The Various Dimensions of Thailand-Japan Economic Partnership His Excellency Virasakdi Futrakul the Ambassador of Thailand to Japan
Outlines 1. Japan Thailand bilateral relations 2. Japan Mekong sub-region 3. Japan ASEAN 4. Opportunities to enhance Thailand Japan relations
1. Japan Thailand bilateral relations
Highlights (1) 125 th Anniversary of diplomatic relations in 2012 600 years of historical ties Close relations in every aspect and level: Imperial Family and Royal Family Politics Economics/Business sectors People-to-People
Highlights (2) Japan and Thailand are strategic partners in strengthening bilateral, regional, and international issues in fields of economy, society, development, security, and political cooperation. Japan is Thailand s largest trade partner and investor for more than a decade Japanese community in Thailand is the 2nd largest community in the world in term of size after China (46,000 businessmen and 7,000 Japanese firms)
Trade between Japan Thailand Trade in 2011 : Japan is Thailand s largest trade partner Total Trade = 62 billion US$ (+ 8.38% from 2010) Trade between Japan and Thailand accounted for 14.5 % of Thailand s total trades with the world. Export to Japan = 22 billion US$ (+ 12.4% from 2010) Japan is the 2 nd largest Thailand s export market after China Import from Japan = 40 billion US$ (+ 6.2% from 2010) Japan is Thailand s largest import market Thailand s trade deficit with Japan = 18 billion US$
Trade between Japan Thailand (2) JTEPA (Japan-Thailand Economic Partnership Agreement) Entered into force in November 2008 Instrument for strengthening economic relationship and facilitating the economic cooperation between two nations. Cover 19 fields of economic partnership and cooperation such as trade in goods, service, custom procedure, rules of origin, investment, government procurement, ICT, agriculture, food safety, local-to-local linkage, SME, tourism, enhancement of business environment, etc.
2011 Total Trade = 5 trillion yen (62 billion US$) Import = 3.22 trillion yen (40 billion US$) Export = 1.81 trillion yen (22 billion US$) 1$ = 80 Source: Ministry of Commerce of Thailand Source: Ministry of Commerce of Thailand
Japan remains Thailand s largest trade partner in spite of the downward trend of share in Thailand s total trade Source: Ministry of Commerce of Thailand
Investment from Japan to Thailand Investment in 2011: Japan is Thailand s largest FDI source FDIs from Japan is the largest FDIs to Thailand, followed by China and U.S. 57 % of all FDIs from overseas to Thailand Number of Japanese applications in 2011 = 560 projects (+ 54% from 2010) Amount of Japanese investment in 2011 = 6 billion US$ (+ 85.6% from 2010) Investment promotion application = 484 projects Valued 4.9 billion US$ Mostly in automobile, machinery, metal, electronic industry.
Japan Even after Great Flood during Oct Nov 2011, FDIs from Japan to Thailand still increased
100 Million Yen 8000 7000 6000 5000 4000 3000 2000 Remittance from Japanese companies in Thailand in 2011 = 3.68 billion US$ (30% of all ASEAN) ASEAN = 974.3 billion yen (12.18 billion US$) P.R. China = 663.8 billion yen (8.29 billion US$) Thailand = 294.6 billion yen (3.68 billion US$) Singapore = 256.2 billion yen (3.2 billion US$) P.R.China. Taiwan Singapore Indonesia Philippines Hong Kong R. Korea Thailand Malaysia India P.R.China Thailand Singapore Indonesia 1000 0-1000 -2000 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Income from Japan's Direct Investment in Asia Source: Bank of Japan
Tourism in 2011: Tourism Japanese tourists to Thailand = 1,126,221 persons 13.34% from 2010 Ranked 3 rd after China and Malaysia Thai tourists to Japan in 2011 = 145,000 persons 32.5% from 2010 due to Tohoku Great Earthquake and Tsunami on 11 March 2011 10,000 Japanese long-stayers in Chiang Mai
Persons No. of Tourists travelling between 2 countries 1,400,000 1,200,000 1,000,000 1,042,349 1,212,213 1,196,654 1,311,987 1,277,638 1,153,868 Thai Tourists to Japan Japanese Tourists to Thailand 1,126,221 1,004,453 993,674 800,000 600,000 400,000 200,000 80,022 104,864 120,238 125,704 167,481 191,881 177,541 214,881 144,969 0 2003 2004 2005 2006 2007 2008 2009 2010 2011 Source: Department of Tourism, Ministry of Tourism and Sports of Thailand
Assistance from Thailand to Japan during Great Earthquake in March 2011 31.6 million yen (395,000 US$) of donations and other relief supplies from members of the Royal Family 512 million yen (6.4 million US$) budget approved by the Thai Government for relief activities 2 medical teams sent for disaster victims in Fukushima prefecture Lending of 2 gas turbines (122 MW) to TEPCO, which can provide electricity for 250,000 households 2.35 billion yen (29.3 million US$) of donations from general public through various channels
