These economic woes have
also led to political tensions between Prime Minister Nguyen Tan Dung and
President Troung Tan Sang. These may surface at the Communist Party’s Central
Committee meeting currently taking place, and there will certainly be discussions
during the meeting about how the weakening Vietnamese economy can be recharged.
Whatever the outcome of
the meeting, we can still expect to see plenty of ongoing interest in Vietnam
by Thai investors, as most businesses with a presence in the country of 90
million will continue to focus on their long-term strategy and creating real
value.
According to the Thai
Consulate in Ho Chi Minh City, Thailand is the 11th largest investor in Vietnam
and the third largest among Asean members, with total investment value of
US$5.9 billion (182 billion baht). This is concentrated in the processed foods,
paper, plastic, animal feed and motorcycle parts sectors.
I am confident that
Vietnam will bounce back from its recent difficulties, and more quickly than
people think. Even though the pace of economic growth in Vietnam is slowing, a
World Bank forecast released at the beginning of October is still forecasting
5.2% growth in 2012 and 5.7% expansion in 2013.
 |
| With sustainable growth around 5% a year, Vietnam should be able to reduce the risk of high inflation. Photo: Bangkok Post |
Going forward, I believe
there are four key areas for consideration by investors:
1. Vietnam is
changing: In the past, corrupt loans to inefficient state- and privately
owned companies resulted in a rise in non-performing loans and pressure on the
wider economy. The Vietnamese government is now taking steps to remedy
these problems in the banking sector. President Truong Tan Sang has given
interviews and public speeches pledging action against corruption and I believe
this, more than any other factor, can support confidence that Vietnam will
provide solid medium and long-term investment growth.
2. Growth is stable: The
current growth rate of around 4% is predicted to average out at around 5% over
the next two years. This is a sustainable level of growth, and will keep
excessive inflation at bay, while also helping Vietnam prepare for the economic
integration prompted by the Asean Economic Community.
3. Vietnam is a
springboard to opportunity lying just beyond its borders: Laos and
Cambodia are dynamos of growth and Vietnam can provide a gateway for Thai
investors wishing to access these markets, directly or through Vietnam
subsidiaries.
4. Cost savings: With a
glut of overextended Vietnamese companies looking to divest or offload assets,
there are bound to be bargains for savvy Thai entrepreneurs looking to expand
their operations. Furthermore, labour costs in Vietnam are significantly
lower than in many countries in Asean, helping to reduce startup costs.
One reason why foreign
investment in Vietnam has dropped recently is that Asean countries have been
competing strongly to try to attract new investment. This is obviously good for
Thai investors spreading their wings, especially now they are being encouraged
by the Thai government to invest abroad.
In my view, an ideal
investment strategy for Thai companies would be to arrange their investments
across several Asean countries, as they will gain comparative advantage, supply
chain benefits and be able to spread their risks.
Because of Vietnam’s
close connections with neighbouring countries, the Vietnamese market constitutes
more than just the country’s 90 million-strong population and it should
continue to be an important element in any regional expansion.
(bangkokpost.com)
