Japanese Investors Upbeat on Thailand JBIC survey ranks Thailand #2 for overseas operations
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Japanese manufacturers have named Thailand the second most favorable location for investment, according to the annual survey “Outlook for Japanese Foreign Direct Investment,” conducted by the Japan Bank for International Cooperation (JBIC). For the second consecutive year, Thailand emerged second only to China in the survey, which is a ranking of investor confidence and satisfaction with overseas operations.
The report considers plans for expansion as well as a range of factors including export base potential, operational costs, market size and geopolitical stability. With an investment value of over US$13 billion since 1999 US$2.2 billion in the first 10 months of 2004 alone Japan is by far Thailand’s largest source of foreign investment. Of the 539 responding Japanese manufacturers, 151 identified Thailand as one of the top 5 countries with promising prospects for business operations during the next 3 years. Over half of the respondents cited Thailand’s potential for market growth as a determining factor. Competitive labor costs were also a key strength, with 49.5% of potential investors noting Thailand’s inexpensive labor force. Thailand’s low production costs, as well as the overall favorability of the nation’s investment climate, also appealed to Japanese manufacturers. “In Thailand, low production costs are expected, while there are few problems in the investment environment,” the study concluded. Roughly one fourth of investors surveyed indicated that investment tax incentives contributed to Thailand’s prospects.
Thailand and China far outpaced their competitors, including the United States and India, in terms of planned business expansions. The study showed that approximately half (47.8%) of responding Japanese manufacturers with operation in Thailand expect to expand over the next three years. Of these 147 companies, 83 have concrete expansion plans in place, as compared to only 58 manufacturers based in the U.S. and 23 in India.
Much of this expansion is expected to take place in the nation's automotive industry. Just after JBID's release of the survey, Toyota Motor Thailand, the country's largest automobile company, announced plans to begin exporting its Thai-manufactured Hilux pickup trucks, the first Toyota vehicle to be developed entirely outside Japan.
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