Effects on Japanese Businesses Direct damages on 451 firms located in 7 industrial parks in 2 provinces JETRO estimated damages on Japanese businesses in Thailand at 250 billion yen (3.1 billion US$), which would result in 1% shrink of Thai GDP (out of total shrink of 2.3% from the flood) Effects on Japanese manufacturing industries both in Thailand and overseas through supply-chain disruptions, particularly, automobile, HDD, electronics Concerns on reinsurance issues
Assistance from Japan to Thailand during Great Flood in Oct-Nov 2011 (1) 1.06 billion yen (13.25 million US$) of donations by Japanese Government, and 407.5 million yen (5 million US$) of donations from public and private sectors. Expert teams sent for monitoring flood situation and advice on safety of public infrastructure Lending of Pi-SAR-L surveillance aircraft and 10 water-pumping trucks with operating personals 250 million US$ 2-step soft loan to be provided by JBIC through 5 Thai commercial banks Import of Thai workers for short-term operation at factories in Japan as well as exchanges/trainings of experts Measures to enhance liquidity for Japanese companies in Thailand, i.e., using Japanese Government Bond as guarantee for monetary measures by the Bank of Thailand
Assistance from Japan to Thailand during Great Flood in Oct-Nov 2011 (2) Assistance through JICA: 2 Joint Study Projects with Thai authorities Study on a Comprehensive Flood Management (Control) Plan for the Chao Phraya River Basin and Feasibility Study on Flood Protection/Mitigation Project Study on Flood Countermeasure for Thailand Agricultural Sector Grant of 1 billion yen (12.5 million US$) for the purpose of contributing to the Programmed concerning the mitigation and relief efforts to restore loss from the recent flood disasters in Thailand.
Current Situation after the Great Flood (1) First half of 2012: Jan Jun 2012 Jan Jun 2011 Change (%) Export to Japan 11,347 Million USD 890,270 Million JPY 11,490 Million USD 901,473 Million JPY -1.24 Import from Japan 23,732 Million USD 1,862,049 Million JPY 19,725 Million USD 1,547,647 Million JPY +20.31 Total Trade 35,079 Million USD 2,752,319 Million JPY 31,215 Million USD 2,449,120 Million JPY +12.38 Trade Balance -12,386 Million USD -971,778 Million JPY -8,236 Million USD -646,174 Million JPY Total trade between Japan and Thailand recovered by 12.5% +50.38 Source: Ministry of Commerce of Thailand
Current Situation after the Great Flood (2) First half of 2012: Jan Jun 2012 Jan Jun 2011 Change (%) No. of Project 431 336 +28.27 Project Value 176,298 Million Baht 434,060 Million JPY 5,425 Million USD 72,244 Million Baht 177,871 Million JPY 2,223 Million USD +144.03 First half of 2012: Jan Jun 2012 Jan Jun 2011 Change (%) Thai Tourists to Japan 132,400 people 60,700 people +118.2 Japanese Tourists to Thailand 630,058 people 565,240 people +11.47 Source: Board of Investment of Thailand / :Ministry of Tourism and Sports of Thailand
Facts After the Great Flood (1) 66.7% of directly damaged companies resumed their operation at the same places in Thailand (JCC survey) 20% resumed at other places in Thailand 6.7% move their operations abroad 6.7% under consideration
Current Japanese view of Thailand After the Great Flood (2) Japanese companies still consider Thailand as promising and favorable investment destination (JBIC survey) Well-developed basic infrastructure Robust economic growth and sound macroeconomic management Consistent investment promotion privilege and policy But if flood reoccurs, most companies plan to invest somewhere else.
After the Great Flood (3) Japan s expectation towards Thai Government More information about Government s flood-control measures transparency, availability, reliability Improve weather forecast system (prediction of rainfall volumes) Develop disaster information system Improve infrastructure on water management control such as drainage channel and drainage tunnel Improve long-term flood-prevention system such as construction of permanent flood way
Technical Cooperation with JICA 8 Projects (2012-2013): 1. Enhancing RISMEP (Regional Integrated SME Promotion) Mechanism Project 2. Improving and Enhancing the Transparency and Predictability of Tariff Classification and Customs Valuation Project 3. Capacity Development on Mitigation/Adaptation to Climate Change in the Southeast Asia Region Project 4. Long-term Care Service Development for the Frail Elderly and Other Vulnerable People Project (cont.)
