Tuesday, October 16 2018

VietNamNews

Why Việt Nam is such a magnet for baht

Update: October, 01/2018 - 16:10
C.P. Vietnam Corporation (CPV) is a member company of C.P. Group, Thailand, investigated in Việt Nam in 1993. It’s business is fully integrated in livestock and aquaculture spanning the entire food production value chain.—Photo CP Group
Viet Nam News

BANGKOK — Thailand is being left behind when it should be learning from the success story to its east.

Việt Nam has attracted a growing number of big Thai corporations to invest in its huge domestic market of 96 million people, a new trend that should be closely watched by Thai economic planners. While Việt Nam’s GDP is half the size of Thailand’s – US$223 billion to $455 billion in 2017 – its economy has for years been growing at a much faster rate, averaging 6-7 per cent per annum. 

Given fresh economic and business opportunities beyond our borders, major Thai conglomerates including CP, ThaiBev, Central, Boon Rawd, PTT and SCG have lined up to invest hundreds of billions of baht in Việt Nam. 
ThaiBev, for example, recently announced plans to invest a combined Bt200 billion-plus in various sectors there, from beer and other beverages to retail and manufacturing. Its biggest investment, Bt156 billion, is in Saigon Beer, in which ThaiBev acquired a 56-per-cent equity stake. That was followed by a Bt28-billion investment in a major Vietnamese cash-and-carry retail chain. Berli Jucker, a unit of ThaiBev, has meanwhile invested in a multibillion-baht glass-bottle plant and other ventures in Việt Nam.

CP group is expanding its food and agriculture business in Việt Nam with a US$250-million investment plan for chicken farming and processing, among other ventures. Central, the retail conglomerate, has designated Việt Nam as its “second home” market after investing a combined Bt50 billion over the past few years. Its latest investment plans, covering 2018-2022 and focusing on retail and other sectors, are worth Bt16.5 billion.

PTT and SCG have boosted their investment in heavy industries as well as the energy and petrochemical sectors, while Boon Rawd has invested Bt40 billion in Việt Nam’s beverage industry. Other major Thai investors include the Amata group in the industrial estate sector; Gulf in the energy sector, the Wha group in industrial estates and B Grimm in renewable energy.

Obviously, Việt Nam in the eyes of these Thai companies has a bright future, having opened up its economy to the rest of world just a couple of decades ago. First, it has a large domestic market of nearly 100 million consumers, which will fuel consumption and industrial growth in coming decades. Second, the country has a sizeable pool of labour, both skilled and semi-skilled, which will sustain its export-driven industries.

Thailand, on the other hand, is facing a rapidly ageing society and a workforce crisis stemming from decades of family planning and low birth rates. Together these will result in a steady decline in the number of workers and growing dependence on migrant labour.

Việt Nam has also benefited from decades of relative political stability with its one-party rule, whereas Thailand has weathered years of political infighting that contributed to a slowdown in economic growth and private investment. At the same time, systematic corruption in Việt Nam is said to be shrinking, and its provincial administrations have more authority than their counterparts in Thailand to grant promotional privileges to foreign investors.

Finally, Việt Nam has a sharper focus on high-technology industries and belongs to multiple free-trade-agreement groups. 

The upshot of all of this is that it makes sense for Thai and other foreign investors to boost their presence in Việt Nam. Thai entrepreneurs’ growing interest in Việt Nam underlines their advanced maturity in branching out to overseas markets and seeking new opportunities and profits. Yet an increasingly successful Việt Nam also offers Thailand several lessons on what it takes to make a comeback on the regional stage.—The Nation/ANN

 

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