Bangkok, June 23: Despite Thailand's economic problems, Japanese investment in the country is expected to continue rising in 1997, the chief of Japan's Chamber of Commerce said on Monday.

Chamber president Yoshiaki Muramatsu told Reuters in an interview that Japanese investment in Thailand would definitely increase by a satisfactory level this year after a sharp jump in 1996.

"What I can say now is that Japanese investment in Thailand in 1997 will increase, but not double last year's. The picture will become clearer when our chamber conducts a survey next month," said Muramatsu.

Statistics showed that Japan led foreign investment in Thailand in the past few years. Out of 130.4 billion baht ($5.2 billion) of total foreign investment in 1996, 73.71 billion baht came from Japan.

This compared with 89.39 billion baht in total investment in 1995, with 31.79 billion from Japan.

Muramatsu said foreign investors still faced problems, including a lack of dialogue with the Thai government and a sluggish domestic economy with a shortage of skilled workers.

"Government policy is very important to investors and what I want to see is that the government invites foreign businessmen for consultation before it introduces new investment rules. Presently, the government never asks us whether its new rules are feasible," said Muramatsu.

He said a shortage of skilled workers in Thailand, which has shifted from labour intensive to hi-tech industries in the past five years, is worrisome and forces Japanese firms to fly in Japanese engineers to fix sophisticated machines when they break down.

"This problem could be solved to a certain level in five or six years after technical training institutes are set up," said Muramatsu, referring to a cabinet decision in early March to set up such institutes to upgrade Thai skilled workers.

He said Japanese investors closely monitored the cash problems faced by finance and property firms.

Analysts have voiced concerns for months over the exposure of finance houses to the ailing property sector which faces a severe supply glut and high financing costs.

The property market is believed to have about 300,000 unsold housing units. Analysts said house prices were unrealistically expensive because of high mortgage rates of 15-21 per cent.

"If these two sectors do not recover soon, they'll affect investment at least in the short-term," he said.

Thai government plans to increase minimum wages for unskilled workers should worry labour-intensive industries because such hikes would have to be absorbed by manufacturers and will hurt exports, Muramatsu said.

Labour unions are demanding the government approve a 20-baht minimum wage hike for workers in Bangkok and five neighbouring provinces who currently earn 157 baht a day.

"The minimum wage issue is a sensitive issue and I hope the wage committee can set up new guidelines acceptable to everybody," Muramatsu said.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.