Japanese businesses in Thailand saw signs of an improving economy in the first half of 2016 and expect further improvements in the second half, according to a new survey.
But most Japanese companies are still reluctant to increase investment amid issues such as redundancy in customs procedures, weak oil prices and a lack of skilled labour, the survey said.
According to Hiroki Mitsumata, the newly appointed president of the Japan External Trade Organisation, who headed the committee conducting the survey, 33% of respondents said they would invest more in Thailand, 35% said they would reduce their investment and 27% said they would maintain the current level.
"Given these figures, we cannot say definitely that they are moving away from Thailand," Mr Mitsumata said.
"What I can tell you from the survey is that they are considering their investment position. If they are not producing at full capacity, they will mull reducing their investment to comply with the market situation."
The survey was conducted between May 23 and June 15, with respondents from 1,705 Japanese companies in Thailand.
Mr Mitsumata said that while the food, garment and chemical sectors are performing well, the outlook for automotive, steel and machinery remains sluggish.
"The export performance painted the same picture, with food, garment and chemical sectors doing well, while the steel and auto sectors were not so good," he said.
The survey showed that most of the major export markets with strong growth for many Japanese companies based in Thailand were mostly in Asean.
Vietnam saw the highest growth, followed by Indonesia, India, Myanmar and Cambodia, said Mr Mitsumata.
The key problem lying ahead in the second half of the year is the lack of skilled labour, especially engineers, he said.
"What we lack the most are mechanical engineers, electronic engineers, IT engineers and chemical engineers," Mr Mitsumata said, adding that some respondents also reported a shortage of senior managers.
Mr Mitsumata said most of the Japanese companies here are still interested in investing in Thailand and want to see more incentives from the Board of Investment.
They also want more clear customs regulations and procedures in order to facilitate trade and investment.