Business Day, Thailand

MoI sure Thai-Japan FTA will be concluded in July

EKARIN PETSIRI, chief reporter

16 June 2005

The Ministry of Industry said on Thursday it is confident that the conclusion of the Thailand-Japan free trade area (FTA) agreement will be reached on schedule in July after representatives of the two countries met this week to discuss the details of the plan, especially on issue of automobile and electronic parts.

Wattana Muangsuk, the Industry Minister, said Deputy Prime Minister and Finance Minister Somkid Jatusripitak had talked with the senior officials of Japan’s Ministry of International Trade and Industry.

Satit Sirirangkamanon, the secretary general of the Board of Investment, said Thailand wants Japan to invest in the manufacture of automobile and electronic parts, especially those not yet produced here in the country.

The two industries will be specially supported by the BoI, which provides incentives such as tax breaks based on zoning of projects. Projects located in remote areas receive the highest benefits.

Currently, Japan is the largest investor in Thailand, with an investment value of about 150 billion baht last year, which accounted for about 47 percent of the country’s foreign direct investment.

In the first five months of this year, 154 Japanese projects, worth about 105 billion baht, applied for promotional privileges from the Thai government.

During the past two decades, Japan invested about 1.55 trillion baht in 4,083 projects in Thailand.

Japan’s exports to Thailand consist almost 100 percent of industrial products. On the other hand, Thailand’s exports to Japan comprise industrial products, which account for 74 percent, and agricultural products, which account for 26 percent. In other words, agricultural products account for a substantial portion of Thailand’s exports to Japan.

This is substantially higher than Malaysia’s and the Philippines’s agricultural exports, which account for 11.8 percent and 12.5 percent respectively of their exports to Japan, according to the information from the Japanese embassy in Bangkok.

Of Thailand’s exports to Japan, 71.8 percent already enjoy zero-duty treatment in Japan.

On the other hand, although there are no precise statistics available, more than 90 percent of Japan’s exports to Thailand is assumed to be subject to customs duty.

Japan’s overall average customs duty (2.9 percent) is much lower than those of Thailand (25.8 percent), Malaysia (14.5 percent) and the Philippines (25.6 percent).