LOCATIONAL SPECIFIC ADVANTAGES OF ASIAN NEWLY INDUSTRIALIZED

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					 LOCATIONAL SPECIFIC ADVANTAGES OF
ASIAN NEWLY INDUSTRIALIZED ECONOMIES
FOREIGN DIRECT INVESTMENT IN THAILAND



              Santhiti Treetipbut
                 Purpose of this research study

                                                 Asian NIEs


To fill this research gap by
identifying and evaluating
the factors specific to the          Taiwan   Korea         Singapore   Hong Kong
economic and local
business environment                                  FDI
factors in Thailand that have
influenced firms from the Asian NIEs to
choose Thailand for FDI.



                                                      Thailand
Significance of the Study

• Assist the host government to     • Create a foundation or
 structure its national policies,    comparative framework for
 foreign investment laws and         potential investors to work from
 regulations and FDI incentives      when planning investment
 programs                            abroad

• Interested persons - use the      • Domestic enterprises may use
 findings of this research to        the outcomes of this thesis to
 analyze and address the             develop strategies that will
 specific motives and needs of       motivate foreign investors to
 foreign investors                   enter into joint ventures or
                                     alliances with them.
                                Research Questions

•   Research Question 1 What are the economic
    and local business environment factors in
    Thailand that most important influenced the
    Asian NIEs firms in choosing to invest in
    Thailand?

•   Research Question 2 What are the important
    variables in the economic and local business
    environment factors in Thailand that influenced
    the investment choices by the Asian NIEs firms
    when considering investment in Thailand?

•   Research Question 3 When selecting a
    location for foreign investment in Thailand,
    what are the different economic and local
    business environment factors in Thailand which
    influenced that choice by the Asian NIEs firms;
    looked at from the perspective of each the
    Asian NIEs firms’ member country?
The benefits of Foreign   FDI has contributed directly
Direct Investment (FDI)   and indirectly to the economic
                          welfare; social development
                          and educational welfare of host
                          countries.
The benefits of Foreign
Direct Investment (FDI)

The main benefits of FDI
include increased economic
growth, poverty reduction, FDI
linkage, FDI spill-over and the
development of the human
resource capital in the host
country.
         Why Asian NIEs
Taiwan    Korea   Singapore   Hong Kong
Why Asian NIEs

   •   Asian NIEs have already made a significant
       contribution to the development of the region

   •   The Asian NIEs are economically strong

   • The Asian NIEs by definition are economies
       that have upgraded their industrial structure
       to high-technology based through
       development of sectors including technology research and
       development, telecommunications, banking and finance, property development, supply
       chain management and medical related industries.



   •   Asian NIEs reflect the overall health of the
       economic and financial environment in East
       Asia (The World Bank 1993).
The study factors and their variables




                  Mapping of the literature
The study factors and their variables




             The Conceptual Framework for this research
    Research Method

• Questionnaires were used to collect         •   The questionnaires were addressed
    perceptions of Asian NIEs firms               to the top executives of the identified
                                                  Asian NIEs firms
•   To ensure that the study population
    was both accessible and accurately        •   122 correctly completed
    generalized, the study population             questionnaires were returned; a
    comprised the Asian NIEs firms                12.5% return rated
    currently investing in Thailand and
    listed with BOI.

•   In this research the sampling frame
    is relatively small and accessible.
    Therefore, to obtain accurate and
    reliable results, this research aims to
    study all the Asian NIEs firms within
    the sampling frame
Summary of the findings
                                                   Most important                Least important             Significant difference from
         Most important factors
                                                     variables                      Variables               different Asian NIEs nations


              Political factors                    Political stability            Political system

                                              Quality and productivity of       Availability of local
               Labor factors
                                                        labor                       managers
                                                                                                              Korea had a significantly
   Government legal issues and policies
                                               Investment guarantees           International treaties         higher mean compares to
   regarding inward foreign investment
                                                                                                                  firms from Taiwan
              Social factors                        Social stability            Cultural differences
                                               Cost and quality of raw
            Resources factors                                               Availability of raw materials
                                                     materials
                                                Tariffs against import        Quotas against export
Government policies regarding trade control
                                                     components                   components

                                                                            Quality of communication,    Korea had a significantly
                                               Cost of communication,
           Infrastructure factors                                              transportation and     higher mean compare to firms
                                              transportation and energy
                                                                              energy infrastructure           from Taiwan
Summary of the findings

             Government legal issues and
           policies regarding inward foreign
                       investment
            Korea had a significantly higher mean
                compares to firms from Taiwan
   Korea                                            Taiwan




              Infrastructure factors
            Korea had a significantly higher mean
                compares to firms from Taiwan


   Korea                                            Taiwan
Recommendations


Labor factors, Government could
focus more on training and labor
development programs that enhance
workers’ skills - Not lower labor cost

Market size, Government should put
in place policies that stimulate
domestic consumption and
investment as well as at the regional
market level.
Recommendations


                  Market size, Facilitate easier access
                  to the regional markets.

                  Political and social factors, Seek
                  to improve existing social and
                  political conditions, or at least
                  ensure that the political landscape in
                  known and understood by potential
                  foreign investors.

                  Infrastructure factors,     Continue
                  to develop, extend and enhance
                  physical infrastructure and related
                  services relied on by international
                  investors and local industry alike.
Recommendations


                  Legal issues and policies
                  Government might consider a
                  systematic review of the legal
                  issues, policies relating to foreign
                  equity ownership, intellectual
                  property protection, financial flow
                  regulations and particularly tariffs on
                  imported components and
                  equipment.

                  Levels of investment incentives
                  and investment guarantees could
                  also be reviewed in terms of their
                  attractiveness to foreign investors
                  generally.
Limitations of the Study


• This study has focused only     • Each industry possibly having
  Asian NIEs investing in           different needs or
  Thailand                          preferences, the results of
                                    this study cannot be
• Questionnaires were not sent      extrapolated to all industries.
  to Asian NIEs firms personnel
  resident outside Thailand.      • This study does not cover
                                    other kind of entry mode.
Limitations of the Study


• It should be noted that
 beyond the timeframe
 of this research, 1993
 to 2006, a number of
 political events
 including the coup and
 post-coup events
 through to 2008 have
 been of concern to the
 investment community.
Further Study


• Parallel studies by the Asian NIEs firms in other
 countries

• Focusing on the modes of entry might produce a
 variation in results

• Focusing on the different industry might produce a
 variation in results
Thank You

				
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