apanese upbeat on business rebound this year

Although Japanese corporations in Thailand believe that business will rebound in the second half of this year, they are urging the Thai government to speedily implement its flood control and management plan and supply accurate information to boost their confidence in making further investments here.

The Japanese Chamber of Commerce surveyed the business sentiment of its 1,345 Bangkok members, and 366 firms both in manufacturing and non-manufacturing answered the questionnaire between December 16 and January 15.

Of them, 70 per cent expect to see business improving in the first half and recovering in the second half after last year's flood crisis.

Of the respondents, 19 per cent reported direct damage from the floods - mostly in the electric and electronic machinery industry - and 78 per cent indirect damage.

Since December, 25 per cent have already reopened, 21 per cent will resume operations in April or May and the rest will be back on track in the second half.

Setsuo Iuchi, chairman of the JCC-Economic Survey at the Japan External Trade Organisation, said yesterday that 295 firms - 83 per cent - of participants have requested speedy formulation of the flood-control plan, while 242 - 68 per cent - hope for dissemination of speedy and accurate information under a single command from Prime Minister Yingluck Shinawatra's administration.

The setting up of a reinsurance system was also among the priority responses sought from the Thai government, said 113 companies or 32 per cent.

Japanese businesses need more confidence before making decisions on fresh investment, expansion or even restarting operations at their existing plants here.

"Although those firms want to stay in Thailand, they are also keen on spreading their risk outside the country," he said.

On the question of potential markets in the future, Japan was the biggest winner with 46 per cent, followed by Indonesia with 44 per cent, India with 29 per cent and Vietnam with 28 per cent.

For example, Indonesia's domestic market offers a huge opportunity for foreign investors, particularly for motorcycle makers, as there are about 240 million consumers.

Japanese firms were eyeing Burma as the sixth potential market as it was rich in natural resources and had 50 million consumers. But at this time Burma is seen as suitable for exports.

"Once its political system is completely reformed and the economy is relaxed for foreign investors, it might be good for manufacturing," he said.

However, 85 per cent of flood-hit companies will keep their production base at the same place while 8 per cent have decided to relocate to other countries. Among those thinking about moving out, electric and electronic companies have a high possibility.

On the government's policy to hike the minimum wage, 63 per cent of manufacturers believe that it would have a significant impact on their business in terms of production costs while 25 per cent saw the impact as controllable.

To cope with any possible effects, half of all firms will improve productivity through automation, 47 per cent will control headcount and others will raise prices and cut other costs.

More than half of respondents are concerned about intensified competition, the lack of human resources at the manager level and an increase in total labour costs.

Asked about the ramifications of the Asean Economic Community (AEC), 38 per cent said they believe that the AEC will increase their business opportunities but 33 per cent said they did not know about the AEC and 28 per cent saw no change if the AEC is implemented.

However, 68 per cent of all firms in the survey want simple and speedy customs procedures from the government under the AEC, followed by 65 per cent who want to see mutual elimination of tariffs and 34 per cent want to see freer movement of the workforce.

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