EARTH Thailand

Clear framework essential, says Jetro

The Nation 06 February 2010 | Petchanet Pratruangkrai 

Japanese investors have called for the Thai government to announce a clear road map for solving the Map Ta Phut problem as soon as possible.

They say doing so would ensure investment remained in the Kingdom and that companies affected would have to carry a financial burden from the episode for only six months.

Map Ta Phut is the most harmful negative factor affecting Japanese investors' confidence, worse even than the domestic political disorder or Bangkok's airport closures. The Thai government must clearly delineate a path for solving the problem, Munenori Yamada, president of the Bangkok office of the Japan External Trade Organisation (Jetro), said yesterday.

A joint survey by the Japanese Chamber of Commerce and Jetro, officially released yesterday, reported 33 per cent of Japanese firms in Thailand had been adversely affected by the Map Ta Phut situation.

Despite the survey having been conducted early last November, when the Map Ta Phut problems were just being raised, many Japanese firms expressed their concern. That indicates the heavy weight the dilemma carries on Japanese businesses here, said Yamada.

Out of 395 respondents, 20 firms in the manufacturing sector and 19 in other sectors said they had been directly affected by the Map Ta Phut shutdowns, 148 firms had been indirectly affected, and seven said their investment plans could be reviewed, due to the possibility of default.

Yamada said companies in the Map Ta Phut area now faced credit problems, because banks or parent companies could not easily approve loans for those projects under suspension.

"It's difficult to predict how long the companies can handle the problem. The suspended projects are costly. Capital registration for each firm decreases each day," said Yamada.

To boost Japanese investors' confidence, Jetro has called for the Thai government to follow three recommendations.

First, it should announce a clear road map for solving the problem. Even though Japanese and other foreign investors have been directly affected by the court injunction, no government agency or high-level official directly responsible for the problem has bothered to explain the situation to any of the companies.

Yamada said the affected firms could use such a framework in requesting loans from banks or parent companies, because this would be a clear indication of what the government was going to do to solve the problem.

Second, relevant agencies should accelerate their interpretation of Article 67 (2) of the Constitution, particularly which types of businesses and industries will be categorised under the article. Unrelated businesses have been indirectly affected by the lack of clarity regarding this, he said.

Finally, the government should issue clear administrative, legislative and juridical authority to relevant bodies in these three areas for solving the Map Ta Phut problem.

Asked if firms in Map Ta Phut may file court petitions stemming from the injunction, Yamada said that depended on how much money each believed it might lose.

Moreover, rising political temperatures have deteriorated investors' confidence even further. Yamada said existing firms familiar with the domestic political situation would not move their operations to another country but that newcomers might not consider Thailand a favourable investment destination.

The survey also showed local Japanese firms remained reserved in their outlook for economic growth this year, due to concerns over rising competitiveness, particularly by Chinese firms and the flooding of Chinese goods into the Kingdom.

Most respondents said the Thai economy would not grow significantly in the first half of the year and that competition would be severe.

However, they foresee future export opportunities under the Asean Free Trade Agreement and other FTAs, particularly with India, China, Japan and Middle East countries.