How is the economic relationship between japan and thailand?
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While constitutional changes have grabbed the liberal Western mind's predilection for democracy, what has received less attention have been changes made to law B.E. 2520. This is Thailand's Investment Promotion Act (1977), and the military have been refining it (as opposed to making a fourth amendment) in order to launch their new Seven‐Year Investment Promotion Strategy (2015–2021). The strategy is a bold one. It is an attempt to effect a structural change in the Thai economy and is certainly having an impact. Foreign investment into Thailand for the past half‐decade has been dropping dramatically. The author has written elsewhere about these changes in the immediate 2016 quarter (Hartley 2016), and the picture is even clearer with the hindsight of 2017, leading to questions beginning to develop around not only the efficacy of the change in economic approach but also the impact on, and role of, Thailand's biggest investor—Japan.
Between 1985 and 2016, up investment in Thailand cumulatively totalled 2.9 trillion baht (US$85 billion; 2017 rates), more than double the next biggest investor—the USA—which stands at 631 billion baht ($18 billion). Cumulative investment from all investors into Thailand for this period was 6.8 trillion baht, meaning that investment from just Japan represented 43 per cent of all foreign investment into the kingdom.
Moreover, this interest in Thailand has been shockproof, remaining a consistent annual average of 42 per cent of total FDI with a peak of 69 per cent in 1989. From frequent military coups to region‐level natural disasters, Japanese investors are dug into Thailand in more ways than one. This is why the Japan–Thailand relationship is so strong and why it is so significant for the wider region given Thailand's importance to Southeast Asia. When some in the region comment in a geopolitical way that ‘Thailand belongs to Japan’, it is not hard to understand why they believe so.
However, 2016 (and, as of the latest February data, early 2017 also) has been a bad year for foreign direct investment into Thailand. Total foreign investment in 2016 has dropped to levels last seen after the Asian financial crisis. Record highs in 2013 of 513 billion baht ($15.1 billion) have halved to 252 billion baht ($7.4 billion) in 2016. This is largely due to a pulling back of investment by Japan. In 2013, Japanese investment totalled 310 billion baht ($9.1 billion) compared with 86 billion baht ($2.5 billion) in 2016. Because the ratio of Japan's investment into Thailand comprises such a large percentage of the total, when Japan moves, everything moves, and Thailand's total foreign direct investment (FDI) correlates almost precisely to decisions by Japanese investors.
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Between 1985 and 2016, up investment in Thailand cumulatively totalled 2.9 trillion baht (US$85 billion; 2017 rates), more than double the next biggest investor—the USA—which stands at 631 billion baht ($18 billion). Cumulative investment from all investors into Thailand for this period was 6.8 trillion baht, meaning that investment from just Japan represented 43 per cent of all foreign investment into the kingdom.
Moreover, this interest in Thailand has been shockproof, remaining a consistent annual average of 42 per cent of total FDI with a peak of 69 per cent in 1989. From frequent military coups to region‐level natural disasters, Japanese investors are dug into Thailand in more ways than one. This is why the Japan–Thailand relationship is so strong and why it is so significant for the wider region given Thailand's importance to Southeast Asia. When some in the region comment in a geopolitical way that ‘Thailand belongs to Japan’, it is not hard to understand why they believe so.
However, 2016 (and, as of the latest February data, early 2017 also) has been a bad year for foreign direct investment into Thailand. Total foreign investment in 2016 has dropped to levels last seen after the Asian financial crisis. Record highs in 2013 of 513 billion baht ($15.1 billion) have halved to 252 billion baht ($7.4 billion) in 2016. This is largely due to a pulling back of investment by Japan. In 2013, Japanese investment totalled 310 billion baht ($9.1 billion) compared with 86 billion baht ($2.5 billion) in 2016. Because the ratio of Japan's investment into Thailand comprises such a large percentage of the total, when Japan moves, everything moves, and Thailand's total foreign direct investment (FDI) correlates almost precisely to decisions by Japanese investors.
Hope you like this answer
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