Ticking the boxes on AEC
Executives talk shop as single market nears
Business leaders expect fast economic growth and greater business expansion ahead of the upcoming Asean Economic Community (AEC).
Thailand, however, still needs to update its laws and regulations to support business and encourage investment from abroad.
At the same time, the country must adjust its energy policies as it transitions from fossil fuels to renewable sources of energy.
Central Group chief executive Tos Chirathivat said retail business trends had shifted during the run-up to the AEC, with consumers switching to online shopping and forcing brick-and-mortar retailers to adapt.
Central is ready to jump aboard the train by adding more goods to its online shopping site after kicking off the project a few years ago.
“There will be triple the number of items on Central’s online shopping list, as we are ready to capitalise on the growing online shopping market,” Mr Tos said.
With economies growing in Asean at a time that growth i n Europe remains slow, the timing is right for Thai retailers to take advantage of cheap assets overseas and acquire new businesses.
“We, Central, are also continuing a plan to acquire department stores in Europe, as our aim is to be one of the leading players in luxury department stores in the continent,” Mr Tos said.
Central Group has already bought land in Rome and plans to open a new luxury department store — probably the biggest in Italy — by next year.
Sathit Limpongpan, chairman of the Stock Exchange of Thailand, said the collective Asean economy would grow faster after becoming a single community with no tariffs and free movement of services, labour and capital.
But it remains unclear whether Thai investors can grab profits from free-trade zones, as Thai laws and regulations are not up to date.
“We need to modernise our regulations to fit in with the fast-growing economy, which helps support the Thai private sector as it invests abroad and provides an opportunity for Asean investors to invest in Thailand,” Mr Sathit said.
Thailand still needs to invest more in infrastructure projects in order to ease free trade and become a hub for logistics and aviation once the AEC takes full effect in late 2015.
Surong Bulakul, chief financial officer of PTT Plc, said Thailand was in dire need of reforming its energy use.
The economy relies too much on petroleum and gas — a risky scheme if fossil fuels start to run out.
“Renewable energy is still the only answer to this question, and Thailand needs to adjust as soon as possible in order to avoid risks,” Mr Surong said.
Like other major Thai companies, PTT is seeking ways to invest abroad and particularly in Asean.
The state-backed energy conglomerate plans to stick to its principle of doing business by seeking good partners, rather than investing alone as an individual company.
Krungthai Bank president Vorapak Tanyawong said Thai commercial banks should consolidate to exploit economies of scale and better compete with regional rivals as the single market approaches.
The country’s four biggest banks — Bangkok Bank, Krungthai Bank, Siam Commercial Bank and Kasikornbank — have assets worth about US$70 billion each.
In contrast, Malaysia’s Maybank has $150 billion and Singapore’s DBS has $300 billion, Mr Vorapak said.
Thai banks are mostly ready for the AEC, but they must improve their Englishlanguage skills and change their mindset about working abroad.
Local banks are opening branches and representative offices in neighbouring countries and have even joined hands with f oreign banks to share facilities and provide cross-border services to clients who are expanding overseas.
Mr Vorapak said Thai banks could ensure a level playing field with other Asean banks in terms of small-business services and retail loans, but they needed to improve risk management and worker skills at the international level.
KPMG Vietnam and Cambodia chairman Warrick Cleine has advised Thai SMEs to get local partners to pave the way for doing business in neighbouring countries.