Japanese banks seek offices in Thailand to serve burgeoning SMEs

Since the beginning of the year, five or six Japanese banks have applied for permits to establish representative offices.

More than 300 Japanese SMEs have expanded into Thailand, which they can use as a base or gateway for other investments and business opportunities in Myanmar, said the BOT's assistant governor for financial institutions, Salinee Wangtal.

She added that even though the representative offices are not allowed to accept deposits or extend loans, they could provide useful information or conduct research for their Japanese SME clients who are investing more in Thailand and other Asean countries, especially Indonesia, Vietnam and Myanmar.

Even though Thai labour costs are higher than in most of its Asean neighbours, the quality of labour and infrastructure are considered acceptable to Japanese SMEs.

Most of the Japanese SMEs operating here are not clients of major Japanese banks, but of small regional banks in that country. After recovering from the 2011 tsunami, more than 300 Japanese SMEs have expanded into Thailand, including those providing automotive components for Toyota and Honda, as well as clothing manufacturers, Salinee said.

Currently, there are about 40 commercial-bank representative offices in Thailand, half of which are Japanese. The number of Japanese banks' representative offices should continue to rise in line with expanding Japanese investment in this region, Salinee said.

Sayam Prasitsirikul, Bank of Ayudhya head of corporate and SME products, said his bank could capitalise on the strength of its major shareholder, Japan's Mitsubishi UFJ Financial Group, to take care of Japanese firms that enter Thailand. Krungsri also has strong branch network nationwide to support its SMEs customers, he said.

The bank believes many of the Japanese SMEs establishing themselves here will concentrate on the supply-chain side of several industries.

Patchara Samalapa, executive vice president of Kasikornbank, said Japan's SMEs tended to have larger assets than their Thai counterparts. Therefore, when they enter Thailand, they are regarded as large customers.

Prasit Wasupath, senior executive vice president of Krungthai Bank, said most Japanese SMEs here were in the auto-parts and electronic-products fields. The establishment of Japanese banks' representative offices in Thailand is mainly aimed at serving these customer groups.

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