Thai firms urged to explore Vietnam

Thailand's private sector should explore business opportunities in neighbouring countries so that it can secure its long-term leadership in Indochina and Myanmar, says Sethaput Suthiwart-narueput, head of Siam Commercial Bank's Economic Intelligence Center.

The bank's research unit is warning Thai operators not to neglect searching for business opportunities in Cambodia, Laos, Myanmar and Vietnam.

Business expansion in neighbouring markets would help Thailand's private sector defend its market share against tough competition from Asian countries.

Since 2000, Thailand has been the leading exporter to Cambodia, Laos and Myanmar but has lost its pole position in Vietnam due to greater competition. Thai direct investment is rising in Laos but in decline in Cambodia and Vietnam.

Dr Sethaput said progress on the Asean Free Trade Area and Asean Economic Community would facilitate greater investment opportunities within the four less-developed countries, but each one presents both opportunities and risks.

Vietnam offers strong potential in the manufacturing, medical and health-care services, and alcohol sectors. Myanmar is good for agriculture and mobile phone operators, while Cambodia presents opportunities for internet businesses. The region is also attractive for the tourism sector.

These sectors are likely to draw large Thai firms, while small and medium-size enterprises should focus on trading and exports, he said.

"Domestic political uncertainty would be a key factor motivating local business operators to seek investment opportunities abroad, including [Laos, Cambodia, Myanmar and Vietnam]," he said.

"Generally, political risk in these countries seems to be lower than in Thailand, but they are at a disadvantage in other areas. As a result, business operators should take time to consider the risks before making a decision on investing."

The IMF World Economic Outlook Database in last October ranked Laos 167th out of 183 countries for ease of doing business, while Cambodia ranked 145th, Vietnam 93rd and Thailand 12th. There was no data for Myanmar.

Dr Sethaput said foreign direct investment in Thailand fell to about $1.2-1.4 billion in the fourth quarter of last year, the latest figures, from an average US$2.5 billion per quarter.