Half Of Japanese Firms Here Considering Thai Exit After Aec Launch: Poll

[Notstupid30]

Thailand will need to ramp up its performance in several areas seen as obstacles to doing business by Japanese corporations in the Kingdom, or else face a decline in investment and even relocations, particularly after the implementation of the Asean Economic Community in 2015.

These are the implications of a Japan External Trade Organisation (Jetro) survey, which showed that some Japanese firms are considering the possibility of moving their production bases to Myanmar and Indonesia to maximise the potential of the AEC. This is despite the fact that the corporations demonstrated improved business sentiment in the first half of 2012, following a recovery in domestic sales and exports after the floods disrupted supply chains last year.

The survey, conducted in June and covering 374 corporations, showed that while 49 per cent said there would be no change in production bases after the AEC launched, 29 per cent saw a possibility of new bases in Myanmar and 21 per cent in Indonesia. Of the respondents, 232 corporations are in the manufacturing sector.

They also complained of a lack of human resources. For those in the manufacturing sector, engineers are the most sought after by Japanese corporations (53 per cent), followed by workers (40 per cent) and managers (37 per cent). Those in the non-manufacturing sector face a major shortage of managers (45 per cent), followed by administrative/sales staff (30 per cent) and engineers (28 per cent).

While promotions were one response (55 per cent) to the lack of human resources, many Japanese firms also had to raise pay for all employees (42 per cent), enhance welfare packages (37 per cent) and improve investment efficiency (27 per cent).

After last year's flood, 70 per cent of respondents said business performance improved in the first half, and 83 per cent of firms anticipated before-tax profit in 2012. Despite the floods, 82 per cent say they would continue doing business in their existing premises, while 18 per cent showed the urge to move to the East of Thailand and 15 per cent in the manufacturing sector responded positively to the idea of a "partial transfer to other countries".

What they want most from the Thai government is implementation of a flood-control plan (82 per cent), followed by speedy and accurate information provision in English (57 per cent) and establishment of a reinsurance system (37 per cent). Thirty-five per cent of manufacturers who suffered damages requested early refund of import duties.

Flood risks aside, the firms highlighted lack of human resources as one of the key obstacles in corporate management (44 per cent), trailing labour costs (56 per cent) and intensified competition by competitors (54 per cent).

They also urged the Thai government to ensure development and implementation of Customs-related systems (46 per cent) followed by relaxation of the Foreign Business Act (31 per cent) and improvement of education and human resource development (27 per cent).

In the survey, 65 per cent of respondents witnessed negative impacts from the wage increase in April and lack of labour force, while the rest witnessed no change or positive impacts on profits. To cope with the wage hike, 44 per cent of respondents kept the increase to the minimum level. Forty-eight per cent aimed for improvement in investment efficiency, while 29 per cent restricted new employment.

As the wage would be hiked to Bt300 nationwide in 2013, 77 per cent of the respondents expected to see an increase in labour costs against total costs. Sixty-six per cent foresaw a decrease in profit and 13 per cent foresaw an increase in prices. Most of them - 62 per cent - planned a review of their remuneration system and restriction of employment (27 per cent). They also expected an outflow of employees.

Source http://www.nationmultimedia.com/business/Half-of-Japanese-firms-here-considering-Thai-exit--30187417.html

OMG this is going to hurt Thailand a lot this ..

[geriatrickid]

Oh yes, the Japanese are going to make a beeline for Myanmar. The logistics system offered will satisfy Japanese needs. As for Indonesia, it is just as frustrating as Thailand with the exception that the Japanese business community can't have as much fun.

[Pib]

"Considering" is always in a business' thought process; but considering and actually implementing a major change like moving to another country is miles apart. And what business does like wage increases?! Just another "what if" survey. But I do think many businesses are indeed afraid of a flooding reoccurance and it's now a major, major factor in their location decision process.

[jerrysteve]

They want both ACCURATE information, and they want it in ENGLISH I wouldn't hold their breath too long for those two items.

r

There isn't any doubt that the past flooding cut into every businesses bottom line.

More importantly is the increase in qualified human resouces including some tax reform.

A relaxation of a 31% foreign business tax for doing business here is quite high.

The Japanese definetly have some extremely valid points.

[yoshiwara]

The Japanese have discovered that putting serious financial eggs into the Thai basket has its downside. They will be making plans to diversify into other areas and Thailland will lose some new investment, but the Japanese will not be upping sticks on their current investments. While this government's energies are fixated on the return of Thaksin rather than focussing on economic issues including FDI, other countries will benefit from the opportunity to step in assuming they don't screw up as well in their own individual ways.