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  1. #1
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    Japanese start looking elsewhere - Higher costs, strong baht taking their toll

    Japanese start looking elsewhere

    Higher costs, strong baht taking their toll

    UMESH PANDEY
    Japanese investors, the country's largest single group of investors, are looking at other destinations in the region as Thailand becomes less competitive amid rising costs and an appreciating currency, the Japan External Trade Organisation (Jetro) said yesterday.

    ''When we asked companies what their future plans were, a majority of the companies responded by saying that they would maintain their position as they were applying a wait-and-see approach,'' Jetro president Yoichi Kato said.

    ''Japanese companies are now looking for investment destinations such as Vietnam, China and India rather than focusing just on Thailand,'' he said in a clear reference to the shifting trend of companies to consider other countries due to the various negative factors affecting Thailand.

    In a veiled reference to the ongoing political drift and strengthening Thai currency, Mr Kato said the stronger baht was taking a toll on Japanese companies that have used Thailand as a manufacturing hub.

    ''If there was a government through elections as has been promised by the incumbent government, it would send a positive signal to the investment community, as has been evidenced by the sharp increase in the capital markets over the past few days after the government reaffirmed that elections would be held by this year-end,'' he said.

    ''Japanese companies would like to see the currency hover around 37.25 baht to a dollar although they have budgeted 35.85 in their books,'' Mr Kato said, adding that with the currency at 34.50 to a dollar the companies were under constant strain.

    ''If it continues this way then companies would need to move to the value-added segment to make higher returns rather than rely on lower cost as a tool to remain competitive,'' he said.

    The twice-yearly Jetro survey, conducted from April 27 to May 23, found that the baht's appreciation was the top concern for Japanese companies in Thailand, followed by political instability, economic policies and increasing labour costs.

    The survey showed that 64% of respondents thought currency was the key concern, followed by 44% who cited political stability, 43% current economic policies and 40% rising labour costs.

    Japanese investors, who account for close to 50% of foreign direct investment (FDI) into the country, have remained sceptical about the country's policies. Changes to the Foreign Business Act spooked many companies that have invested in the country over the past few decades.

    Mr Kato said that Jetro's survey of 351 Japanese companies in Thailand showed for the first time in nine years that investment sentiment here had declined.

    ''This is the first time we are witnessing such a trend,'' he said, adding that close to 58% of respondents said they would maintain their positions and only 17% would expand.

    Mr Kato added that most investors were concerned about the foreign exchange fluctuation, while they also feared excessive competition, the continued rise in raw material prices and political instability.
    All these factors, he said, had helped countries such as Vietnam, India and China become more attractive destinations for Japanese investment.

    source: Bangkok Post 05.07.2007

  2. #2
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    Quote Originally Posted by William
    ''Japanese companies would like to see the currency hover around 37.25 baht to a dollar although they have budgeted 35.85 in their books,'' Mr Kato said, adding that with the currency at 34.50 to a dollar the companies were under constant strain.
    I wonder what their books will look like when the baht hits 30 to the US$?

  3. #3
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    The Japanese are actually the main driving force behind the THB appreciation. Not sure why it took them so long to realize what was happening. If you invest massively in a country, you are going to jack up the currency and that's a built-in "penalty" for your investment.

    When done with one country, go to the next etc...

  4. #4
    watterinja
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    Against this backdrop, I still do not see how Thailand will be able to meet the skilled & professional needs of Japanese companies.

    With ever-increasing visa difficulties, the entry of Japanese long-term skilled & professionals will decline. Where will Thailand find suitably-skilled local staff? From my experience, they simply do not, in general, exist. Precision & attention to detail are not typical Thai traits, no matter how highly qualified the individual.

  5. #5
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    Quote Originally Posted by buad hai
    I wonder what their books will look like when the baht hits 30 to the US$?
    the books will look the same but the directors shorts will turn brown.

  6. #6
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    Fvck em ! they been screwing this country silly, piss off and take your Tv assembly plants with you. The Thai would be better off without them, they do nothing to transfer any technology here, all they do is use Thai for low end assembly. This does nothing to encourage any local skill development.
    There canít be good living where there is not good drinking

  7. #7
    watterinja
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    ^ Actually, PP, you are quite wrong in my view.

    The Japanese have been trying to transfer technology to the Thai's for some time, but there is a huge shortage of skilled professionals to receive the technology being transferred. The Japanese government has sent folks to try & study how to successfully transfer technology & I have actually been part of such a transfer for the past 3-odd years.

