Japanese automaker Toyota Motor, whose factory in Thailand appears above, has maintained its leading position in Thailand, which has remained the undisputed automotive center in Southeast Asia.

Over the years, Japan and Thailand have steadily built and strengthened their cultural and business relationship, and in 2012 they will celebrate the 125th anniversary of the establishment of mutual diplomatic ties between the two countries.

In turn, Thailand has proven itself a faithful partner to Japan in Japan’s time of need. Earlier this year, Tohoku was struck by one of the most powerful earthquakes to hit Japan in its history, unleashing a tsunami that further devastated coastal towns and farm and industrial land. Together, the disasters killed more than 13,000 people, with thousands more still missing.

Thailand and its people wasted no time in rallying together to do their part to aid Japan. The royal family of Thailand was involved in the relief efforts.

Their Majesties King Bhumibol Adulyadej and Queen Sirikit donated $165,000 to the victims. Princess Ubolratana gave more than $320,000 worth of survival kits and another $64,000 worth in cash and blankets. Crown Prince Maha Vajiralongkorn contributed over 20,000 blankets.

On the whole, donations from the Thai public have surpassed $7.92 million, while the Thai government has pledged over $6.57 million in further aid.

“We are truly grateful to the Thai royal family, and to all the Thai people, who have contributed to Japan in this dramatic time. The many letters of support and sympathy we’ve received have been truly overwhelming, and we will never forget what the Thai people have done for us,” says Japan’s Ambassador to Thailand Seiji Kojima.

Japanese Ambassador to Thailand Seiji Kojima.

The outpouring of sympathy and help is just one more facet of a deeply intertwined relationship between the two countries that dates back over half a millennium, since ancient ties between Ryukyu (now Okinawa) and the Siamese capital of Ayutthaya.

A sizable number of Japanese live in Thailand today, and the same can be said for Japanese direct investment in the form of companies who have established a presence in the country.

The Japanese Chamber of Commerce (JCC) in Bangkok lists a total of 1,330 members. Their research indicates that there are approximately 7,000 Japanese companies in the country today.

“When you ask Japanese what would be the ideal destination for investment, Thailand would be on top of their list. We have a well-balanced supply chain, so it is easy to start a business here,” says Payungsak Chartsutipol, chairman of the Federation of Thai Industries (FTI).

Japan continues to be the second largest exporter and the largest importer for Thailand.

The Japanese account for over 40 percent of the country’s foreign investment. Furthermore, the 2011 earthquake and tsunami also caused many small to medium-size Japan-based companies to establish their main base of operations in Thailand.

“Japan is the biggest investor in Thailand,” Payungsak says. “Japanese companies are involved in nearly all sectors: including autos, electronics, electrical appliances, petrochemicals and food. They are one of the key factors driving the Thai economy. Sixty-five percent of our GDP comes from our exports. We foresee that the Japanese will only keep increasing their investments in Thailand.”

In 2006, trade between both countries totaled $987.80 billion. Since then, this has increased by 24 percent in only five years — totaling $1.22 trillion in 2010.

With its strategically central position in southeast Asia and relatively short delivery times to surrounding markets, Thailand continues play a pivotal role not only in the Association of Southeast Asian Nations (ASEAN) region but in the global economy as well.

The country is also a major manufacturing hub.

“The Thai economy is continuously developing because the country has so many good resources for companies looking for a manufacturing and export base. Specifically, Japanese companies can utilize this base between the key markets of China and India,” says Munenori Yamada, president and chief representative for ASEAN and South Asia for the Japan External Trade Organization (JETRO).

The country’s service sector is also thriving.

“Thailand boasts a high level of infrastructure at every level and abundant well-trained human resources. Thailand has free access to the major markets,” he adds.

The automotive sector, in particular, is booming. Japanese and international auto companies have chosen Thailand as the ideal Asian production and export base.

But in order to manufacture a car, a company needs to source about 20,000 automotive parts and components, ideally from other companies close to it.

JETRO Thailand President and Chief Representative for ASEAN and South Asia Munenori Yamada

With the major Japanese automakers such as Toyota, Honda, Nissan and Mitsubishi establishing manufacturing facilities in Thailand, small and medium-sized auto parts companies have followed suit and set up factories to cater to the needs of their clients and meet the growing demand.

Indeed, several local Thai companies, such as Lohakit Metal, have greatly benefited from this new wave of incoming companies, as many of their services and products are geared toward satisfying Japanese business clientele.

“Ninety percent of the auto sector is covered by Japanese companies. Most of these consider Thailand an ideal export base,” says Kyoichi Tanada, president of Toyota Motor Thailand and the JCC in Bangkok. “The current production capacity in Thailand is 1.6 million units, but with Thailand’s continued success it is expected to rise to at least 2 million units soon.”

Currently, Thailand is ranked 12th worldwide in terms of total production volume of automobiles. The Thai government estimates that its rank will move to 10th in the world by the end of this year.

“We have identified some areas of cooperation that we can continue to build on in the future and these include agriculture, science and technology, environmental technology, IT, fisheries and tourism. We will continue to work together to diversify, deepen and strengthen our relations in these areas,” Kojima adds.

“The prosperity of Japan and the Japanese are dependent on the Thai people and Thailand. So we must continue to build on our relationship and support each other,” the ambassador says.

“Thailand is such an attractive country. We will continue to invest and work with the Thais. Our friendship and business relationship goes far back and will surely continue in the future,” JETRO’s Yamada says.

‘The prosperity of Japan and the Japanese are dependent on the Thai people and Thailand. So we must continue to build on our relationship.’