Japanese firms in Thailand see post-election stability boosting investment
Japanese business leaders in Thailand expect a more stable administration to strengthen confidence, improve the investment climate in the second half of the year, and support the next phase of economic recovery.
- Japanese investors in Thailand express confidence that the recent election will lead to greater political stability, which they see as a key factor for boosting the economy and future investment.
- Despite a prolonged government formation process, Japanese firms remain optimistic, anticipating that a more stable administration will improve the investment environment in the second half of the year.
- Thailand's appeal is reinforced by strong fundamentals like infrastructure, logistics, and a long-established Japanese business network, which are expected to be enhanced by the anticipated political clarity.
- While Japan has diversified investments to other ASEAN countries, clear economic policies and stability from the new government are expected to attract a new wave of investment back to Thailand.
A survey of executives at Japanese companies in Thailand points to positive confidence in the country’s political direction after the election, even though the certification process and government formation will still take time.
Most investors believe clearer stability will be a key tailwind for the next phase of economic recovery.
Amid Thailand’s political climate, with the formation of a new government still awaiting clarity, Japanese investors, Thailand’s largest foreign investor group, continue to show confidence in stability in the period ahead.
Kalin Sarasin, President of the Thai-Japanese Association, told “Thansettakij” that, based on conversations with most Japanese operators, they are pleased to see major parties joining the government and believe this administration will be more stable than the previous one, even if the timeline for forming the government is not being rushed.
Japanese investors understand Thailand’s political context well and see that forming a government may take time, but it has not caused alarm.
They believe Thailand will keep moving forward and remain on track, while expecting political clarity to help strengthen the investment climate in the second half of the year.
From a survey of CEOs at Japanese companies in Thailand conducted late last year, compared with views at the start of this year, most assess that the economic outlook will improve after the election.
Most expect the economy to improve from early this year onwards, even though they did not specify whether growth would clearly reach the 3% mark, as the Bhumjaithai Party, leader of the government-formation camp, had previously stated.
The findings nonetheless reflect confidence in Thailand’s regional opportunities.
“In Japanese investors’ view, Thailand still has more opportunities than many neighbouring countries, thanks to strong fundamentals, comprehensive infrastructure, logistics systems, and a Japanese business network that has been rooted in Thailand for more than 30–40 years.
This network supports value-chain expansion (Value Chain), especially in the automotive and electronics industries,” Kalin said.
Another advantage is the quality of life and readiness to support expatriate executives, hospitality, convenient living, safety, and high-quality international schools that meet global standards, making it possible for families to relocate together.
Thailand is also a regional aviation hub, offering easy connectivity and making it a suitable base for managing ASEAN businesses.
Kalin also compared Japanese investment in Thailand with Vietnam and Indonesia, noting that, over the past 10–20 years, Japan has used Thailand as its main production base, particularly in the automotive sector, turning the country into the “Detroit of Southeast Asia”.
Over the past 4–5 years, however, a meaningful portion of new investment has flowed to Vietnam, and some to Indonesia, reflecting a strategy of risk diversification and an effort to tap into new markets.
Today, Vietnam serves as an export production base for many Japanese industries, as well as for other multinationals, including electronics, electrical appliances, and food.
Indonesia, meanwhile, focuses on production for domestic sales, given its population of more than 300 million and a large internal market with rising purchasing power.
Even so, Japanese investors still view Thailand as a good country, it doesn’t renege on commitments, and they expect investment to increase again in the future.
In the electric-vehicle (EV) industry, Chinese brands are expanding aggressively in Thailand, while Japanese manufacturers are still sticking mainly to a hybrid strategy.
Kalin said, “Japanese hybrid cars in Thailand are selling extremely well; sales have not dropped at all.”
Japan is not pushing a full-scale EV play as quickly as China, leaving Thailand’s market in a transition period shaped by technological shifts and policy-driven competition.
One issue Japanese investors continue to watch is corruption.
Although the survey did not explicitly cite Thailand’s Corruption Perceptions Index (CPI) decline, it remains an operational-level worry, concerns about having to pay facilitation money along the way.
Overall, however, Japanese investor confidence in Thailand remains high.
Overall, this suggests Japan has not pulled back from Thailand, even as it has diversified investment towards Vietnam and Indonesia in recent years.
Political stability and clear economic policy will be key variables in attracting a new round of investment, especially in the new-energy automotive era and advanced-technology supply chains.
If the new government can ensure policy continuity and raise transparency, Thailand still has the potential to remain Japan’s main investment base in ASEAN.
