Logo of Phnom Penh Post newspaper Phnom Penh Post - Why Vietnam a magnet for Thai firms




Why Vietnam a magnet for Thai firms

Content image - Phnom Penh Post
Nguyen Thanh Nam (left), director general of Sabeco, signs documents as he attends the auction of the brewer’s shares at the Ho Chi Minh City stock exchange in December last year. Thai brewer ThaiBev has invested $4.8 billion in the company’s Saigon Beer. AFP

Why Vietnam a magnet for Thai firms

The Nation (Thailand)/ANN: Thailand is being left behind when it should be learning from the success story to its east.

Vietnam 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 Vietnam’s GDP is half the size of Thailand’s – $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 Vietnam.

ThaiBev, for example, recently announced plans to invest a combined $6 billion-plus in various sectors there, from beer and other beverages to retail and manufacturing.

Its biggest investment, $4.8 billion, is in Saigon Beer, in which ThaiBev acquired a 56-per-cent equity stake. That was followed by a $868-million investment in a major Vietnamese cash-and-carry retail chain. Berli Jucker, a unit of ThaiBev, has meanwhile invested in a multimillion-dollar glass-bottle plant and other ventures in Vietnam.

CP group is expanding its food and agriculture business in Vietnam with a $250-million investment plan for chicken farming and processing, among other ventures. Central, the retail conglomerate, has designated Vietnam as its “second home” market after investing a combined $1.5 billion over the past few years. Its latest investment plans, covering 2018-2022 and focusing on retail and other sectors, are worth $511 million.

PTT and SCG have boosted their investment in heavy industries as well as the energy and petrochemical sectors, while Boon Rawd has invested $1.2 billion in Vietnam’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, Vietnam in the eyes of these Thai companies has a bright future, having opened up its economy to the rest of the 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.

Vietnam 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 Vietnam 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, Vietnam 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 Vietnam. Thai entrepreneurs’ growing interest in Vietnam underlines their advanced maturity in branching out to overseas markets and seeking new opportunities and profits. Yet an increasingly successful Vietnam also offers Thailand several lessons on what it takes to make a comeback on the regional stage.

MOST VIEWED

  • Without shoes or a helmet, a young cyclist steals the show

    Pech Theara gripped the curved handlebars of his rusty old bike, planted his bare feet on its pedals and stormed as fast as he could towards the finish line. The odds were against him as the 13-year-old faced off against kids with nicer bikes at

  • Phnom Penh-Sihanoukville expressway on schedule

    The construction of the more than $1.9 billion Phnom Penh-Sihanoukville Expressway has not been delayed despite the Covid-19 pandemic, with more than 26 per cent of the project completed and expected to finish in about two years, according to Ministry of Public Works and Transport secretary of

  • Singapore group seeks $14M in damages from PPSP over ‘breach of contract’

    Singapore-based Asiatic Group (Holdings) Ltd is seeking a minimum of $14.4 million relief from Cambodia Securities Exchange (CSX)-listed Phnom Penh Special Economic Zone Plc (PPSP) for allegedly breaching a power plant joint venture (JV) agreement. Asiatic Group’s wholly-owned Colben System Pte Ltd and 95 per

  • Over 110 garment factories close

    A government official said on November 22 that at least 110 garment factories had closed in the first nine months of the year and left more than 55,000 workers without jobs – but union leaders worry those numbers could be much higher. Ministry of Labour and Vocational Training undersecretary

  • PM dispels lockdown rumours, gifts masks

    Prime Minister Hun Sen on November 12 denied rumours that he will lock down the country in response to increased Covid-19 fears, referring to them as propaganda aimed at destabilising the country. In a Facebook post, he said some people had spread rumours that the government

  • SilkAir adds flight to Phnom Penh schedule

    Silkair (Singapore) Pte Ltd is increasing its flight frequency between Phnom Penh and Singapore with a third weekly flight on Saturdays, according to Cambodia Airports’ Facebook page. The other flights offered are on Tuesdays and Sundays, with an estimated Phnom Penh arrival time at 5:35pm