Why Vietnam a magnet for Thai
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-percent 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 semiskilled, which will sustain its export-driven industries.
Thailand, on the other hand, is facing a rapidly ageing soci-