20 companies plan to invest
Early benefits are expected from Jtepa
At least 20 Japanese companies are planning new and major investments in Thailand, thanks to the recently signed Japan-Thailand Economic Partnership Agreement (Jtepa) and the trade and investment benefits it provides, says a senior Industry Ministry official.
Pramote Witthayasuk, director-general of the ministry's Industrial Promotion Depart-ment, said the companies were expected to spend a combined Bt40 billion to establish businesses in Thailand.
Most of them are automobile and auto-parts manufacturers. Representatives from the companies will visit Thailand next month in search of suitable Thai partners, and the government is planning to "match" them with Thai small- and medium-sized enterprises in Bangkok.
Despite concerns over negative impacts from the free-trade agreement (FTA) on Thailand's car industry, Pramote said Jtepa would in fact create benefits for the industry.
Japanese auto-makers regard Thailand as a country with high production efficiency and high capability in producing replacement parts. They feel comfortable transferring high technology to Thailand's skilled workers, he said.
The companies will focus on replacement-equipment manufacturing rather than the past practice of original-equipment manufacturing, due mainly to high demand for replacement parts in the world market.
As well as these companies, trade and investment privileges provided in the bilateral FTA will also draw more Japanese investors to Thailand, Pramote said.
Thailand's Board of Investment says Japan is the Kingdom's biggest investor, accounting for 43 per cent of its total foreign direct investment. More than 1,300 Japanese firms are operating in Thailand, employing about 50,000 Thai workers.
In the first two months of this year, foreign direct investment in Thailand grew 77 per cent to Bt75.3 billion, compared with Bt42 billion in the same period last year. In both periods, Japanese investors accounted for 60 per cent of total investment.
Export Promotion Department deputy director-general Kunya-phan Raengkhum said most industries should enjoy benefits from Jtepa as soon as it takes effect. The Japanese government will first ratify it, after which it is expected to be implemented later this year.
Jtepa will increase opportunities for Thai products to enter markets, in both Japan and third countries. In particular, Thailand's agricultural, textile and jewellery exports to Japan can expect to grow 30 per cent, he said.
The pact will bring tariffs for these goods down to zero within the first year. Currently, import tariffs on garments to Japan are 2.7-13.4 per cent; on food and frozen food products, 5 per cent; gems and jewellery, 2.7-10 per cent; and petroleum and plastics, 2.5-21.3 per cent.
Kunyaphan added that tourist numbers from Japan were expected to increase 20 per cent. At present, 1.2 million Japanese tourists visit Thailand each year.