JTBF Mission to Thailand 2009 (2/23-2/27)

Visit to Japanese Chamber of Commerce, Bangkok (JCCB)

reported by Takashi Fuse (Representative of Bangkok Office, JTBF)

Succeeding a welcome message, Mr. Yamabe and Mr. Inoue introduced activity summary of 2008 in line with a distributed document titled "JCC Activities".

• Economy Status
  • Business trend survey of Fall 2008
    Diffusion index worsened over all business sectors. +37 in the first half dropped to ▲39　in the second half. Outlook for the first half of 2009 is further down to ▲59. Aggravation as such has never been experienced. Especially, car industry is serious （+55➝▲39➝▲77）. Even in comparatively positive sectors, food industry （＋13➝▲6➝▲19） and textile industry （+33➝▲7➝▲33） have also a similar trend. Minimum impact of the 2 sectors might have come from food security problems of China as well as low Baht rate. Retail industry is also serious （＋75➝▲46➝▲83）. Positive outlook was maintained till October 2008, which was suddenly deteriorated by the Airport closure and was accelerated by non-responsiveness of Government. Consumer spending trend remains uncertain, which, together with a limited number of the surveyed companies, contributed to the drastic aggravation of the survey result.
  • Car production
    It was 1,394　thousands in 2008. Export exceeded domestic sales in 2007. Outlook of 2009 is 1 to 1.1 millions, 30% less 2008. Decreased production as such has never been experienced in past 11 years. In consideration of 1.5 millions production capacity, the operating ratio　of medium and small manufacturers could possibly come down to 50%.
  • JCC's responses to the economy downturn
    ① To understand status and needs of member companies through work shops and committee meetings. ② Top 3 of JCC will join committee meetings and other meetings to exchange opinions. ③ Closer contact with Thai Government to prompt responses. ④ To provide timely information through seminars, etc.
    Will put a strong emphasis on understanding of needs of medium and small companies as well as closer contact with Thai Government.
  • Number of member companies of JCC
    Currently, it is 1,306. No report of withdrawal so far. While some companies might have to withdraw from now on, Japanese companies entering Thailand is steadily increasing. In fact, we have met many companies visiting JCC in January and February this year.
• Contact with Thai Government
  • Opinion exchange with Thai Government
    Last year, we had many opportunities of exchanging opinions due to frequent reshuffling of cabinet members (Prime Minister, Minister of Industry, Minister of Commerce, Minister of Labor, Minister of Treasury, Secretary General of BOI, et al.)
  • Industrial policy as requested to Thai Government
    ① Urgent economic policy ② Infrastructure improvement ③ Open inflow of foreign capital as well as promotion of trading policy ④ Leadership among ASEAN countries
    We are also requesting to work with FTI to shore up slumping car industry. Thai Government seems to have started to consider tax benefit for purchasing of the car.
• Mr. Yamabe's comments released on occasion of political instabilities of Thailand
  • September 2nd 2008： Released JCC's comment on declaration of a state of emergency at Bangkok.
  • December 1st 2008: Released JCC's comment on closure of Suvarnabhumi airport.
• Promotion of JTEPA
  Major activities were as follows.
  ① Execution of JTEPA Use Survey ② Establishment of JTEPA committee jointly with FTI ③ Held a sub-committee of Business Environment
  
  Made a proposal of improvement because JTEPA benefits are not explicit enough and that relationship with BOI benefits is neither explicit.
  
  The first sub-committee of Business Environment was held in Bangkok in September 2008, to which JCC also attended. It has not been held in Japan yet because specific plans are not visible how to promote penetration of Thai goods into Japanese market. The public sector has to take a role to lead the private sector.
• Other Activities
  • An approach to ASEAN head office
    A joint meeting among ASEAN, JETRO and JCC is scheduled in June in Jakarta. Dr. Surin Pitsuwan, Secretary General of ASEAN, has 5 years term. JCC intends to deepen contact with Dr. Surin during his term in office, while it is not visible yet how he goes with consolidation of ASEAN countries
  • Survey of GMS region
    Made survey trips: Chaingrai-Kunming (August 2008), East-West Economic Corridor (December 2008). Inadequate road maintenance in Laos remains exposed. Almost had an accident of falling down to valley during Chiangrai-Kunming survey.
  • A visit to India by JCC Board (members)
    Indian market has a growth potential. EPA between ASEAN and India is expected to be closed. EPA between India and Thailand is no more advanced from the early-harvest stage. Export of car parts from Thailand to India is expected to grow.
  • Opening of Japanese school in Sriracha
    JCC contributed 4 billions Baht. First year, primary and secondary school children count 110. 10 teachers move from Japanese school in Bangkok and 6 come from Japan. Population of Japanese school in Bangkok is 2,400. Japanese school in Shanghai has more population but consists of 2 schools. If compared in single school base, Bangkok school is said to be the largest.
• Other Questions and Answers
  • Logistics impact due to the airport closure
    There was no case of factory shutdown, as to industrial products, owing to a few days buffer stock of materials. However, in case of import of fresh vegetables from Thailand, substantial amount was wasted.
  • Foreign business act
    Under-the-ground discussions seem to continue in regard to revising the act, namely relaxation of list 3 (being requested by Foreign Chambers of Commerce). Both positive and negative (nationalistic) movements are observed. At least, the act will not go worse. JCC has withdrawn a formal request of revising the act because a practical definition of the management authority is a sensitive matter.
  • Movement towards protectionism (non-tariff barrier)
    There certainly is a movement to tighten application of Thai Industrial Standard (TIS). Keeping conformity with TIS is not an easy matter for some sorts of production. Steel production will be one of those that will suffer from serious impacts.
  • Financial problems
    Due to credit crunch and/or credit withdrawal of local banks, some medium and small companies have started to fall into cash-flow problems. March to May this year will be the serious period. Mr. Kitayama commented that, in his interview with Ministry of Finance and Bank of Thailand, ①drastic fiscal actions to stimulate economy, ②front loading of the implementation of the plans of the national enterprises with the necessary funds raised from Asian Development Bank, etc. were under discussion.
  • Returning of expatriate families to Japan due to bird influenza
    Panasonic's recent announcement of prompting families' return to Japan was a shocking news to Japanese society. In fact, each company is investigating countermeasures and families' return is just one of alternatives. Their conclusion is to take a watch-and-see attitude because there is no fact of increased risks. Panasonic's announcement was probably overstated in mass-media report.