Bangkok--9 Oct--KASIKORNBANK
As investment dynamics transform, diversification has become a focus among foreign investors. Japan has shifted its position to the “Thailand Plus One” policy. Seeing this as a vital change, KASIKORNBANK advises businesses to undertake a thorough study prior to investing. In order to stress its position as a business partner in the AEC market, KBank will host an International Summit & Business Matching event on November 25-26, 2013, targeting partners from Japan, South Korea, ASEAN and Europe. The event is intended to attract more than 300 companies and to spawn over 400 business matching deals.
Mr. Songpol Chevapanyaroj, KASIKORNBANK Executive Vice President, said ASEAN remains an attractive destination for investors from all over the world, due to the size of the market and long-term potential it holds. KResearch projects that ASEAN’s GDP will grow around 4.7-5.3 percent YoY in 2013, with a base case of 5.1 percent; inflation is forecast at perhaps 3.9-4.2 percent.
At present, every ASEAN member country competes to get a fair share of massive investments from overseas, such as from Japan, the US, the EU and China. Each ASEAN nation has different levels of advantages and readiness, with respect to rising wages, property rentals and openness of the respective investment policies. However, intra-ASEAN investment accounted for as much as 23 percent of the total investment in 2011. Investors from outside the bloc have invested in a greater variety of industries, showing ASEAN’s potential in accommodating the entire production chain and becoming one of the world’s major production hubs.
The CLMV+I nations, comprising Cambodia, Laos, Myanmar, Vietnam and Indonesia, are crucial production bases and raw material sources. The three major industries in these countries are agro-industry (e.g. rice, rubber, sugar and corn), energy and ores, and labor-reliant industries (e.g. textiles, shoes, leatherwear, and jewelry). The CLMV+I have seen over 5 percent GDP growth and a constant rise in purchasing power. Indonesia is particularly attractive since Thailand is its second-largest trade partner in ASEAN, with major products such as automobiles and components, machinery and parts, sugar, and plastics. Thai investors, however, must be especially cautious towards foreign exchange and other impacts from the anticipated QE tapering. Given that Indonesia does not rely much on exports but more on imports for domestic consumption, in the event that the Rupiah depreciates, inflation will rise in parallel.
Soaring inflation is a major hindrance to purchasing power. When that happens, our overall exports may suffer a downtrend. Currently, the Indonesian government has issued a policy that allows easier foreign investment.
Thailand — as a country strategically located at the center of upper South East Asia — is expected to be a hub for both border trade and logistics. Our border trade with the CLMV countries posts a 7.5-percent increase on an annual average. Total revenue from border trade in 2015 is forecast to reach THB540 billion. Japan, our biggest investor, has shifted from its previous strategy of “China Plus One” to “Thailand Plus One”, aiming to use Thailand as its investment and production base, with additional production bases to be established in another country, i.e., Indonesia, Vietnam and Myanmar as main contenders.
Thai entrepreneurs in certain industries may see the need for in-depth research on production base relocation, in order to enhance manufacturing efficiency and competitiveness. Businesses in labor-reliant industries may consider relocating into neighboring countries and boosting production by bringing along our more advanced technology. Business visions also need adjustment. Production base sharing can be done in a constructive way, while localization is also essential. In this regard, good business matching with reliable and competent partners is considered a key to success.
Mr. Songpol added that in order to offer support for trade and investment in Thailand and ASEAN, KBank will host an International Summit & Business Matching 2013 event on November 25-26, 2013, in collaboration with over 30 partner banks from Japan, South Korea, Germany, Italy, Vietnam, Indonesia, Cambodia and Laos. The event will tighten in-depth cooperation between partner banks, which includes product and service development for Thai and foreign businesses aiming to invest in other countries. These business matching activities will increase business expansion opportunities, information exchange on the economy and investment in each country among partners, and special services given to customers who use partner banks’ service areas for their foreign business transactions.
KBank hopes to attract more than 300 companies from various industries such as food, food technology and consumer product manufacturing from Japan, Thailand, South Korea, Cambodia, Laos, Myanmar, Vietnam, Indonesia, Italy and Germany. This event is expected to spawn over 400 business matching deals. For more information about this event or other business matching issues, please contact the K-Biz Contact Center, 02888 8822, or the K Global Business Center at
[email protected].