Vietnam is becoming an attractive investment destination for Thai firms as it embraces a more friendly business climate with increasing participation in trade blocs.
In mid-July, several dozens of Thai firms came to Vietnam to scout for investment opportunities focusing on a wide range of sectors such as energy, retail, agriculture, processing, building material, and animal feed.
“Thousands of Thai firms wish to join hands with Vietnamese partners to leverage the existing potential of both countries,” said Sanan Angubolkul, president of the Thailand-Vietnam Business Council, at a recent press conference in Hanoi.
According to Tharabodee Serng-Adichaiwit, general manager of Bangkok Bank Public Company Limited in Vietnam, Vietnam is one of the best destinations for Thai investments in Asia and there will be more Thai investments into Vietnam in the near future.
Bangkok Bank has recently tripled its capital in hope of providing more loans for Thai investments to expand in Vietnam.
In another case, billionaire beer magnate Charoen Sirivadhanabhakdi, chairman of Thai Charoen Corp (TCC), told Prime Minister Nguyen Xuan Phuc at a mid-July meeting that TCC would continue to expand business in Vietnam.
TCC has recently finalised a 655 million euro ($876 million) purchase of German retailer Metro Cash & Carry Vietnam chain. In 2013, TCC’s subsidiary, Berli Jucker, also purchased the Family Mart system in Vietnam.
Additionally, Thailand’s Central Group completed its acquisition of France’s Big C Vietnam super market system at a price of $1.1 billion. Late last year, Central Group purchased 49 per cent stake of Vietnam’s Nguyen Kim electronics supermarket chain.
The council’s statistics show that between the period of 2012 and 2015, the Thailand-Vietnam trade turnover rose 40 per cent to $13 billion. Thai investments into Vietnam have augmented 35 per cent from $5.9 billion in 2012 to over $8 billion in the present.
Ponpimon Petcharakul, commercial attaché from the Thai Embassy to Vietnam, told VIR that the Vietnamese government has greatly improved its administrative procedures by enacting legal documents on business conditions to make it easier for investors to do business.
“Not only big firms from Thailand, but thousands of small- and medium-sized enterprises want to invest in Vietnam, especially when the Thai economy seems to become stagnant and Thai investors need to seek more opportunities outside of Thailand. Vietnam is one of their best selections,” Petcharakul said.
In a June interview with VIR in Bangkok, Thai Minister of Commerce Apiradi Tantraporn said a new wave of Thai investments was coming in Vietnam as the Vietnamese government actively improved its investment climate, with significant tariff cuts under the ASEAN Economic Community (AEC) and free trade agreements (FTAs).
“Notably, Thailand has fewer FTAs than Vietnam. Therefore, Thai firms want to invest in Vietnam to take advantage of its FTA benefits,” Tantraporn said.
Under Vietnam’s commitments to the AEC and FTAs, the reduction and removal of many import tariff lines for goods will help Thai firms increase their investment in Vietnam and from here, they can further boost exports to FTA member markets.
Vietnam has signed 11 FTAs and is currently negotiating another four. It is expected that Vietnam will have a total of 15 FTAs with 53 partners worldwide.
“The AEC and FTAs are further strengthening the partnership between the two countries as it encourages more business transactions from Thailand to Vietnam and vice versa,” Angubolkul said.