Wednesday, May 15, 2024
HomethailandgeneralJapanese firms upbeat on Thailand, Asean

Japanese firms upbeat on Thailand, Asean

Japanese businessmen remain confident about their investments in Thailand and are keen to stay here, particularly in businesses related to automobile manufacturing, according to Hideyuki Tanaka, Chair of the Subcommittee on Asean Economic Relations, Keidanren (Japan Federation of Economic Organisations).

Thailand, which is one of 10 Asean member countries, has an abundance of natural resources, and Japan feels that its people have a common culture with Thais. More importantly, Thai people are friendly to the Japanese, Mr Tanaka said.

Because of these factors, many Japanese businessmen, particularly in the automobile industry, remain confident in their investments in Thailand. They are still setting up manufacturing sites in the country.

These small and large Japanese companies have the potential to expand their supply chains in the country, he said, saying that he believed many more Japanese companies, including SMEs and startups, will move to Thailand.

“The number of Japanese companies and the total amount of investment in Thailand is the largest compared to other investors from abroad,” he said.

Mr Tanaka was speaking to the Bangkok Post recently when he travelled to Thailand to promote the 50th anniversary of Asean-Japan relations this year. Asean and Japan established diplomatic relations in 1973.

Japan is determined to promote the implementation of the Asean Outlook on the Indo-Pacific (AOIP) through concrete projects and activities via an Asean-led mechanism. The AOIP, which shares the principles of the Free and Open Indo-Pacific (FOIP) led by Japan, has four key areas, namely maritime cooperation, connectivity, SDGs and economics.

Mr Tanaka said even though the cost of living in Thailand is rising, Japanese businessmen will not leave because Thailand is at the centre of the Mekong subregion, surrounded by Laos, Cambodia and Myanmar.

Currently, there are about 6,000 Japanese companies operating in Thailand, making it one of the largest business bases in Southeast Asia for Japan. Japanese firms have invested roughly 3.5 trillion baht in Thailand over the past 40 years, accounting for about 40% of cumulative foreign investment in the country, according to the Japanese Embassy in Thailand.

Asean focus

Besides Thailand, Mr Tanaka said Japan is looking to invest in other Asean countries over the next 50 years.

He said Japanese people have long been investing in Asean as the region has been of prime importance as its countries have served as manufacturing sites for Japanese firms.

However, Japan has started to realise that the region is not only important in terms of manufacturing to sustain its supply chain. Asean is also one of the largest consumers of Japanese products and culture.

“Asean’s GDP growth rate is likely to surpass Japan’s soon. So, it is a very attractive consumer market.

“We understand that Asean is where people consume Japanese products and culture. People in the region have always travelled to our country. So, Asean is very important for the Japanese market and our products, and it is very beneficial to Japan,” he said.

As the world has emphasised the importance of supply chains and had to deal with their disruption, Japan has regarded Asean as a long-lasting, reliable partner. Japan recognises Asean as the main pillar of its supply chains, he said.

What are AOIP and FOIP?

The AOIP and FOIP share common values, and further collaboration is in the pipeline to develop them.

Asean members have reached a consensus on dealing with external partners such as China, the European Union (EU), the United States and Japan through the AOIP. Japan will also engage with Asean with its new FOIP plan. Mr Tanaka said both the AOIP and the Japanese FOIP plan shared common concepts and objectives.

According to the Japanese Foreign Ministry website, the new plan for the FOIP was announced by Japanese Prime Minister Kishida Fumio on March 20, during his participation in the Indian Council of World Affairs (ICWA) summit.

The fundamental concept is to help the region value freedom, the rule of law, an area that is free from force or coercion, and one of prosperity. There are four pillars: peace and rules for prosperity, addressing challenges in an Indo-Pacific way, multi-layered connectivity, and boosting efforts for security in the sea and air.

Furthermore, Japan will respond robustly to the needs of each country, with the public and private sectors working in tandem.

Japan will also mobilise a total of more than US$75 million (2.73 billion baht) in public and private funds in the Indo-Pacific region by 2030 for infrastructure, where there is major demand from each country. Japan aims to grow together with other countries.

For the AOIP, it had been agreed by Asean members to engage with other powers to maintain Asean’s centrality, peace, freedom, and peace in Southeast Asia.

Under the AOIP, Asean members aimed to engage in maritime cooperation, connectivity, UN SDGs, economic and other possible areas for further cooperation, such as the digital economy, SMEs and MSMEs, cross-border digital data flows, climate change and risk reduction management, an ageing society, and innovation.

As the US and the EU also have their own Indo-Pacific strategies to engage with Asean, the Bangkok Post asked Mr Tanaka about the differences between the Japanese FOIP plan and other strategies for engaging with Asean. He said Japan and Western countries have a very long history with lots of ups and downs, and now both sides have arrived at the same relationship level as members of the G7.

“However, we Japanese believe deep in our minds that the way of thinking in Western countries is not the global standard. We also understand Asians and Asean people.

“So, we can be a coordinator between the standpoint of Asean and also the Western point of view. At the same time, it is necessary for Japan to understand Asean’s centrality.

“Therefore, we need to deepen our dialogue to set a new standard. At the same time, regarding energy and the green transition, we do not believe that there is only one solution, as offered by Western countries. We have to understand the current situation between Asean and Japan, and then we can come up with new solutions for this issue,” he added.

For further collaboration between Japan, Asean and Thailand, he suggested that they should engage more in three areas: energy transformation, digital transformation, and improvement of grassroots’ livelihoods.

“People’s livelihoods and their safety and security are very important. In societies in Asean, the age of populations varies, and like Thailand, they are becoming ageing societies. Japan became an ageing society ahead of Thailand.

“Therefore, we can share our expertise and experience with Thailand and collaborate regarding medical science and technology. Furthermore, we need to collaborate together more in building infrastructure as well as developing the capacity of people,” Mr Tanaka said.

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