    The labour force here is generally underpaid & unstable - especially under the pressures & rigours of the engineering profession. Thais are pretty lazy, in the main - & extremely forgetful - besides being downright inefficient. They have no real concept of physics, or how to really understand the inner workings of physical phenomena. This is an essential requirement for a good engineer.

    In my view, Thailand is wasting its time trying to become a technology powerhouse - it will fail miserably in this endeavor. Their past saving grace was using a few expats to prop up their skills shortages at strategic points. With the current visa nonsense, these folks are moving off to greener pastures.
    Last edited by watterinja; 05-07-2007 at 12:49 PM.

  8. #8
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    ^ You paint a pretty gloomy picture.........it aint all doom and gloom out there and things will change. The education system here does not inspire the kind of thinking that technical fields like engineering requires. To simply say that they will fail in the technology arena is quite wrong IMHO.

  9. #9
    watterinja
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    The issue has much to do with the S.E. Asian aptitude for absorbing & understanding physically-based technology. They are fine with playing with pictures & drawing - lots of colour etc, but they have no feel at all for physical concepts. Without skilled professional advisers steering the locals around the tricky hurdles, they hit the wall most times.

    Singapore was a lot wiser in this regard & has looked after their international advisers. Thailand's often xenophic & penny-pinching attitude makes this difficult. Thailand will never reach Singapore's level of technology & even then, homegrown Singaporean technology is probably fairly minuscule.

    The general Asian mind is good at copying existing technology (even Japan), but very poor at creating new technology. In Thailand's case, general laziness & quick-buck attitudes don't help matters.

    Another thing is that the Japanese tend to work on 7-year forward plans. Once the forward vision is interrupted, or changes direction, it takes some time to regain the previously-lost position, if at all. Thailand is going to have to undertake some serious soul-searching if it wants to regain what it is currently losing.
    Last edited by watterinja; 05-07-2007 at 02:44 PM.

  10. #10
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    Quote Originally Posted by watterinja
    The general Asian mind is good at copying existing technology (even Japan), but very poor at creating new technology
    I dont think companies look to Thailand with their creative problems in mind. Mostly they are here for cheap labour and seem to look for assembly and low skilled production workers.

  11. #11
    watterinja
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    ^ That's correct.

    The survey showed that 64% of respondents thought currency was the key concern, followed by 44% who cited political stability, 43% current economic policies and 40% rising labour costs.
    Herein lies the rub.

  12. #12
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    Meanwhile Singapore is thriving. The city has a vibrant expat community (the brains as they call it here), hot women, great food, and handsome entertainment. Just bring your Thai whores there and you are set. Getting a VISA to Singapore has never been easier, if you have something to bring of course.

    Thailand always been a shithole, great for whoring and backpacking. They could never pass that stage and they are alienating themselves everytime they get a chance.

    The strong THB is not helping.

  13. #13
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    Quote Originally Posted by Butterfly View Post
    Meanwhile Singapore is thriving. The city has a vibrant expat community (the brains as they call it here), hot women, great food, and handsome entertainment. Just bring your Thai whores there and you are set. Getting a VISA to Singapore has never been easier, if you have something to bring of course.

    Thailand always been a shithole, great for whoring and backpacking. They could never pass that stage and they are alienating themselves everytime they get a chance.

    The strong THB is not helping.
    spot on Butty,
    maybe somchai ain't the gift from gawd he always thought he was ... feck'im

  14. #14
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    Quote Originally Posted by watterinja
    40% rising labour costs.
    Lets take the average Honda factory worker, what are they earning?

    8000 baht per month?

    The same factory worker would be paid about 110,000 baht in Europe.

    Labour costs here are a joke, they are nothing.

    Even if labour costs here went up 100% it would not hurt these companies.

  15. #15
    watterinja
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    ^ Labour costs are relative to the local cost of living. If they went up 100%, it would shut down most Thai-Chinese manufacturing companies overnight. Perhaps not so much from a profitability make-break point of view, but the Thai-Chinese overlords would just shut shop in principle & take their loot back to China.

    I also believe that each worker should earn a living wage & in proportion to his/her input. The problems here is that there are so few technical types that are really worthy of a high salary. Perhaps many are under-privileged in that they've never had decent opportunities? Others are perhaps a little too laid back.