Technical Cooperation with JICA (2) 8 Projects (2012-2013): 5. Policy/Strategy and Operation on HIV/AIDS Prevention and Control Project 6. Harmonization of Power Distribution System in ASEAN countries Project 7. Comprehensive Flood Management Plan for the Chao Phraya River Basin Project 8. Flood Countermeasures for Thailand Agricultural Sector Project
2. Japan Mekong sub-region
Japan Mekong sub-region (1) Japan is a long-standing, reliable, and indispensable partner for the Mekong region countries. The relationship between Japan and the Mekong countries has progressed substantially since the 1 st Mekong - Japan Summit in 2009. Japanese government announced to provide the Mekong countries with ODAs of 600 billion yen (7.64 billion US$) during 2012 2014. The objective of the sub-regional development is to narrow the economic and developmental gaps among the Mekong countries.
Mekong-Japan sub-region (2) Fields of Development under Mekong- Japan Framework Development of basic physical infrastructure and transport facilitation. Creation of society placing importance on human dignity issues by Disaster management Environmental conservation Climate change mitigation Human security Food security and food safety
Mekong-Japan sub-region (3) Thailand s role in Mekong Japan Framework (1) Thailand s role in the framework is in form of partnership for development (co-donor) with Japan in contribution to the development of the neighboring countries in Mekong sub-region. Japan views that Thailand, located geographically in the centre of the Mekong sub-region and playing a constructive role in regional integration, will continue to contribute to the development of the region.
Mekong-Japan sub-region (4) Thailand s role in Mekong Japan Framework (2) Up until now, Thailand has contributed to the development of basic infrastructure of approximately 20 projects in the region. Budget of 77 million US$ is earmarked by the Thai Government for the development of the infrastructure in the Mekong sub-region.
Mekong-Japan sub-region (5) Cooperations between Thailand and Japan on Myanmar Thailand and Japan intend to further support of the government of Myanmar towards democracy and national reconciliation. Thailand and Japan place the importance of extending support for poverty reduction and economic development in Myanmar; for instance, Dawei Mega Project. Joint working group between Thailand and Japan on the development of basic infrastructure and deep-sea port in Dawei.
3. Japan - ASEAN
Japan s views on ASEAN Japan-ASEAN (1) Have great potential population size (600 million people) growing purchasing power high development of FTAs Its ability to recover and grow even stronger after crises
Key Statistics Japan-ASEAN (2) Japan is the 4 th largest trading partner with 10 % share of ASEAN s total trade in 2010 (after China, ASEAN, EU-27) ASEAN is Japan s 2 nd largest trading partner after China. (2010) FDI from Japan to ASEAN increased by 124.3 % to 8.4 billion US$ in 2010 (the 4 th largest investor after EU, ASEAN, USA ) FDI from Japan is accounted for 11.4 % of total inward investment to ASEAN (2010) 3.66 million Japanese visited ASEAN in 2011 (the 6 th largest visitors after ASEAN, EU-25, China, Australia, South Korea)
Billion U.S. Dollar Trade between Japan - ASEAN (2002-2011) 1$ = 80 300 250 200 150 151.37 156.18 171.76 189.12 212.1 236.85 258.12 171.54 Trade, 238.58 222.07 100 50 0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Trade 151.37 156.18 171.76 189.12 212.1 236.85 258.12 171.54 222.07 238.58 Exports 80.15 81.25 91.04 97.88 103.73 119.18 127.33 87.64 117.68 117.61 Imports 71.22 74.93 80.72 91.24 108.37 117.67 130.79 83.9 104.39 120.98 Source: ASEAN Secretariat Office/ASEAN-Japan Centre
Billion U.S. Dollar Trades between Japan and members of ASEAN 70 60 50 40 30 20 10 0 Thailand Thailand Thailand 2008 2009 2010 2011 Singapore 46.33 30.59 37.74 40.37 Indonesia 56.37 34.78 46.82 50.19 Malaysia 45.36 30.68 40.22 45.08 Phillipines 22.4 15.23 18.62 18.16 Indonesia 20.38 14.45 16.69 19.76 Thailand 60.24 40.82 56.44 57.79 Thailand Source: ASEAN Secretariat Office/ASEAN-Japan Centre
Trend of Japan s FDI to ASEAN and China, 1995-2010 ASEAN Source: ASEAN-Japan Centre
Japan-ASEAN (3) Thailand in ASEAN Framework Gateway to ASEAN (CLMV (Mekong Sub-region)) 1,126,211 Japanese tourists travelling to Thailand in 2011 - the largest among ASEAN countries for the past decade and ranks #4 worldwide (after China, U.S., and S. Korea) 6 billion US$ of FDI from Japan in 2011 (of all ASEAN countries, ranked # 2 after Singapore) Trade value between Thailand and Japan is 62 billion US$ in 2011 (ranked #1 among ASEAN countries for the past decade) Source: ASEAN-JAPAN Center Computation: 1$ = 80
Japan-ASEAN (4) Cooperation between Thailand- Japan under ASEAN framework ASEAN-Japan Summit ASEAN+3 Summit East Asia Summit (EAS) ASEAN Regional Forum (ARF) ASEAN-Japan Center (established in 1981)
