As the Thai economy continues to evolve, so too is investment coming from Japan, which sees Thailand as the ideal gateway to the growing ASEAN region
Under the Thailand 4.0 plan, Thailand aims to move to a digital and knowledge-based economy driven by services, innovation, technology and creativity. Amongst the core industries of the plan are next-generation cars, biotechnology and agriculture, smart electronics, digital, biofuels, logistics and aviation; health and wellness tourism, robotics and medical services. As a world leader in technology and innovation, and as Thailand’s largest investment partner, Japan will play a crucial role in the success of Thailand 4.0 and the development of many of these industries.
“Japanese investment is an investment of quality. Japan not only invests to produce here, but they also transfer knowledge and technology. Japanese companies are very keen in terms of technology transfer, providing skills and being ahead in terms of innovation and quality,” says Thailand’s Minister of Commerce, Sontirat Sontijirawong.
Thailand is already a large manufacturing base for Japan’s automotive companies, who are firmly supporting the development of the next-generation automotive industry. Thailand is set to create an ecosystem for electric vehicles (EVs), and Japanese companies such as Nissan, Toyota and FOMM Corp plan to build large EV manufacturing bases in the country to meet growing domestic and regional demand. Demand for robotics in Thailand is also surging, particularly in the automotive industry, and robotics now represents 25 percent of Japan's automotive manufacturing output in Thailand.
Meanwhile, Mitsubishi Chemical Corporation is investing in biochemical technology through PTTMCC, a joint venture company it holds with Thailand’s PTT Global Chemical that is developing bio-degradable plastics. The company’s goal is to develop 100-percent, bio-based polymers in the near future, which could help to revolutionize the plastics industry.
Thailand’s flagship project is the Eastern Economic Corridor (EEC). Over five years $43 billion will be invested to turn the EEC into a hub for the 10 priority industries under Thailand 4.0. Japan has been the largest foreign investor in the plan to date, investing more than $1.1 billion. Last year, Japan’s Ministry of Economy, Trade and Industry signed an MoU that will focus on developing the 10 targeted industries in the EEC.
“Many of our policies like Thailand 4.0 or the Eastern Economic Corridor have been strongly supported by the Japanese. And we have welcomed not only big companies, but also Japanese SMEs,” says Mr. Sontijirawong.
The number of Japanese SMEs investing in Thailand has grown considerably, as they look to seize opportunities in the growing ASEAN region and its market of 630 million, in order to offset the impact of dwindling domestic demand in Japan. Financial services, logistics, and high-technology services are among the popular businesses for Japanese SMEs in Thailand.
“Thailand’s strongest advantage is that we are at the center of Asia. So it’s geographically strategic for Japan to relocate and expand their investment here. If they have their manufacturing base in Thailand and set up shop for example in the EEC area, not only do they have access to our domestic market, but to all of the ASEAN,” says Mr. Sontijirawong.
“One thing that the Japanese admire is that they can find a quality workforce in Thailand. Our people are educated people and are prepared to work with high technological advancements. We cannot be compared to our neighboring countries, as we are moving to an added-value-driven economy, so we compliment perfectly Japan’s strategies of using Thailand as a hub. We can exchange and transform technology.”
The Ministry of Commerce has a number of agencies and departments under its control, including the Department of International Trade Promotion (DITP), which is overseen by Director-General, Mrs. Chantira Jimreivat Vivatrat.
Acting as a one-stop shop for investors, the DITP aims to increase Thailand’s trade competitiveness to become one of the top five countries in Asia by 2021. It serves as an important link for Japanese investors looking to invest in Thailand.
“The Department of International Trade Promotion can support and provide information to any Japanese company willing to trade or set up shop in Thailand. DITP can help Japanese companies with advisory services and provide match-making links between foreign and local companies,” says the minister.