Half of all Japanese firms in Thailand say sales have significantly dropped during the first half of 2020

Japan External Trade Organisation (JETRO) said on Wednesday that almost half of all Japanese businesses in Thailand have seen their sales significantly impacted by the outbreak of the coronavirus.

Japan is one of the biggest investors in Thailand. The amount of foreign direct investment from Japanese firms has reached US$2.49 billion out of the total $6.13 billion in 2019.   

JETRO Bangkok has surveyed 631 businesses that are members of the Japanese Chamber of Commerce during the first half of 2020.

About 48 per cent of the businesses said that their sales have decreased by more than 20 per cent between January and June 2020 but no more than 50 per cent when compared to the same period of time in 2019.

About 27 per cent of the businesses said its sales have decreased by at least 5-20 per cent and 9 per cent said its sales have decreased by more than 50 per cent.

The majority of businesses (77 per cent) said the drop in sales was led by lowered domestic demand and the loss of business opportunities from the lack of negotiations (68 per cent) and travel restrictions (65 per cent).

Nearly 53 per cent of the firms surveyed have also lowered their investment into Thailand’s manufacturing sector during the first six months of 2020. 

On the other hand, about 21 per cent said they have decided to increase its level of investment, 16 per cent are maintaining the same level, and 9 per cent are still pondering. 

For the near future, approximately 60 per cent of the surveyed firms said they will continue to operate and increase their investment in Thailand. 

Around 34 per cent said they were unsure while 7 per cent said they will have to reduce the size of its operation here. 

This is in line with the 57 per cent that said that they will maintain the same level of investment in capital goods. Another 29 per cent said they do not have such a plan and 14 per cent said they will expand it. 

JETRO said Thailand’s advantage is its readiness in supply chain solutions which should be able to counter the supply chain disruption that was caused by COVID in the first half of 2020.

Their survey in China during 2019 showed that more than 10 per cent of Japanese firms on the mainland wanted to move their production arm to Thailand. 

However, Vietnam is still Thailand’s biggest competition in Southeast Asia because they have lower labour costs with the potential of improvement in its supply chain in the near future, they added.

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