Despite strong incentives from the Thai government to attract investors in the Eastern Economic Corridor (EEC), Japanese investors are still concerned about the impact of possible political risks on their investment in the megaproject, says Hiroki Mitsumata, president of Japan External Trade Organization (Jetro) Bangkok.
Most interested Japanese investors are concerned if there is a change in Thai politics, the country's investment policy will also change and their investment will be affected.
Mr Mitsumata said that instead of putting entire projects in EEC, Japanese investors may consider dividing them among many locations along with the EEC.
"We hope the incentives for investment in the EEC will be long term as we are worried if there is any movement in Thai politics that causes a big change in the administration, the investment policy will change too," he said.
Jetro Bangkok conducts a survey every six months on the business sentiment of Japanese investors in Thailand as well as potential investors.
"Over 50% of survey respondents said they will expand their investment in Thailand," said Mr Mitsumata referring to the latest survey.
Potential investors in Thailand found the EEC incentives quite attractive, he said.
Incentives for investment projects in the EEC include tax holidays of up to 13 years to support investment in targeted technologies, greater than the eight-year period for other businesses. Investors in general businesses will also be allowed to claim deductions for R&D expenses of 300%, up from 200%, if they invest more in technological or human resource development.
"Potential new investors that are taking a long time to decide may want to be sure there are no obstructions to their business plan in the long term," said Mr Mitsumata.
Thailand is the top destination in Asean for Japanese investors, who often use it as an industrial production base for exports. Thailand wants to upgrade its status to be a digital hub for the future production of IT.
The survey found Japanese investors are still committed to Thailand even as industry is growing in Myanmar, Vietnam, Cambodia and Laos. They would prefer to use Thailand as a centre to penetrate these markets, he said.
The EEC project is meant to accommodate the 10 targeted industries being promoted as clusters by the government. The government targets new applications this year to reach 600 billion baht thanks to incentives and the EEC project.
Hirunya Suchinai, secretary-general of the Board of Investment, said applications for investment from January to February exceeded 30 billion baht.
"Some 60-70% of the 30 billion baht is investment in the new targeted industries," she said.