    I try to give emergent technical types an opportunity to learn - some take up on it, others duck & dive, others don't bother. My policy is to train them to be able to find a good position anywhere in Thailand, or abroad. Ironically, I have lost a few good ones who learned enough to bargain for better wages with their Thai-Chinese overlords - who turned them down. They ended up working for the opposition. Good for Thailand - bad for the local overlords.

    The real success rate for techno-types is very, very low in Thailand.

  16. #16
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    Quote Originally Posted by buad hai View Post
    Quote Originally Posted by William
    ''Japanese companies would like to see the currency hover around 37.25 baht to a dollar although they have budgeted 35.85 in their books,'' Mr Kato said, adding that with the currency at 34.50 to a dollar the companies were under constant strain.
    I wonder what their books will look like when the baht hits 30 to the US$?
    By then they will pulled out of LOS and gone to Viet Nam.
    The writing is on the wall and no one here is reading it. by the time they figure out what is happening it will be to late for Thailand.

  17. #17
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    Quote Originally Posted by Spin View Post
    Quote Originally Posted by watterinja
    40% rising labour costs.
    Lets take the average Honda factory worker, what are they earning?

    8000 baht per month?

    The same factory worker would be paid about 110,000 baht in Europe.

    Labour costs here are a joke, they are nothing.

    Even if labour costs here went up 100% it would not hurt these companies.
    The bottom line is the almighty Dollar

  18. #18
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    Have to agree with Watterninja.
    Been employed as an expat in high tech industry here for over 15 years.
    No incentive to be a doer or brainstormer, as the GM will steal the idea, no incentive to bend your back, as they will leave you on a pile of rubbish if you inhure yourself.
    I would not work any harder than any Thai for what they get paid, I have tried to get pay increases for intelligent and hard workers, only to see them abuse the promation and back slide.
    No simple answers, but to rid the country of the "experts" will hurt them dearly.
    I often see a whole department formed to take the place of one expat, and it still cannot maintain a solid output of work.
    Also they are totally brain dead when it comes to working out a problem, unless they have been shown the exact same problem solving process.

    Anyone tried to so a Thai tradesman a better way of doing something?
    Forget it, once they learn a method, they will not change ever.

  19. #19
    watterinja
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    Quote Originally Posted by Ban Saray View Post
    I often see a whole department formed to take the place of one expat, and it still cannot maintain a solid output of work.
    I've estimated the falang support ratio in excess of at least 10 Thais to one falang. Between a Japanese colleague & myself we carry around 20 direct Thais & another 100 odd, especially as new products are finding companies.

    The interesting thing is that most of this new work seems to have come when visiting foreign companies spot the rare western/japanese face in the group. In all, a group of over 10,000 employees has at most 4 foreign advisers - one of whom is part-time. The foreign advisers have no authority & can only advise.

    One large automotive concern asked the following issue when reviewing the design process: "What happens when you leave?" How do you answer that?

    Also they are totally brain dead when it comes to working out a problem, unless they have been shown the exact same problem solving process.
    This shows their utter lack of creative thinking skills. Following a pre-determined path which has been developed by a falang, is not creative. I've begun to find it ridiculous, but, until a decent offshore assignment comes up, I'm biding my time, making far more from offshore consulting.

    I try & get them to think out-of-the-box, but, in general, it is totally impossible. The Japanese have seemingly tried to understand the Thai way of thinking (Jetro have visited a number of times), but, in many places, I think they've begun to give up.

  20. #20
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    Look at what they have done to Internet in this country, ADSL,,SAT,, What ever you have in mind, they can buy the equipment, same stuff that is used the world over and most places charge $25 or so dollars a month, and you get 300 KB/sec download,, here I pay $40 and just did a 4.80 KB download and averaged 9.0 KB/sec.

    This place does not have one craftsman in 1000 workers and never will have because they are unteachable and unlearnable..

    I have came here for many years and the only improvement I can see since 1965 is in the quality of the way the whores dress.

  21. #21
    watterinja
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    Quote Originally Posted by blackgang View Post
    This place does not have one craftsman in 1000 workers and never will have because they are unteachable and unlearnable..
    This is a profound truth - I concur completely. It's like the ears block, the eyes glaze & zip goes into the cranial cavity - like someone turned off the 'on' button.

  22. #22
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    Quote Originally Posted by Ban Saray
    Also they are totally brain dead when it comes to working out a problem, unless they have been shown the exact same problem solving process
    Yeah, I hate that. It's like you have to explain them very basic problem solving skills. There is a turd on the road, what do you do ? step on it or go around it ? no answer, blank stare. Hopeless.

