Thailand Tries Tokyo Fence Mending
Image Credit: Office of the Japanese Prime Minister

Thailand Tries Tokyo Fence Mending


Earlier this month, Thai Prime Minister Yingluck Shinawatra traveled to Japan with a full delegation, aiming to repair ties with the world’s third-largest economy. After the visit, both sides released a joint statement declaring an enhanced strategic partnership in the economic and security realms. Japanese Prime Minister Yoshihiko Noda affirmed that his government views Thailand as a “key country in Southeast Asia,” and underlined that its “development and stability are important for Japan’s national interests.” Thailand, which depends heavily on investment from Tokyo (nearly a third of Thailand’s total direct foreign investment comes from Japan) emphasized the importance of bilateral ties.

So why the damage repair exercise? After all, relations between Thailand and Japan have been strong for decades, built upon close economic ties and a historical alliance on security matters. There are also cordial exchanges between the royal families in both countries, with a relationship that had until late last year remained robust since the two families agreed to be allied together during World War II. However, much of this diplomatic capital was eroded when a series of floods left Bangkok paralyzed, destroying a significant amount of property, including that of Japanese manufacturers.

At the time, senior legislators in Japan criticized Thailand’s underdeveloped policies for curbing the flooding, raising concerns about the property damage to its considerable investments in the country. The Thai floods represented another significant shock to Japan’s supply chain economy, which was already reeling from the Tohoku earthquake and tsunami last March. Thailand houses large facilities for some of Japan’s automobile manufacturers, including Toyota, Honda and Isuzu. In the wake of the floods, the Japan External Trade Organization (JETRO) reported that nearly 300 Japanese factories were adversely affected, resulting in a suspension of production. Many of the parts necessary to complete the process of building these automobiles are assembled in the Thai plants, thus disrupting the supply chain of these goods overseas.

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