Japan currently represents the largest pool of Thailand’s foreign investors, but this might not be true for long. Japanese companies
A flooded Canon facility in Ayutthaya. (Photo by MakaniMike via Creative Commons)
2011 has already been a rough year for Japan, between the devastation caused by the March earthquake and the accompanying tsunami that killed thousands, damaged a nuclear reactor, and laid waste to entire communities in the northern part of the country. The massive flooding in Thailand, which began hitting a number of Japanese industrial estates north of Bangkok in October, have in turn caused a wave of devastation to sweep through Japan’s foreign investment sector.
The losses incurred have been dramatic. Seven industrial parks in Ayutthaya Province were flooded with floodwaters up to three meters deep, halting production as and impacting an estimated 450 Japanese companies. Those hit include automobile makers Honda and Mitsubishi, and camera company Nikon. Japanese corporate heavyweight Pioneer Corp. was among the many companies that were forced to withdraw profit forecasts for the year, after the floods devastated the company’s holdings and profits.
Thailand has accounted for roughly 3.2 percent ofJapan’s foreign investment since 2009, but this may be set to change – new in vestments inThailanddropped to 30 in October and 1 in November, after stayingat an average of 50 during previous months.
It’s no surprise that Japanese investors might be a bit skittish about exposing any further resources to natural disasters. In spite of valient efforts by many government and NGO officials, some have been left with an impression of mismanagement and poor preparations made for Thailand’s flood disaster. Many Japanese companies may decide to exit Thailand in favor of more secure facilities.
(Photo by MakaniMike via Creative Commons)
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I can understand Japans concerns with Thailand especially after being exposed to a horrific natural disaster in their own country. I think it will be important to reevaluate business in Thailand. I think it may just be a matter of large companies having a flood plan in place that will negate any harmful effects in the future.
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