The Japanese have suggested Thailand gradually rework its investment promotion policies to minimise the impact on existing investors, saying a sudden change could cause investment to drop.
As wages rise, productivity should also increase, ultimately leading to a more competitive Thailand, says Mr Hayashi. PATTANAPONG HIRUNARD
Yasuo Hayashi, former chairman of the Japan External Trade Organization (Jetro), recommends a gradual transition in terms of investment promotion policies, allowing time for firms to adjust.
The Board of Investment (BoI) is changing the country's investment policies from the current zone-based scheme to one classified by industry preferences. The new regime is expected to take effect by mid-year.
"For companies where investment incentives are important, a sudden change of investment policy might lead them to stop investing here," said Mr Hayashi, now the special adviser to Jetro.
Meanwhile, wage increases and a worker shortage are big concerns for Japanese companies in Thailand, and they face growing competition here.
Wage increases are also a top concern of Japanese firms in Indonesia, Malaysia and Vietnam, according to Jetro's recent survey.
"As wages rise, productivity should increase," said Mr Hayashi. "When productivity improves, Thailand will increase its competitiveness."
Japanese companies can expect greater consumer spending in Thailand as income levels surge.
At the same time, Japanese investors are eyeing greater investment in the Mekong subregion, partly due to the opening up of Myanmar.
Labour-heavy industries in particular will find Mekong nations like Cambodia and Laos attractive, said Mr Hayashi.
The Mekong countries enjoy an abundance of natural resources that would be enhanced by better transport linkage in the region.
A deep-sea port in Dawei, Myanmar will attract Japanese investors, said Mr Hayashi.
The appreciation of the yen will probably spur more Japanese investment abroad. At the same time, Japan's domestic market is being squeezed as the population declines.
Mr Hayashi urged Thai companies to consider investing in Japan, especially in small and medium-sized tech firms.
About the author
- Writer: Nareerat Wiriyapong
Position: Business Reporter