Japanese small and medium-sized enterprises in various manufacturing and service sectors are looking at using Thailand as a base for expansion into other Asean markets.
Industry Minister Chakramon Phasukavanich said that under Japanese Prime Minister Shinzo Abe’s policy to help SMEs invest overseas, many companies wanted to expand into Thailand because of the two countries’ close relations and their view that Thailand is a centre for Asean linkage.
He spoke after a meeting with the head of Japan’s Ministry of Economy, Trade and Industry and the head of the Organisation for Small and Medium Enterprises and Regional Innovation, Japan (SMRJ) on late Wednesday.
“With the real intention of Japan SMEs to expand their businesses into Thailand, the ministry is targeting 500 Japan SMEs investing in Thailand this year,” Chakramon said.
To facilitate Japanese investment, the ministry will launch a programme to match Thai and Japanese SMEs as partners for starting businesses in Thailand.
Under Abe’s policy, the Japanese government wants at least 10,000 SMEs to begin operating abroad between 2014 and 2018 because of the country’s economic-growth slowdown and its rising number of elderly people.
By investing overseas, SMEs tap a bigger market while Asean – especially Thailand – is a target destination for new investment thanks to the region’s rising economic growth, its support infrastructure, and its supply chains and facilities to support business expansion.
Chakramon said more Japanese SMEs commencing operations in Thailand would help promote the growth of supply-chain industries and increase the value add in many products and services.
When asked if Thai businesses should be worried about competition from Japanese SMEs, he said they should not worry too much because Japanese companies wanted Thai partners. He said Japanese investment should also help transfer technology, know-how, and wisdom to Thais.
According to the Industry Ministry, in 2014 more than 10 Japanese SMEs in sectors such as food, pharmaceuticals and cosmetics opened in Thailand.
To help forge closer ties with Japan, Chakramon said Prime Minister General Prayut Chan-o-cha would lead a team to Japan early next month to discuss investment and trade cooperation as well as the Kingdom’s planned high-speed rail network.
He said the two countries would also discuss the possibility of revising the Japan-Thailand Economic Partnership Agreement. Japan wants Thailand to review tariffs on steel and luxury-car imports under the agreement, and Thailand has studied the economic impact of any tariff reductions.
Hiroshi Takada, chairman and chief executive officer of SMRJ, said hundreds of Japan SMEs viewed Thailand as a potential market and a springboard to serve business growth in other Asean countries under the upcoming full implementation of the Asean Economic Community this year.
He said the most popular segment was supply-chain manufacturing – from farming to services such as medical supplies and electronics.
Takada added that Japanese SMEs had a lot of confidence about investing in Thailand since many large Japanese enterprises are already in the country and can support supply-chain industries, while the Kingdom also has good basic infrastructure.
Japanese investors prompted the transfer of know-how and technology to Thais to form good partnerships, he said.
His only concern for Japanese SMEs centred on Thailand’s laws and regulations not being in English.