Broader incentives, improved transport links could attract more Japanese firms

Meanwhile, business sentiment among Japanese corporations in Thailand deteriorated in the first half of the year, but increased "substantially" in respect of the second half due to expectations of a recovery in consumption based on economic stimulus measures.

The latest in the chamber’s semi-annual surveys, conducted between May 25 and June 15 among 415 Japanese companies, found that only 18 per cent (70 firms) of those that answered the questionnaire are interested in doing business in the six SEZs scheduled to be established by the government in the coming years, while 29 per cent said they "do not have adequate details" about the sites, and 56 per cent said they are "not interested".

"There are already more than 4,500 Japanese companies operating in Thailand, so interest in investment in newly set up special economic zones might still be low at the moment. It could be because of the large number of companies already here," said Masayasu Hosumi, chairman of the economic research committee at the Japanese Chamber of Commerce in Bangkok.

Nine Japanese firms in the manufacturing sector – mostly from the textile and chemical industries – are interested in the SEZs as factory sites, while seven from the non-manufacturing sector, mainly from the trading and civil engineering sectors, shared a similar interest.

Although the SEZ in Mae Sot, which is set to be open to investment before the end of this year, is the most prepared in terms of infrastructure and overall demand, the survey revealed that the special zone in Kanchanaburi had grabbed the greatest attention from Japanese firms.

Around 59 per cent of the Japanese firms with an interest in the SEZs want to invest in the Kanchanaburi zone, while 42 per cent want to invest in Sa Kaeo, 24 per cent in Tak and 24 in Nong Khai.

The survey showed that 32 per cent of the firms currently not interested in the SEZs wanted to see an expansion of activities eligible for BoI incentives in the zones.

By industry, 30 per cent of the manufacturing sector wants to see more development of industrial estates, and 29 per cent of non-manufacturers want to see improved customs procedures in the SEZs.

Meanwhile, 41 per cent of the Japanese respondents said their business performance in Thailand was "improving", which represents an increase of 13 basis points on the diffusion index (DI), whereas the percentage of firms reporting that their performance was "deteriorating" fell by 11 points.

"The overall DI is expected to increase by 24 points to 20 per cent from the previous period, when it was minus 4 per cent, while stability in the political situation, promotion of economic measures and improvement in customs-related systems are what Japanese firms are requesting from the Thai government, according to the survey," Hosumi said.

"More improvement in customs means more transparency and more predictability, while implementation of the [customs] system is also important. And another concern for Japanese firms is increased competition between themselves in Thailand," he added.