VietNamNet Bridge – Thailand's investments in Viet Nam have jumped in the past five years, fuelled by opportunities arising from the formation of the ASEAN Economic Community (AEC) and the impending Trans-Pacific Partnership.

Tharabodee Serng-Adichaiwit, general manager of Bangkok Bank Public Company Limited in Viet Nam

Statistics of the Foreign Investment Agency shows that Thailand poured US$7.88 billion investments into Viet Nam as of February 2016, ranking 11th among countries and territories with investments in Viet Nam. Recent acquisition deals in the retail sector of Viet Nam by Thai firms drew large market attention.

Viet Nam News spoke with Tharabodee Serng-Adichaiwit, general manager of Bangkok Bank Public Company Limited in Viet Nam, about the investment trend.

How do you evaluate the investment trends of Thailand’s enterprises in Viet Nam? Which factors help attract investments from Thailand to Viet Nam?

A strong economic growth with improving fundamentals, stable currency and low inflation are among factors which help attract investments to Viet Nam. However, I think the most important is that Viet Nam is becoming the world’s production hub with a booming middle class which also has low household debt.

We cannot deny that Viet Nam will be one of the most prosperous and biggest economies in the AEC in the next 5 to 10 years. Viet Nam is inevitably one of the most attractive destinations not just for Thais but for all foreign investors.

In particular, especially when the Thai economy becomes stagnant, Thai investors need to tap more opportunities outside their country.

With the AEC, our bank received visits and enquiries by a few hundred Thai investors in the past year. We also frequently organised seminars to promote investments to Viet Nam from Thailand with overwhelming participation from Thais every time.

What do you think about the recent investment influx from Thailand to the Viet Nam’s retail sector with acquisition deals into giant supermarkets? Should Vietnamese retailers be worried about losing the market share to Thais?

With Viet Nam integrating more and more into the regional and global economy, and especially its large potential which is the best in the region, the penetration from foreign investors is inevitable. For instance, Japan and Korea investors also substantially invest in Viet Nam.

I think there is no need for Vietnamese retailers to be worried as those Thai investors are the largest ones from Thailand and very professional in this field.

Their economy of scale and insight in the retail system will bring better services and prices to Viet Nam’s consumers. They also inevitably have to rely on Vietnamese human resources in running their businesses and thus Vietnamese will learn those retail systems from them.

The flip side of the coin is that with so many foreign players in Viet Nam, the local consumers will ultimately benefit from this competition.

I had a chance to talk with them earlier, and they have no intention of disrupting the Vietnamese market or make it difficult for Vietnamese business. More than 95 per cent are still Vietnamese products. They even plan to bring Vietnamese products to their networks in Thailand.

Actually, if you take the Thailand market as an example, Thai retailers still dominate the market even though so many foreign players have penetrated the Thailand market in the past twenty years. Another example is the banking industry. So far, even with the Viet Nam opening its banking industry to foreign banks, local banks are still are the major players in the banking industry.

What do you predict about the investment inflow from Thailand to Viet Nam, given the situation that several Thai banks have opened an office in Viet Nam recently, including Kasikorn Bank, and Siam Commercial Bank, while Bangkok Bank increased the charter capital of its both branches in Viet Nam?

It is the strategy of Thai banks to expand its network to fully cover the AEC. Of course, this aims firstly, to support Thai investors and secondly, to expand to new markets that have strong potential and big room for growth.

I think at this moment, if you ask anyone in the world, they will give the same answer, that Viet Nam is the best destination for investment. I, therefore, predict that there will be more investments from Thailand, especially since the two countries have close proximity and culture.

For Bangkok Bank Viet Nam, we tripled our capital to tap huge Thai corporates who are coming to Viet Nam, and at the same time we also wish to support more Vietnamese companies which are becoming bigger and stronger, as well as become financial partners of such Vietnamese corporations to invest in the AEC where we have a long presence in most of its economy.

Bangkok Bank Viet Nam, with supported from large international network, and more than 20 years of experience coupled with accumulated local knowledge and local connection in each area, is pleased to be one of knowledge centres for Viet Nam businesses to penetrate to those markets as well.

Moreover, we also frequently organise seminars to promote investment in the AEC as well as organise investment trips to each country to explore opportunities.

What are your recommendations for Vietnamese businesses to be able to take advantage of the investment inflow from Thailand?

I am witness to the fact that when most Thai investors come to Viet Nam, they still have limited knowledge about the Vietnamese market and they need to learn and rely on Viet Nam businesses as their local trade partners.

I think once the relationship has been established it will be long-term where both parties will enjoy mutual benefits.

Moreover, once the investment is decided in Viet Nam, most of the products and goods that they use inevitably have to be procured from Vietnamese businesses.

In this instance, since Thailand and Viet Nam share a proximity and culture under the roof of the AEC, I think Vietnamese businesses can easily work with the Thais, because, speaking from my own experience, I think it is not hard to understand and do business with the Vietnamese.

VNS