BOI Confident Japanese and Korean Firms Will Maintain Thai Bases Despite US Tariffs
Secretary-General says 4% tariff gap is outweighed by Thailand's lower production costs and strong industrial advantages
Thailand's Board of Investment (BOI) is confident that Japanese and South Korean companies will not relocate their production facilities from Thailand despite a US tariff rate that is 4% higher than what their home countries face.
In an interview with Thansettakij, BOI Secretary-General Narit Therdsteerasukdi Therdsthirasak addressed concerns over the US imposing a 19% tariff on Thailand, compared to 15% on Japan and South Korea.
He stated that investment decisions are long-term plans influenced by numerous factors, with tariff rates being just one.
According to Narit, large multinational corporations like those from Japan and South Korea consider a range of factors before moving or expanding production, including the quality of infrastructure and logistics, supply chain maturity, the availability of skilled labour, and the costs of labour and energy.
He asserted that Thailand holds a significant advantage in all these areas.
"Even with a 4% tariff difference, the overall production costs in Japan and Korea, including wages, land prices, energy, and management fees, are still considerably higher than in Thailand," he explained. "Therefore, a 4% tariff gap alone may not be enough to incentivise a return to their home countries."
He added that Japanese production bases in Thailand are particularly robust, having developed highly efficient, integrated supply chains that are among the best in the world.
Japanese investors view Thailand as a vital regional hub and a base for exporting to global markets, not just the US.
However, Narit stressed the need for Thailand to continue improving its competitiveness.
Key areas for development include expanding industrial areas and infrastructure to support rapid growth, establishing a competitive clean energy framework, developing a high-skilled workforce for new industries like semiconductors and AI, and improving the overall ease of doing business to attract more high-value investment.
