Japanese executives buttressing Thai hub
Japanese firms are starting to apply a Thailand-plus-One strategy in Southeast Asia by using Thailand as a hub to expand business in the region and reap the benefits of upcoming regional integration and free trade agreements, says the Japan External Trade Organisation (Jetro).
Setsuo Iuchi, the president of Jetro’s Bangkok office, said by maintaining operations in Thailand, Japanese companies are better positioned to penetrate neighbouring countries and adjust for divisions of labour.
Indonesia is the top complementary production base in Asean after Thailand, followed by Vietnam and Myanmar, he said, citing the results of a recent business sentiment survey by the Japanese Chamber of Commerce in Bangkok.
‘‘This is the first time we’ve seen this kind of movement of Japanese companies, and it’s increasing,’’ said Mr Iuchi.
He said Indonesia’s huge domestic market continues to lure Japanese investment, while opportunities are growing in Myanmar.
Interestingly, the Philippines ranks fourth by attracting more investment in electrical appliances and office automation, said Mr Iuchi
He said as Japanese companies use Thailand as a springboard to neighbouring countries, connectivity and availability of managers are needed here. Thailand must now compete for foreign investment in Asean, so he recommends improving facilities.
Non-manufacturing segments such as retail, IT solutions and logistics are expanding or looking to invest in Asean because the market is expanding, said Mr Iuchi. Wage increases in China as well as a labour shortage are driving investors away.
In addition to the Asean Economic Community, companies investing in Asean have high expectations for benefits from the Regional Comprehensive Economic Partnership (RCEP), which covers a wide range of economic cooperation between Asean countries and the six free trade agreement partners Japan, China, South Korea, India, Australia and New Zealand.
Announced at last November’s Asean summit, negotiations for the RCEP are projected to conclude in 2015.