson Itsuki Kurosu said of the auto giant’s three plants.
Rival Honda also said it would keep its four Thai plants running, including three auto factories and a motorcycle facility.
But “if the Thai royal family or the government issues instructions [to halt operations] then we’ll comply with them,” added Honda spokesperson Tamon Kusakabe.
While much of Japan’s investment in Thailand – about US$4.2 billion last year alone – is based in manufacturing, more and more service sector firms have opened up in the country in recent years.
According to Thai government figures, the economy grew 2.8 percent last year following record tourist arrivals and a ramp-up in infrastructure spending by the ruling junta.
But while that is three times faster than in 2014 it is still a lot slower than the 6.5pc seen in 2012.
There is also concern about the immediate impact on the key tourism sector during the mourning period after the government asked the public “to refrain from holding entertainment activities for one month”.
Thailand’s notoriously rowdy nightlife, red-light districts and beach partying on its southern islands are top draws for a tourism industry that has kept the economy afloat as other sectors fell flat. –