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Bangkok. Japanese companies, Thailand’s biggest foreign investors, may spend more to build factories in neighbors including Indonesia and Vietnam after the worst flooding in 70 years disrupted global production.

“Executives recognize the concentration risk after the floods,” said Takahiro Sekido, chief Japan economist at Credit Agricole CIB in Tokyo. “The recent trend of accelerating investment into Thailand will cool despite the fact that Thailand was such an ideal destination.”

Prime Minister Yingluck Shinawatra has proposed spending 130 billion baht ($4.2 billion) on reconstruction and steps to prevent future floods.

Companies including Pioneer, Honda Motor and Toyota Motor scrapped profit forecasts after the floods shut factories. The disaster has rippled through the supply chains of Japanese auto and electronics makers, as parts shortages affected operations across the globe.

Honda chief financial officer Fumihiko Ike said on Oct. 31 that he hopes the Thai government will improve infrastructure, including water-drainage systems.

Canon, Nissan Motor, Hitachi and Toshiba all halted production at Thai factories because of the floods.

“We acknowledge the need to consider diversifying investment inside Thailand and to other countries in the future,” Pioneer spokesman Hiromitsu Kimura said on Thursday, a day after the company withdrew its forecasts for full-year earnings because of the disaster in Thailand.

The distribution of Japan’s supply chain across the region may shift as well amid increasing local consumption and plans to unify the region’s economy.

The 10-member Association of Southeast Asian Nations is targeting 2015 for the creation of a single-market economic zone modeled after the European Union, without a common currency.

Japan was the biggest investor in the bloc from 2008 to 2010, topping the United States and China, according to Asean statistics.

Indonesia and Vietnam, which both attracted more foreign direct investment than Thailand last year, look set to attract more Japanese investment, said Tohru Nishihama, an economist at Dai-ichi Life Research Institute in Tokyo.

“Indonesia has a large population and its domestic demand is quite strong, while Vietnam’s population is increasing,” he said.

The two countries account for more than half of the 591 million people in the countries that comprise Asean, the organization’s statistics show.

Indonesia imports as many as 200,000 vehicles from Thailand annually, and some factories have temporarily shut because of the parts shortage, according to the Indonesian Automotive Industry Association.

Still, Indonesia, Southeast Asia’s biggest economy, must do more to improve roads, electricity, ports and airports to attract investors, said Sudirman Maman Rusdi, the auto industry association’s chairman.

“At a glance, this is an opportunity,” Rusdi said. “But are we ready?”

Thailand’s infrastructure and industrial clusters make it an easy place for Japanese companies to operate, Yoichi Yajima, business support center representative for the Japan External Trade Organization, or Jetro, said last week.

“I don’t expect a big withdrawal of investment from Thailand,” Yajima said. “As long as big firms like Toyota, Nissan, Honda, Toshiba or Hitachi stay here, their suppliers won’t leave.”

Still, the floods may have cut interest in investing in Thailand to a trickle.

Queries to Jetro in Bangkok about new investment dropped to about 30 in October and one in November from more than 50 in each of the previous few months, said Yajima.

At least 533 people have been killed since late July, when monsoon rains began lashing Thailand.

Advancing waters have swamped seven industrial estates north of Bangkok with 891 factories, and threaten two others in the capital where Honda, Isuzu Motors and a unit of Mitsubishi Heavy Industries have operations.

Bloomberg