The continued mass demonstrations and political instability in Thailand is worrying some of the Japanese companies and manufacturers based there. If the situation does not improve in the next few months, some of them might take another look at their investment strategies in a country that has been one of Japan’s more important production bases.
As per the Thai Board of Investment, Japan has the highest number of investments in the Southeast Asian city, particularly for automakers and electrical appliance manufacturers who have put up production bases there, partnering with and investing in local manufacturers. Figures from the Japan External Trade Organization show that as of April 2013, there are 1,458 Japanese companies operating in Thailand and in 2012, there were 761 new investments worth 1.11 trillion yen. But now, the daily massive protests are hampering operations and the companies are faced with the difficult task of managing investment risks.
The secretary-general of the Japanese Chamber of Commerce in Bangkok, Nobuyuki Ishii, said that the there will be “adverse effects” on the economy if the anti-government protests go on. “We can only hope the situation calms down as quickly as possible,” he said. Chubu Economic Federation Chairman Toshio Mita, who is the chairman of Chubu Electric Power Co., said in a press conference that there is a possibility that the parts supplies to some manufacturing plants may stop due to the unrest. It’s not the first time that massive protests have affected operations in the country: the 2006, 2008 and 2010 mass demonstrations caused 460 billion yen worth of damage to their economy. Japan Research Institute‘s Keiichiro Oizumi said that there will now be a reevaluation among Japanese companies whether to continue operations or move some of the production processes somewhere else that have lower labor costs, as the Thai administration has also increased the minimum wage as of January this year.
[ via Yomiuri ]