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.
...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.
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