With changing investment promotion policies, Japan will no longer be Thailand’s largest foreign direct investor this year.
China will go on top by bringing in the most money directly from that country and indirectly via Singapore.
However, under Thailand's clear-cut policy to promote high-technology clusters, Japanese should return to become the largest investors in Thailand next year, according to the Board of Investment (BOI).
In the first eight months of this year, Singapore was the largest foreign direct investor as measured by BOI-approved projects. It invested in 51 projects worth 13.14 billion baht (US$371 million), followed by China with 37 projects worth 10.73 billion baht and Japan with 92 projects worth 9.91 billion baht.
A total of 332 projects from foreign investors worth 50.26 billion baht applied for BOI privileges from January-August. This would create at least 18,250 jobs for Thais and 2,431 jobs for foreigners.
Since the BOI was set up 49 years ago, Japan has usually been the leader of foreign investors.
Hirunya Sujinai, secretary-general of the BOI, said Chinese companies had invested in many large projects focusing on alternative energy generation, solar-cell production, automobile manufacturing and rubber-tyre production.
The focus of industries from Japan will shift to services, information technology and trading, which require less capital than heavy industries, which China is just starting in here.
After investigating the sources of investment funds, the agency found that many Chinese companies invested in Thailand via Singapore, so it considered China to be the largest foreign investor for the country this year.
However, since a clear-cut investment-promotion policy has just been issued, Japanese investors are expected to be back to being Thailand’s largest investors next year.
The reasons are the Thai government’s cluster-promotion policies and a plan to support investment in high technology and innovation, as well as a policy to promote cluster investment in special economic zones, which Japan has high expertise in.
Japan will still use Thailand as an investment base in Asean, as many supporting industries and supply chains are already here.
The BOI will go on a roadshow to Japan next year to promote the new investment strategy focusing on cluster and super-cluster investment.
After the Asean Economic Community (AEC) goes into full effect by the end of this year, more Japanese firms in high-tech industries around Asean should invest more in Thailand, Hirunya said.
The BOI and the Japanese city of Hamamatsu yesterday signed an agreement to collaborate on promoting investment particularly in technology and innovation industry clusters.
Mayor Yasutomo Suzuki said that of the approximately 200 companies from Hamamatsu that had invested in Asean, 66 firms had invested in Thailand.
Most are small and medium-sized enterprises with sophisticated technology. The city has about 3,000 SMEs looking to invest overseas.
Japan has enjoyed a long, close relationship with Thailand. The two countries are expected to tighten ties in investment support.
Industries that have been eyed by Japan investors in Thailand are food service and restaurants, and high technology and innovation, Suzuki said.
Industry Minister Atchaka Sibunruang said she foresaw closer cooperation and more investment from Japan, focusing on high-tech and innovation clusters.
Thailand needs more of them after changing its policy to rely less on labour and focus more on higher-tech industries to support export growth.
Industries that the BOI will be sponsoring in the form of clusters in special economic zones are automobiles and parts, electrical and electronic products, and environmentally friendly chemical products.
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