Japanese Business Investment in Thailand Under a Cloud

Japanese foreign investment in Thailand has taken a major hit, with an estimated 450 companies affected by last year's flooding. Lost production and high damage bills have taken a heavy toll on business investment. Thailand law firm BSA Law has advised investors to consider their legal responsibilities amid the turmoil. End Quote

(1888PressRelease) January 31, 2012 - Bangkok - Japanese companies bracing for reduced profits or closure in the wake of Thailand's flooding need to consider their legal framework, according to leading Thai law company BSA Law.

The international law firm in Thailand believes recent grim profit projections by Japanese manufacturing companies including auto giants Toyota and Honda were not isolated cases.

Toyota has cut its full-year net profit forecast by at least half - at least in part due to heavy flooding in Thailand's industrial parks.

Fellow Japanese auto maker Honda has also withdrawn its earlier forecasts after a challenging year which included Japan's devastating March earthquake and tsunami.

Sanyo Semiconductor announced in December 2011 that it would be closing its Thailand factory due to extensive machinery and building damage at its Rojana Industrial Park operations. It said its 2000-strong workforce (including contractors) would be laid-off and compensated as required by Thai labor law conditions.

Spokesman for leading Thai law consulting company BSA Law Apisakde Kongkangwanchoke said while Japanese foreign investment in Thailand was under a cloud, there were obligations and opportunities under the country's business law.

Thailand's legal framework can be complex for foreign entities, which are subject to the Foreign Business Act 1999 (as well as Thai labour law). This regulates foreign investment levels, company structures, and includes restrictions on the types of businesses which can be operated by foreign corporations. Thai law also requires foreigners to obtain a Thailand work permit.

Mr Kongkangwanchoke said that under Thai business law, foreign companies affected by the Bangkok's floods may be able to suspend the payment of wages if they were forced to halt operations.

"If a stoppage is deemed to be caused by a force majeure then Thailand law has provisions for wages to be suspended," he said. "This is not automatic and if your business does not meet this there is also a provision under Thailand business law for wages to be reduced."

Mr Kongkangwanchoke said affected foreign businesses should seek independent business advice. Thailand investors should carefully check their supply contract obligations as well as permits and licence terms.

"Companies that operate with Board of Investment privileges may be eligible for additional assistance with regard to relocation. Check with your corporate legal service in Thailand to make sure you take advantages of any available assistance."

About BSA Law:

For nearly 30 years, Bamrung Suvicha Apisakdi Law Associates (BSA Law) has focused on providing reliable legal advice and services to the Thai and foreign business community in Thailand. BSA Law seeks to provide international standards of legal services while retaining the customs of the Thai business culture.

For more information please contact:

Jim Byrne
Business Advisor, BSA Law.
Email: jim ( @ ) bsalaw dot co dot th
http://www.bsalaw.co.th

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