Thais consider investment in Vietnam
As Vietnam continues to remain a hotbed for foreign investment, Thai companies are now starting to look at their neighbour in a different light, with delegations of business executives flocking to the country.
As wages and other costs rise and Thailand starts to lose some competitiveness in export markets, local businesses see more opportunities abroad.
In order to promote such moves, Bangkok Bank, Thailand's largest commercial bank, arranged in April for 30 Thai businesses to visit Binh Duong province in Vietnam. Participants noted Binh Duong's New City offers substantial opportunities in manufacturing, retail sales and services. Land plots of various sizes in its industrial parks allow businesses more options for their factories, said Soraya Runckel, vice-president of Runckel & Associates.
She said investors had been keen on Vietnam the past 15 years because of its GDP growth of 7.5% per year on average, with projections it will continue at this rate for the short term. About 70% of Vietnam's 85 million people are under 30, ensuring a secure workforce as well as low labour costs for investors for a long period.
This young demographic guarantees a large pool of consumers, since the young tend to buy more than their older relatives, she added.
The Vietnamese government amended various laws covering investment, enterprise, land, and business competition to make them more favourable to foreign investors. For instance, foreign investors may invest in all sectors not specifically prohibited by law, which includes telecommunications, infrastructure, and retail businesses. Foreign investors are allowed to acquire 100% shares in private firms following specific guidelines.
A trip to the country is convenient for executives, as Ho Chi Minh City is only an hour away and multiple airlines serve the route. Binh Duong is a one-hour drive from Ho Chi Minh City.
The province has plans to develop the central city and expand the provincial economic and industrial zones. It includes modern residential, industrial and service zones that will have shopping malls, banks and financial services, a university, schools, a hospital, a golf resort and a horse-racing track.
Much of the infrastructure is under construction or already completed.
The province is eager to invite Thai businesses to operate or provide services there. Businesses located in Binh Duong benefit from relatively low wages, a young population and enthusiastic workers, while only being a short drive away from Ho Chi Minh City.
Provincial officials simplified investment procedures by reducing regulations and advising on lending sources.
In addition, a Binh Duong office could be developed as an export base to the marketer's Shangri-La of China.
Thai investment in Vietnam has been located mostly in Ho Chi Minh City, Binh Duong, Dongnai and Vungtau, or the Southern Key Economic Zone (SKEZ). The SKEZ generates 75% of the country's revenue.
Many Thai companies emphasise longer-term investment, such as Siam Cement and CP, with factories located in Binh Duong province's My Phuc Industrial Park.
Binh Duong maintains good infrastructure, such as roads and utilities, while attempting to keep policies transparent, she said.
It has labour training and human resource management, and the province has six universities and one new international university: The Eastern International University. Plans are underway to establish training and vocational institutions.
By Umesh Pandey - The Bangkok Post - May 23, 2011