Thai Businesses are most Interested in Expanding Business in Vietnam in Southeast Asia
The “ASEAN Business Survey” recently published by HSBC said that in most Southeast Asian markets, more than half of the companies participating in the survey expressed their desire to choose Vietnam as a new market to expand their business. The survey was conducted by this bank in the 6 largest markets including Indonesia, Malaysia, Philippines, Singapore, Thailand and Vietnam on 600 businesses with annual revenue of at least 150 million USD. As a result, the top 3 neighboring businesses that are most excited to expand operations in Vietnam are Thailand (66%), Malaysia (58%) and Indonesia (55%). Thailand is also in the top 3 of businesses confident in their ability to develop business in Vietnam at 93%, behind local businesses (98%) and Singapore (94%).
“Thailand continues to be a country that contributes greatly to Vietnam’s FDI story”, said Mr. Ahmed Yeganeh, Country Head of HSBC Vietnam Business Banking Services Division. According to data from the Foreign Investment Agency, accumulated by the end of the first quarter of 2024, Thailand is the 9th largest investor in Vietnam, pouring a total of more than 14 billion USD, nearly a billion USD higher than Malaysia. In Southeast Asia, Singapore is the largest investor, pouring 77 billion USD, the second largest partner. Other neighbors such as Indonesia and the Philippines have invested more than 600 million USD each in Vietnam by the end of last year. Since last year, Thai investors have continuously announced plans worth hundreds of millions to billions of dollars to consolidate operations in Vietnam. In August 2023, Kasikornbank (KBank) – Thailand’s second largest bank announced its intention to pour more than one billion USD into Vietnam by 2027. Just at the end of February, Thailand’s fourth largest bank is The Siam Commercial Bank Public Company (SCB) said it will buy all capital contributions in Home Credit Vietnam, for about 800 million euros. In the production segment, SCG confirmed that it has started operating the Long Son Petrochemical Complex (LSP) and is in the machinery testing phase. This first integrated petrochemical complex in Vietnam aims to produce 1.35 million tons of olefin and 1.4 million tons of polyolefin annually, providing raw materials for the plastic industry.
Not only Thailand, businesses in Southeast Asia generally tend to prioritize choosing neighbors to expand their business due to geographical advantages and cultural similarities. This year, HSBC survey said 87% want to invest within the bloc compared to 69% outside the bloc. At the same time, 67% think that intra-bloc trade will prosper, more than double the rate of optimism about extra-bloc trade. In the opportunity to welcome intra-regional FDI capital flows, Vietnam is attractive to neighboring partners thanks to its ownership of 16 free trade agreements (FTAs), a strong consumer market and a growing digital economy.
Last year, Vietnam attracted 36.61 billion USD in FDI, an increase of more than 32% compared to 2023 and a record high in the period 2018-2023. “In a challenging year for the global economy, this number continues to show the importance of Vietnam as a manufacturing hub”, commented by Mr. Ahmed Yeganeh.
