Factors Affecting Japanese Direct Investment in Automotive, Metal and Electrical Appliances Industries of Thailand

Abstract

The objectives of this research were to analyze factors affecting Japanese direct investment in automotive, metal and electrical appliances industries of Thailand. Quarterly data from Q1/2005 to Q4/2014 were collected and analyzed quantitatively by Ordainary Least Squares Regression Model method.

The results showed that factors statistically significantly affecting Japanese direct investment in automotive Industry were Manufacturing Production Index in Japan and the Thai government's first-car policy. Factors statistically significantly affecting Japanese direct investment in metal industry were metal export value of Thailand and Manufacturing Production Index in Japan. Factors statistically significantly affecting Japanese direct investment in electrical appliances industry were electrical export value of Thailand, exchange rate and average minimum wage rate in Thailand.

Since the Thai government's first-car policy had induced foreign direct investment from Japan in the automotive industry, the government should use measure which aimed to induced FDI into specific important sectors. As for the metal industry, the government should promote and offer the special privileges for metal export particularly to Japan in order to induced FDI from Japan. Since the average wage rate was the important factors affecting FDI from Japan in electrical appliances industry, the government should encourage more skill development in order to be competitive because the industry was skilled-labor intensive and the government should promote and offer the special privileges for electrical export particularly to Japan same the metal industry.