High
on the agenda of former deputy premier Virabongse Ramangkura, who heads a new
government committee on reconstruction, is a visit to Tokyo to find ways to
rebuild the confidence of Japanese investors in the wake of Thailand's
devastating floods.
More than half of the 720 factories crippled
by the inundation of seven industrial estates north of Bangkok last month are
Japanese. The 450 plants affected include those run by big names such as
Toshiba, Honda, Minebea and Canon.
The flooding was a double blow for the
companies - coming soon after the March tsunami in Japan - and represented the
Japanese industry's worst disaster abroad. It also hamstrung other plants, with
shortages in parts and raw material disrupting global supply chains, especially
in the electronic and auto industries. The impact of the floods on Japanese
investors is significant, as they are a mainstay of the Thai economy.
Last year, Japanese firms accounted for 57 per
cent of foreign projects granted incentives by Thailand's Board of Investment.
With 1,350 members, the Bangkok branch of the Japanese Chamber of Commerce is
also its largest outside Japan.
The question now is whether Japanese
businesses will ever view Thailand in the same light. What Bangkok does will
determine the future of Japanese investment in the country - hence Mr
Virabongse's trip to Tokyo, which is likely to take place within weeks.
The March tsunami was an important push factor
for Japanese industry to boost its production outside the country. But
Thailand's flood disaster has been a rude awakening. In general, Japanese
investors have been unhappy with the way the disaster was managed.
Some say there was not enough warning at some
of the industrial estates, while others believe the Thai authorities underestimated
the scale of the flooding. Yet others have been dismayed by the inaccurate and
sometimes contradictory information coming from various government agencies.
"I would not be surprised if some small
and medium-sized enterprises are more careful about where they locate in
Thailand, or will consider other countries," observed the economic
minister in Japan's embassy in Bangkok, Mr Masato Otaka.
Mr Setsuo Iuchi, the president of the Japan
External Trade Organisation, has said that while he believed Japanese investors
were still confident in Thailand, "I could not say whether they will
relocate to other countries".
Insurance will be a huge issue for investors.
While preliminary estimates are flying around,
a true picture of the damage - and the insurance claims that will arise - will
emerge only when the industrial parks are pumped free of water, a process which
could take anywhere from two to four weeks.
Only one - Rojana in Ayutthaya province - has
begun pumping water out.
"Without proper insurance, no investor
will be interested in Thailand," said Mr Otaka. "The country will now
be regarded as flood-prone. Insurance companies may charge unrealistic
premiums, which will directly impact competitiveness."
Mr Virabongse is likely to hear about all
these issues when he meets government officials in Tokyo.
"Investors will want strong, determined
and concrete measures to prevent this kind of flooding in future," said Mr
Otaka. While the major companies will be able to get through the disaster, some
of the smaller and medium-sized firms are likely to have difficulties, he
added.
"It is the job of the Thai government to
invest in Ayutthaya and Pathum Thani to keep them going as a manufacturing
base," he said of the industrial estates.
The Thai government has already taken measures
to help Japanese and other investors hit by the flooding. It is readying soft
loan packages and financial help for companies which have had to pay workers
through two to four months of production halts. But clearly, Japanese - and
other - investors will want more in terms of covering some of the costs of the
damage and additional insurance schemes.
The real key to revival is a major overhaul of
the water management and drainage system - whatever the cost. That will also
require bringing on board local communities.
Mr Otaka said: "For Thailand, money is
not the real issue, it is a question of how to allocate and spend it. This
needs major political decisions backed up by public consensus."
Nirmal Ghosh
The Straits Times
Business & Investment Opportunities
YourVietnamExpert is a division of Saigon Business Corporation Pte Ltd, Incorporated in Singapore since 1994. As Your Business Companion, we propose a range of services in Consulting, Investment and Management, focusing three main economic sectors: International PR; Healthcare & Wellness;and Tourism & Hospitality. We also propose Higher Education, as a bridge between educational structures and industries, by supporting international programs. Sign up with twitter to get news updates with @SaigonBusinessC. Thanks.
No comments:
Post a Comment