Investment vista entices Thai firms

Many Thai firms at the forum expressed their interest in investing in Vietnam in the years ahead

Thai Minister of Commerce Apiradi Tantraporn told VIR that Vietnam had been actively improving its investment climate, with large tariff cuts under the ASEAN Economic Community (AEC) and other free trade agreements (FTAs). Interestingly, Thailand has reported fewer FTAs than Vietnam.

“This has prompted many Thai investors to come to Vietnam to do business. Vietnam is a lucrative market for Thai firms. There is growing interest in projects across the industrial, service, tourism, and financial sectors in Vietnam,” Tantraporn said on the sideline of last week’s “CLMVT Forum 2016: Towards a Shared Prosperity”.

The three-day forum in Bangkok, hosted by Thailand’s Ministry of Commerce, brought together some 1,000 participants from Cambodia, Laos, Myanmar, Vietnam and Thailand, as well as experts from Japan and the US. The first ever event aimed to discuss ways to form a seamless Mekong Delta region or a Single Destination.

“I believe that over the next few years, Thai investments in Vietnam will continue to grow. We have seen impressive growth in investments here over the past few years,” she said.

According to the Vietnam-Thailand Business Council, Thailand could become one of Vietnam’s ten largest foreign investors over the next two years, moving up from its current 11th place ranking. Thai investments in Vietnam rose by 35 per cent from $5.9 billion in 2012 to about $8 billion in May 2016.

Under Vietnam’s commitments to FTAs and the AEC, the reduction and removal of many import tariff lines for goods will help Thai firms to increase their investments in Vietnam, and from here they can further boost exports to FTA member markets.

Vietnam has signed 11 bilateral and multilateral FTAs and is currently negotiating another four with bilateral and multilateral partners. It is expected that Vietnam will have a total 15 FTAs with 53 partners worldwide.

“Thai investors wish to increase their investments in Vietnam because Thai goods are becoming popular here,” said the council’s president Sanan Angubolkul.

Chiming with this view, Grongthong Maneesin, a representative from Thailand’s Duay Ruk Company, told VIR that her company would attend a large-scale Thai goods exhibition in Vietnam in August 2016.

“We want to market our high-quality herbal products across Vietnam, as the demand for them is rising. After that, we would consider direct investment in the country,” she said.

Representatives from many firms, such as Green Siam Marketing, TRI Global, Kito, CT Industry, NMB-Minebea Thai, and Gates Unitta also stated that they valued the Vietnamese market and were considering expanding investments in Vietnam. At present, they are promoting their products through fairs and exhibitions across the country.

According to Ponpimon Petcharakul, the commercial attaché from the Thai Embassy to Vietnam’s Thai Trade Centre, several factors make the market attractive to foreign investors. In addition to benefiting from the AEC and FTAs, Vietnam has a large population of nearly 100 million people and their disposable income is rising. The country’s middle-class is swelling and consumers are spending more. Vietnam’s political stability is also a huge factor in its favour, as is its improved business climate and educated workforce.

“Thanks to these factors, Thai businesses are performing well in Vietnam,” Petcharakul said.

Over the past few years, Vietnam has been home to many large-scale Thai projects. Recently, in the retail sector, Central Group completed its acquisition of France’s Big C Vietnam super market chain, at a price of $1.1 billion. This acquisition enabled Central Group to take over Big C’s gigantic list of assets including 33 supermarkets and ten convenience stores with a combined annual volume of over 50 million customers. Late last year, Central Group purchased a 49 per cent stake in Vietnam’s Nguyen Kim electronics supermarket chain.

In addition, Thai Charoen Corp (TCC) spent $876 million acquiring Germany’s Metro Cash & Carry Vietnam supermarket system. In 2013, TCC’s subsidiary, Berli Jucker, also purchased the Family Mart system in Vietnam.