Japanese investors are keeping their investment plans in Thailand intact on expectations of a second-half economic and export recovery.
The Thai economy is projected to perform better in the latter half as the political situation has eased, said Setsuo Iuchi, president of the Japan External Trade Organization in Bangkok and Jetro's chief representative for Asean and South Asia.
Exports are likely to improve with the global economy, while domestic consumption can become a major factor driving the Thai economy forward, he said.
"The National Council for Peace and Order has pushed forward with its reform agenda. This makes us expect it will spur economic growth if the reforms progress according to plan," said Mr Iuchi.
He said tourism accounted for nearly 10% of GDP, so it would be another boost if tourism recovered in the second half.
Mr Iuchi yesterday released a Japanese Chamber of Commerce business sentiment survey that found a significant portion of Japanese investors anticipated an increase in their local investments this year. Conducted between May 21 and June 20, the survey involved 423 firms including 250 in the manufacturing sector.
Of the total, 36% said capital investment would increase even though business sentiment had deteriorated from the second half of 2013, he said. An improvement in sentiment is expected in the second half, as 21% of the firms anticipated no change in investments and 39% a decrease.
Some 43% of the firms expect exports to grow in the second half, while the challenges are severe competition, higher labour costs and lack of managers, said Mr Iuchi.
"Thailand is a hub for Asean, as many companies have established research and development centres here," he said.
Japanese investors are keen to reap the benefits of the big domestic markets in Indonesia, Vietnam and China but will do so through Thailand.
Mr Iuchi said he was returning to Japan after his three-year term in Thailand ended.