BBL eyes Chinese firms in Vietnam

 Vietnam is enjoying tax benefits under a free-trade agreement with the European Union, said Tharabodee Serng-Adichaiwit, senior vice president and general manager of Bangkok Bank’s Vietnamese operations.

When the US-led Trans-Pacific Partnership crystallises, Chinese exporters with a production base in Vietnam, which plans to be one of the members, can take advantage of tax privileges from the US.

Labour in China will no longer be cheap, so its exporters have to find a new base, while Vietnam is welcoming foreign direct investment to accelerate its economic growth.

Tharabodee said Bangkok Bank (China) could help refer Chinese customers to BBL’s Vietnamese operations, which has two branches – one in Hanoi and the other in Ho Chi Minh City.

Chinese customers at Bangkok Bank in Vietnam are only 3-4 per cent of the total, but are expected to surge to nearly 10 per cent if Chinese direct investment in Vietnam continues rising.

Thai companies are not making as many moves into Vietnam as Chinese companies. The key Thai investors are garment manufacturers. However, what the bank has been seeing is a pick-up in the trading activities of Thai companies, which use Vietnam as their trading base in supplying Thai products to Vietnamese consumers.

Vietnam now is quite different from what it was a few years ago after the government managed to solve the economic problems, runaway inflation and bad debt in the banking industry.

The Vietnamese government this year targets growth in gross domestic product at 6.5 per cent, export growth at 18 per cent, inflation at not more than 1 per cent, loan growth in the banking industry at no more than 14 per cent and bad debt at less than 3 per cent.

Bangkok Bank in Vietnam aims for loan growth of 15-20 per cent this year. The pace in the first half – 7-8 per cent – was lower than expected because approved borrowers are not drawing down on their loans yet. Most of the approved loans are for construction, which takes time, so borrowers have no need for the funds right away. 

Last year, the bank’s Vietnamese operations reported loan growth of 5 per cent.

Wage costs in Vietnam might become a negative factor for investment in the future because the country plans to raise the monthly salaries of unskilled workers by 16 per cent over the next few years. However, the new wages will still be half those in Thailand.

Vietnam is among the most attractive countries in Asean for direct investment because of its political stability, low labour costs and supportive conditions, Tharabodee said. 

This will bring opportunities to the bank, he added.