Thai Floods May Shift Japan Investments

Bloomberg,

15 November, 2011

Japanese companies, Thailand’s biggest foreign investors, may spend more to build factories in neighbors including Indonesia and Vietnam after the worst flooding in 70 years disrupted global production.

“Executives recognize the concentration risk after the floods,” said Takahiro Sekido, chief Japan economist at Credit Agricole CIB in Tokyo. “The recent trend of accelerating investment into Thailand will cool despite the fact that Thailand was such an ideal destination.”

Prime Minister Yingluck Shinawatra has proposed spending 130 billion baht ($4.2 billion) on reconstruction and steps to prevent future floods. She seeks to reassure investors that Thailand remains a safe place for business, as companies including Pioneer Corp, Honda Motor Co. and Toyota Motor Corp. scrapped profit forecasts after the floods shut factories.

The disaster has rippled through the supply chains of Japanese auto and electronics makers, as parts shortages affected operations across the globe.

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