Japanese investors see a brighter economic outlook for Thailand's economy this half, boosted by growing exports, the global economic recovery and massive spending on government infrastructure projects, according to the latest Japanese Chamber of Commerce (JCC) survey.
But the investors want the government to continue with its human development policy to meet changing workforce demand from foreign companies, which are mostly switching to high-tech industries, as well as invest further in long-term flood prevention measures, the survey said.
JCC's diffusion index rose to 26 points in the latest survey, conducted from May 22 to June 14, said Hiroki Mitsumata, director of Economic Research Group at the Japan External Trade Organization (Jetro).
"That was highest in four years, reflecting that most Japanese companies in Thailand expect better economic performance this half," said Mr Mitsumata.
He said the survey covered 1,735 Japanese companies in Bangkok. Of the total, 594 companies or around 34.2% responded to the questionnaire.
Although respondents expect a better economic outlook for this half, they said there are some risks lying ahead, which the Thai government will need to tackle this year. One major concern is the country's flood prevention measures, especially after many Japanese factories were hit by the severe flooding in 2011.
"We understand that the Thai government is working hard to tackle the flood [prevention] problem and we encourage Thailand to push on, as it is worth investing in to support the Thai economy in the long run," said Mr Mitsumata.
But he said the JCC did not have any concerns about the recent flooding that has hit Thailand's northeastern Sakon Nakhon province and surrounding areas as there are no Japanese companies investing there.
For long-term investment prospects, JCC said all Japanese investors still see Thailand as a good production base to serve Asean business, and thus have no plans to relocate.
But the JCC said some labour intensive investment could shift to Vietnam, where costs are much lower. Major investment involving high-technology and big supply chains with more developed logistics systems will remain in Thailand, particularly in the Eastern Economic Corridor (EEC).
Tsuyoshi Inoue, the JCC's executive managing director, said many Japanese companies are interested in investing and expanding business in the EEC, but are concerned about a lack of skilled labour. The JCC is encouraging the Thai government to focus on creating a better-educated workforce matching demand from foreign investors.
The JCC has also asked the government to focus on eliminating redundancies in the Thai tax system that affects new foreign investors, deterring them from funding new projects in the country. Mr Inoue cited the case of NMB-Minebea Thai Ltd, a leading global supplier of high-precision mechanical and electronic components, that had shaken investor confidence.