VietNamNet Bridge – Viet Nam is a land of opportunity, especially HCM City, but Thai investors should be more strategic by creating both "aggressive and passive" business plans to maximise benefits when the ASEAN Economic Community (AEC) takes effect in 2015, a trade specialist says.

Ho Chi Minh City.—File Photo

Thai operators should not set up business operations to exploit only natural resources in Viet Nam. Instead, they should work with them by creating a friendly business environment through joint operations, Malinee Harnboonsong, director of the Thai Trade Centre in HCM City, has suggested.

She said Thai investors should study all aspects of the Viet Nam investment environment, especially regulations, tax incentives for exports to the European Union and other non-ASEAN countries, and language barriers. At present, Viet Nam continues to gain tax privileges under the EU's Generalised System of Preferences.

Thai investors should not think of Viet Nam as a rival. Businesspeople should view Viet Nam as an ASEANpartner 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 businesses to survive.

"We want to see that there is business cooperation between Thailand and Viet Nam over the next two years, not production relocation from Thailand to Viet Nam to cash in on lower costs." She said this idea would help spread production facilities to other places regionally to channel product output to new markets as well.

"It will be a win-win situation," Malinee said.

In 2012, investment from Thai companies in Viet Nam was roughly ranked 10th. At present, Japan and South Korea are playing major roles, beating Singapore, which was on top previously. However, Singapore is investing more by capitalising 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 Viet Nam. After a previous visit by Prime Minister Yingluck to Viet Nam, Thailand hoped to increase trade value by 20 per cent annually. Food and energy are strong industries in which Thailand can compete with others, while textiles also provide opportunities, but thought has to be given to innovation and design. Charoen Pokphand Group (CP) and SCG have gained a foothold 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 Viet Nam rose by 2.26 per cent to US$3.3 billion, while imports increased by 26 per cent to $1.68 billion. Last year, Thai shipments to Viet Nam were valued at $6.48 billion - a drop of 8.16 per cent - while imports grew 47.02 per cent to $2.98 billion.

Southern Viet Nam has rich national resources. It is a base for food production for export and also produces 70-80 per cent of food for domestic consumption. There are various industrial zones offering incentives to foreign investors. Overall in Viet Nam, foreign companies are allowed full ownership of their operation. But land ownership is prohibited. The minimum wage is more than Bt200 a day.

Viet Nam has good relations with Thailand. The perception among Vietnamese towards Thailand is good and they like to use Thai products as well.

Thai co-operatives

A delegation of co-operatives from Thailand, directed by the Co-operatives Promotion Department, met with Vietnamese company executives in HCM City on Tuesday, Aug 13, to explore business opportunities.

Most of the visiting co-operatives, specialising in milk, beef, rice, processed fruit and other products, were looking to find importers and distributors in Viet Nam.

Speaking at the Viet Nam-Thailand Business Meeting, Opat Klanbut, deputy general director of the Co-operatives Promotion Department of Thailand, said Thai co-operatives can ensure regular supply of good quality farm produce and raw materials to Vietnamese partners. Klanbut said "we hope to sign MoUs with Vietnamese co-operatives to boost trade ties and other activities.

"Thai co-operatives also want to open factories producing milk, meat and processed food in Viet Nam," he said.

Bilateral trade between Viet Nam and Thailand has increased strongly in recent years, he said, adding that the business trip is expected to enhance further trade relations of the two countries, he said.

There are more than 7,100 co-operatives in Thailand with over 10 million members. They contribute about 19 per cent of the country's GDP.

The Viet Nam-Thailand business meeting was organised by the Co-operative Promotion Department of Thailand and the Viet Nam Chamber of Commerce and Industry in HCM City.

by Bamrung Amnatcharoenrit

Source: VNS