Reuters International

Japanese Foreign Minister Fumio Kishida (L) meets with Thailand's Foreign Minister Don Pramudwinai at the Ministry of Foreign Affairs in Bangkok, Thailand, May 1, 2016. REUTERS/Chaiwat Subprasom

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BANGKOK (Reuters) - Japan's foreign minister arrived in Bangkok on Sunday aiming to reaffirm economic ties after Japanese investments in Thailand slumped last year amid political concerns as well as stiff competition emerging from more nimble neighbours.

Japan has historically been the largest investor in Thailand, Southeast Asia's second biggest economy, which it sees as an important production base.

However, Japanese investments in Thailand nosedived by 81 percent last year, according to official data, something analysts say mirrors concern about Thailand's economy which continues to struggle under prolonged military rule.

Increased competition from the region's newer economies, such as Vietnam and Myanmar, is posing another threat to foreign investment in Thailand.

Foreign Minister Fumio Kishida told a news conference after meeting his Thai counterpart at the beginning of a two-day visit that Thailand remained an important stakeholder.

"Thailand is a stakeholder that Japan cannot be without as many big and medium-sized Japanese firms from over 4,500 companies are based here," Kishida told reporters.

Japan still came top in foreign direct investment (FDI) in Thailand last year, with total investments approved valued at more than 144 billion baht ($4.13 billion).

A senior Japanese diplomat, who wanted to remain anonymous, said Thailand's military government was keen to allay Japanese fears on potential political obstacles to investment.

Thailand has been ruled by a junta since the military took power in a May 2014 coup. The junta has promised a swift return to democracy but has pushed back a general election now expected to place in mid-2017.

The military government, led by General Prayuth Chan-ocha, has struggled to revive Thailand's export-dependent economy.

The country has seen a fresh wave of small, anti-junta protests over the past two weeks ahead of an Aug.7 referendum on a draft constitution that critics say will enshrine military power.

Kishida's visit to Bangkok kicks off his tour of the region including Myanmar, Laos and Vietnam.

It follows his visit to Beijing where China and Japan both expressed willingness to improve strained relations over conflicting territorial claims in the East China Sea.

(Reporting by Amy Sawitta Lefevre; Additional reporting by Juarawee Kittisilpa; Editing by Clelia Oziel)

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