Japan may soon prefer to invest in Vietnam and Indonesia, because they have a larger working-age population, while Thailand is transitioning to an ageing society, according to Kozo To, President of the Japanese Chamber of Commerce in Bangkok.
With the working population in Thailand declining, and if Thailand cannot address the situation, To told Thai PBS World that Japanese businesses are likely to focus their investments elsewhere.
“Thailand is transitioning into an ageing society and its population is beginning to decline. As a result, when Japanese companies consider new investment destinations, they often look to Vietnam, Indonesia or India, where the market size is larger and the younger population is more abundant,” he noted.
Krungsri Research Centre has stated that Thailand will soon be categorised as a super aged society, because the proportion of the population aged 65 and over is expected to exceed 20% in 2029.
Another pressing issue is Thailand’s lack of skilled talent to meet new investors’ requirements.
To attract more high-value supply chains to Thailand, he suggested that the government needs to strengthen human capacity building and promote industry-academia collaboration.
He also pointed out that simplifying regulations and reducing restrictions for foreign businesses are crucial, proposing that a one-stop service is needed, where companies can coordinate with relevant ministries, receive comprehensive information and provide multi-ministerial coordination.
SMEs need a fair competitive environment
Meanwhile, the President and head of finance and accounting at LH Financial Group (LHFG), Waravoot Tocharoentanapol, stressed that a proper environment for small and medium-sized enterprises in Thailand is indispensable in maintaining Thailand’s competitiveness, as SMEs represent over 70% of Thai businesses.
Under current Thai law, foreign entities can only hold 49% of a company’s equity, with the remainder held by Thai individuals or companies. Waravoot stated that Thai SMEs are competing in an environment that is not entirely fair.
“Nowadays, Thai SMEs are competing on an uneven playing field. The government may have to step in, by enacting appropriate legislation or enforcing levies to establish a fair environment for Thai SMEs,” he stressed.
To drive the economy, he also emphasised the need for swift solutions to address excessive household debt, as weak domestic purchasing power will continue to dampen growth in the local market.
The Joint Standing Committee for Commerce, Industry and Banking reports that the household debt-to-GDP ratio reached 104% in the fourth quarter of 2024.
Waravoot also raised concerns over the spectre of high tariffs against products and services from Thailand, which has historically operated at a trade surplus against the United States, adding that the manufacturing sector needs to monitor this closely.
“Businesses, including electronics and auto part (manufacturers), need to monitor prudently. LHFG also examines sectors which could be impacted by greater competition due to increased imports, because of the tariffs that U.S. may impose on other countries."
"Based on this, we are monitoring closely for our stakeholders, in order to identify whether any additional support may be necessary,” he concluded.
By Franc Han Shih, Thai PBS World
Full interview on The Wave - Kozo To, President of the Japanese Chamber of Commerce in Bangkok
Full interview on The Wave - Waravoot Tocharoentanapol, President and Head of the Finance and Accounting Group at LHFG