    Quote Originally Posted by blackgang
    I have came here for many years and the only improvement I can see since 1965 is in the quality of the way the whores dress.
    LOL. Good one and so true. The city is a fucking dump, they are 40 years behind for that level of opportunities they had in the past. And yet, it's a third world country. At least Vietnam has an excuse for being third world. What is Thailand excuse ?

  23. #23
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    Thailand sits squarely on the horns of a very large dilemma. The only folks afforded a decent (comparatively) education are the well-to-do or the high So. With the silver spoon in your mouth the competitive edge is reduced due to the comfort available to the upper class. I’ve yet to see any inkling of the average Thai graduate being able to exercise creative thinking.

    Technical fields require a substantial understanding of cause and effect forward thinking, being able to think about what the affect will upon implementing a cause. The building blocks of creative thinking are focus, memory skills, discipline and determination, all attributes not normally associated with the Thai populace. Neither are these nurtured, promoted or rewarded from a young age in Thai society.

    Even with a decent education a Thai is just as liable to be turned aside in a job situation to someone with more “connections” or juice. Such is the way of the ‘Land of Smiles’.

    Unless this cycle is broken by ‘The Powers That Be’ this will continue. They, (the powers), believe a gradual increase in pay will suffice to keep everyone happy. This basically just ends in inflation without benefit to anyone. The currency will continue to rise until the cost advantages are gone, the companies will leave and the crash will happen all over again. But for a different reason, stupidity.

    It’s too bad the “Sufficient Economy” has no place in it for education and creativity. It does however provide for the continuing greed and maintenance of the upper classes. Where else would they get their slaves and hookers?



    ***


    There is a reason that Seagate is expanding in Singapore and China, they need workers and space. Why did they take the Maxtor acquisition out of Thailand??????.... Cheaper / better labor force and better infrastructure for their employees elsewhere and expat folks. Bet they don't expand anymore in Thailand either.

    A lot of use of the word average here but still appropriate I think. Yes, there are exceptions but the ‘average’ is what the economy is built on.

    E. G.
    Last edited by El Gibbon; 05-07-2007 at 10:00 PM.
    "If you can't stand the answer --
    Don't ask the question!"

  24. #24
    watterinja
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    Quote Originally Posted by Butterfly View Post
    Quote Originally Posted by Ban Saray
    Also they are totally brain dead when it comes to working out a problem, unless they have been shown the exact same problem solving process
    Yeah, I hate that. It's like you have to explain them very basic problem solving skills. There is a turd on the road, what do you do ? step on it or go around it ? no answer, blank stare. Hopeless.
    The classic 'cop-out', brain-into-neutral-stare...

    I refuse to take over & solve the problem, which is what they are angling for. Instead, I'll work through the solution on my own, & press them to engage the brain, with questions on the basics they should know & edge them towards a solution.

    To be honest, the job percentage completion rate of these engineers is, at best, around 10% - they always opt to grab the next project on offer & forget about the previous job. Their local-overlords are the worst cause of this, with their archaic-management style.

    Another problem is that the basic level of engineering education in Thailand is pretty terrible. Even their so-called top professors cannot think their way out of a wet paper bag. If the solution does not lie in a book, then it is impossible.

    I was asked to teach the basic principle of scaling heat-transfer based on a fairly simple mechanism. After three attempts with the one professor & various attempts with others, I gave up on them. They really have no clue about simple engineering design principles, yet they claim to be professors specialising in that subject. It is not in their nature.
    Last edited by watterinja; 05-07-2007 at 10:20 PM.

  25. #25
    Thailand Expat
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    ^or, alternatively, your explanation was crap

    If Thai society has any fault, it is two-fold: on the one hand, I genuinely believe there is a certain conscious movement not to educate people, for fear they make ask questions. On the other hand, [and this may be changing] Thailand is not built on a meritocracy. Being the best at something doesn't guarantee you anything. It is a society where you fill dead men's shoes. And if you want to make sure you have a chance of filling the dead men's shoes, best not ask too many questions, and thus we return, on this wonderful merry-go-round, to problem 1.

    It is why (a) no Thai driver can ever fucking work out how to drive round a roundabout; and (b) almost all Thai workers who are able to think outside of the box (and, I have met some) don't live in Thailand (esp. if they are under 40 years of age).

    That said, I have met some very clever Thai lawyers. Problem is, lawyers create fuck all. If anything, we destroy.

    My 2 cents worth.

    ~W~

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