Japan-ASEAN (5) Under ASEAN-Japan Framework Inauguration of ASEAN Community by 2015 Japan s Task Force for ASEAN Connectivity Continued support for ASEAN Integration ASEAN- Japan Comprehensive Partnership Agreement (AJCEP) entered into force in April 2008 Under ASEAN+3 framework ASEAN+3 Partnership on Connectivity (Thailand s initiative) ASEAN Plus Three Emergency Rice Reserve (APTERR)
Thailand as a hub for Japan s access to AEC/ASEAN Community
Japan-ASEAN (4) Under EAS framework Cooperation on political and security issues Cooperation of food safety and food security Establish ASEAN Plus Working Groups to study on East Asia Free Trade Area (EAFTA) and Comprehensive Economic Partnership for East Asia (CEPEA)
4. Opportunities to enhance Thailand Japan relations
Japan s Economic Policy and Prospects Japan s New Growth Strategy: Strategy for Rebirth of Japan The Cabinet approved the strategy on 31 July 2012. Top priorities are 1) Reconstruction from the March 11 disaster and 2) Rebirth of Fukushima. It aims to achieve an average nominal growth rate of 3% with an average real GDP growth rate of 2% by FY 2020. There are 11 fields in the strategy. Among them, focuses are on investment especially in 3 fields including the Environment, Medical and Agriculture/ Forestry/Fisheries sectors.
Japan s New Growth Strategy: Strategy for Rebirth of Japan (2) 11 fields and main mid-long term goals and measures for each field are as follows: 1. Environment sector 2. Medical sector 3. Agriculture, forestry, and fisheries sector 4. SMEs sector 5. Science and technological innovation & IT sector 6. Financial sector 7. Tourism 8. Economic strategy in Asia-Pacific 9. Life and employment 10. Human resources and education 11. Creation of vigorous nation and local community
Japan s New Growth Strategy: Strategy for Rebirth of Japan (3) Thailand can greatly benefit from #8. Economic strategy in Asia-Pacific 80% of trade should be done with nations with which Japan has concluded Economic Partnership Agreements (EPAs) by 2020. Promotion of international economic partnerships including establishment of FTAAP. Promotion of export of integrated infrastructure system in Asian, Middle East and Latin America. Capture growing middle class markets in emerging countries. Expand export of Cool Japan and Japanese food products. Expand flow of people, goods and capital into Japan. Promote overseas development of Japan s logistics system in order to further expand and gain overseas logistics market, especially in Asia.
Japanese Economy
Japan s GDP in recent years Source: Cabinet Office
Japan s Current Economic Situation In FY2012, the Japanese economy will grow by 2.2%, driven by domestic demand as intensive implementation of full-fledged reconstruction measure is expected to created steady demand and employment. Downside risks include a further downturn in the overseas economy amid the deepening European sovereign debt crisis, the appreciation of the yen and the subsequent acceleration of hollowing out of industry, constraint on the electricity supply and crude oil price increase.
Japan s Current Economic Situation Challenges Japan is now facing The shortage of power supply was caused by the shut-down of nuclear power plant across country- The percentage on the nuclear-power usage ratio to the total energy supply in 2030 ranges from 0% to 25% In worst case of no usage of nuclear power : Production cost of Japanese firms is expected to increase by 6.75 billion US$ Japan s GDP will shrink by 562 billion US$ (GDP s Growth declines by 0.4%) The ratio of Japanese s national public debt is over 200 %of GDP. The shortage of working labor due to the Japan s transition to aging society and low-birth rate problem.
Opportunities for Thailand Benefits from the commitment of the Government of Japan and Japanese private sector to: Development of Thailand s infrastructure including post-flood recovery and reconstruction projects, Cooperation through Japan s advanced technology in areas of space technology, high-speed urban railway, ICT infrastructure, Japan s conducting the preliminary feasibility study on high-speed rail links on Bangkok-Chiang Mai and Bangkok-Rayong routes. Benefit from the increasing trend of Japanese firms desire for business expansion in overseas especially in Asia and ASEAN.
Opportunities for Japan Water resource management system projects of 915 billion yen (11.4 billion US$) budget Country-wide infrastructure upgrading projects of 5.9 trillion yen (73.7 billion US$) Gateway and access to ASEAN Economic Community (AEC) in 2015, a single market of 600 million population, 143.4 trillion yen (1.7 trillion US$) GDP, and 5% annual economic growth Export opportunities to FTA/EPA partners of Thailand and ASEAN 55 trillion yen (687.5 billion US$) of regional connectivity projects under Master Plan on ASEAN Connectivity and ASEAN Plus Three Connectivity Partnership, linking Japan with ASEAN, India, and beyond 21 st Century s Silk Route
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