Thai investors to embrace lucrative Vietnam partnerships
Vietnam is a land of opportunity and Thai investors should create both “aggressive and passive” business plans to maximize benefits when the ASEAN Economic Community (AEC) is formed in 2015, a trade specialist says.
Thai operators should not set up business operations to only exploit natural resources in Vietnam, but to create a friendly business environment through joint operations instead, Malinee Harnboonsong, director of the Thai trade Centre in HCM City, suggested.
She said Thai investors should carefully study Vietnam’s investment environment, especially regulations, tax incentives for exports to the European Union and other non-ASEAN countries, and language barriers. At present, Vietnam continues to gain tax privileges under the EU’s Generalized System of Preferences.
In her opinion, Thai businesspeople should view Vietnam as an ASEAN partner and find ways to work together, as the two share similar national resources. Product launches from Thai counterparts could then be differentiated in the market through innovative business models as a way for their business to survive.
“We want to see that there is business cooperation between Thailand and Vietnam over the next two years, not production relocation from Thailand to Vietnam to cash in on lower costs.” She said this idea will help spread production facilities to other places regionally to channel product output to new market as well.
“It will be a win-win situation,” Malinee said.
In 2012, investment from Thai companies in Vietnam was roughly ranked 10th. Japan and Republic of Korea are currently playing major roles, beating Singapore, which was on top previously. However, Singapore is investing more by capitalizing on such incentives as industrial zones to increase its role in the market. Real estate and electronics are major industries invested in by the island nation.
Malinee said Thailand intended to increase its role in Vietnam. After a previous visit by Prime Minister Yingluck Shinawatra to Vietnam, Thailand hoped to increase trade value by 20% annually. Food and energy are strong industries in which Thailand can compete with others, while textiles also provide opportunities, but though has to be given to innovation and design. Charoen Pokhand Group (CP) and SCG have gained a foodhold there.
At present, the Vietnamese Government is in the process of studying the environmental impact for the launch of an oil refinery project before inviting foreign investors to participate.
According to the Customs Department, in the first half of this year, exports from Thailand to Vietnam rose by 2.26% to US$3.3 billion, while imports increased by 26% to US$1.68 billion. Last year, Thai shipments to Vietnam were valued at US$6.48 billion – a drop of 8.16% - while imports grew 47.02% to US$2.98 billion.