Firms urged to tap growing middle-class market in GMS
Bangkok Bank has urged Thai businesses to have a more active role in the Greater Mekong Sub-region (GMS) in terms of trading activities and investment, in order to tap the growing middle-class market in those countries.
Speaking at the bank’s “Trade Logistics in Greater Mekong Sub-region: GMS” seminar yesterday, executive vice president Kobsak Pootrakool said the high level of gross-domestic-product growth in emerging GMS countries such as Cambodia, Laos and Myanmar presented a great opportunity for Thai enterprises.
Cambodia has annual GDP growth of 7 per cent, while’s Laos’ economy is expanding by 8 per cent and Myanmar’s by 7 per cent, he said. He said that growth in the emerging economies of the GMS, which have a combined population of around 150 million, had led to a rising number of middle-class consumers and demand for electronic gadgets and new-technology products.
“Thailand has expertise in producing those products and people in the GMS prefer buying products from Thailand, as they have confidence in our products,” said Kobsak. Thai apparel, furniture, rubber and processed products are all in high demand in GMS countries, and especially in Myanmar, he added.
Bangkok Bank, which has 26 offices and branches in 13 countries outside the Kingdom, wants to see Thai business ride the opportunities presented by GMS growth by not only selling products, but also securing resources and reducing production costs.
This would increase their competitiveness for when the Asean Economic Community is fully realised in 2015, he said.
Kobsak cited Swedish furniture giant Ikea as an example of successful business adjustment. The company’s labour costs in Sweden were high, so it decided to use only designers in its home country and moved its production base to China.
In an effort to save transportation costs, Ikea heavily promoted DIY products along with reinforcing its brand, he said.
Thai producers should learn from Ikea’s example by hiring labour resources in GMS markets and focusing on design and brand awareness, he suggested.
Chansak Fuangfu, senior executive vice president of Bangkok Bank, said on the sidelines of the seminar that the bank had seen much activity in the GMS by two major Thai corporates, one of them wanting to secure resources and move its production base within the sub-region, and the other being a trading company. A high-growth GMS business area will be trading, thanks to infrastructure investment, he said.
The combined value of Thai exports to CLMV countries – Cambodia, Laos, Malaysia and Vietnam – in the next two to three years will surpass the Kingdom’s exports to the US, he added. The current value of exports to the four markets is more than Bt20 billion.
Bangkok Bank, meanwhile, is talking with the banking regulator in Cambodia with a view to resuming its operation in the country, as it wants to provide services to customers increasing trade activities in Cambodia and elsewhere in the GMS, said the executive.
Chansak said the bank’s outstanding lending to GMS corporate customers was currently not much when compared with total outstanding loans of US$8 billion (Bt248 billion) at its overseas branches, as it could provide loans from Thailand to businesses in GMS countries.
