Thai Crisis Could Deter New Foreign Investment

Long-term foreign investors say they are sticking with Thailand despite its political woes but the threat of worsening chaos may scare away new money as companies scope out other options in neighboring countries such as Indonesia.

Protesters trying to topple the government have rallied in the capital, Bangkok, since November. This month they have forced ministries to close and blocked major roads. They say they will stop a general election being held on February 2.

“Assuming the political woes go on, foreign investors may decide to shift to other countries like Indonesia, Vietnam and Myanmar,” Kyoichi Tanada, president of Toyota Motor Corp’s (7203.T) Thai unit, said this week.

“Many investors want to invest in Thailand. If the situation has not been resolved, the ones which are already invested may not go away, but whether they will invest more, it’s questionable,” said Tanada, also vice-president of the Japanese Chamber of Commerce, which represents 1,524 Japanese firms in the Southeast Asian country.

Thailand gets more than half of its foreign direct investment from Japan. That foreign capital brings much-needed money into a country that recorded a current account deficit in 2013 and may again this year.

It is the biggest car market in Southeast Asia and a regional production and export base for top manufacturers such as Toyota, Nissan Motor Co (7201.T) and Ford Motor Co.

via Reuters

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