Thai investors buoyed by Vietnam potential

Tussin Mahamongkol, vice chairman of the Thai Business (Vietnam) Association, told The Nation that Thai products are popular in the Vietnamese market. Consumers are willing to pay more for products from Thailand with Thai labels.

Less than 2,000 Thai companies are registered with the Thai Consulate in Vietnam, so the country still has room for a lot more as the market is huge.

Many Thai SMEs are thriving in Vietnam, including clothing and cosmetics traders.

"If any Thai investor wants to invest in Vietnam, now is a good time because the country has difficult relations with China, the biggest dealer in the market.

"Thailand could take this opportunity to receive a better market share," said Tussin, who has been a businessman here for more than 10 years.

According to the Bank of Thailand, Thai investment in Vietnam grew 11.8 per cent to US$2.5 billion (Bt90 billion) last year. A significant portion of the expansion was from industry, which has a value of $112 million. Thai investment in Vietnam is higher than in other CLMV countries.

Another Thai businessman, Veerapol Romphoti, general manager of Flexo Graphic, Vietnam’s third biggest maker of mainly labels and packaging, also said Vietnam has great potential, which makes it appealing to investors, especially when it comes to labour supply.

This is because the country has a population of 90 million, with a great deal of people of working age, making Vietnam a good destination for many investors.

However, unlike the popular belief that low labour costs make the country attractive for manufacturers, the monthly wage is between Bt6,000 and Bt7,000. With other costs including social security, which the employer has to pay, it could add up to Bt9,000.

"So if you are looking for cheap labour, Vietnam might not be the answer," he said. However, Vietnam is still attractive. Since much of the population is 18-25 years of age, they can still work for a very long time.

These working-age people in big cities like Hanoi and Ho Chi Minh City have purchasing power. That makes it a market with possibilities. The Vietnamese also like Thai products. They consider Thai goods as possessing high quality and affordability.

However, doing business in Vietnam presents some challenges, especially legal complications, he said, bemoaning the fact that Vietnam has many laws that discriminate against foreigners.

However, the situation should be better when the economic community is fully launched this year, he added.