Thailand Investors Voice Fears after Army Takeover

Thailand Investors Voice Fears after Army Takeover

Thailand has become increasingly important for Japanese firms as they shift operations from home to counter high wages and an overvalued yen and to mitigate the effects of natural disasters on the supply chain.

TOKYO -- Thailand's biggest investor Japan on Tuesday expressed "grave concerns" after the army imposed martial law, with the United States saying it must only be "temporary" as multinational firms monitored events nervously.

After months of anti-government protests, generals ordered forces onto the streets of Bangkok and troops were positioned at television stations as the army said media would be censored.

But despite the crisis -- which saw Southeast Asia's second-biggest economy shrink 0.6% in January-March -- analysts said the economy could bounce back.

"We have grave concerns about the situation in Thailand," Japan's chief cabinet secretary Yoshihide Suga told reporters in Tokyo. "We once again strongly urge all parties concerned to act in a self-restrained manner without using violence."

The dismissal of prime minister Yingluck Shinawatra this month in a controversial court ruling has sent tensions soaring in a country that has endured years of political turmoil.

"Red Shirt" supporters of Yingluck and her brother Thaksin Shinawatra, who was deposed as premier in a 2006 coup, have warned of civil war if power is handed to an unelected leader, as the opposition demands.

The army, which has mounted numerous coups in recent decades, insisted Tuesday's declaration of martial law did not amount to a coup. "The public do not need to panic but can still live their lives as normal," it said.

The United States urged "all parties to respect democratic principles, including respect for freedom of speech.

US State Department spokeswoman Jen Psaki said: "We understand the Royal Thai Army announced that this martial law declaration is not a coup.

"We expect the Army to honor its commitment to make this a temporary action to prevent violence, and to not undermine democratic institutions."

Indonesia, the Philippines and Australia also expressed concern and called for a democratic solution to Thailand's crisis.

Japanese Companies Monitoring Situation

Nearly 4,000 Japanese firms operate in Thailand, think-tank Teikoku Databank said in February, with investments the Bank of Thailand said were worth $6.89 billion in 2013 -- half of the total inward investment.

That figure is more than the next three biggest investors combined -- the United States, Britain and the Association of Southeast Asian Nations (ASEAN).

Thailand has become increasingly important for Japanese firms as they shift operations from home to counter high wages and an overvalued yen and to mitigate the effects of natural disasters on the supply chain.

Car giant Honda (IW 1000/29) said it has postponed the April 2015 opening date for a new Thai factory due to the uncertain business climate.

"If the situation improves, we may complete the factory and start production," said company spokesman Teruhiko Tatebe.

Toyota (IW 1000/8), the world's biggest automaker, also said it was watching events carefully, but added all three of its Thai plants were operating normally, with shifts unaffected.

Nissan (IW 1000/31) said it was "monitoring the situation in Thailand closely," but added: "Thailand's rich potential economic growth cannot be overestimated and remains unchanged, despite the current disruption."

- Miwa Suzuki

Copyright Agence France-Presse, 2014

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