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http://www.pacificlegaladvisory.com/news_detail.php?news_id=29
Date : Jul 18, 2006
Seagate shifts B40bn project to Malaysia
Seagate Technology, the world's largest maker of hard-disk drives, has decided not to expand in Thailand but to invest 40 billion baht in a project in Malaysia instead.
The shift by one of Thailand's largest employers and exporters was confirmed by Somkid Jatusripitak, caretaker deputy prime minister and commerce minister.
Thailand had been shortlisted for expansion by the company, but Malaysia had offered better incentives.
California-based Seagate entered Thailand in 1988 and has developed the operation into its largest in the world. Executives declined to comment on the company's investment plan yesterday.
According to recent reports, Seagate was one of several US companies to have relocated investments to other countries in the Asean, such as Vietnam and Malaysia, due to Thailand's political and economic uncertainties and better investment incentives elsewhere.
Dr Somkid, who also chairs the Board of Investment, led a roadshow in the United States last week to try to turn investment confidence around.
Chakramon Phasukvanich, the permanent secretary for the Industry Ministry, said Seagate's shift in investment showed that Thailand had failed to support the company and the industry in terms of human resources and investment promotion privileges.
"[Southeast Asia] is highly competitive in the fight for foreign direct investment. We need to improve our comparative advantage in all aspects, including investment privileges," he said.
Other foreign investors were likely to follow suit, he warned.
According to Mr Chakramon, Seagate had approached the BoI before finding better opportunities elsewhere.
A proposal earlier this month from caretaker finance minister Thanong Bidaya to extend BoI tax breaks _ to 15 years from seven now _ alongside other improvements, had come too late.
One official at the National Economic and Social Development Board (NESDB) said a key factor behind Seagate's decision was likely to have been labour shortages in the country.
Thanin Pa-Em, the director of the NESDB's Competitiveness Development Office, said several industries in Thailand were facing skilled labour shortages. Efforts by state agencies, including the Education Ministry, to improve skills had been slow, Mr Thanin said.
Another obstacle was the lack of clear customs procedures or one-stop service for electronics producers, Mr Thanin added. The industry relies heavily on just-in-time logistics to manage its products and supply chain.
However, despite the setback, Mr Thanin said that positioning Thailand as a regional hub for the electronics sector and hard disk-drive industry remained a top development priority.
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