VietNamNet Bridge – Thai investors have been flocking to Vietnam, the first step in its plant to conquer the ASEAN market.

Thai SCG has set up 17 subsidiaries in Vietnam which have the total investment capital of hundreds of millions of dollars. It is expected that Vina Kraft Paper, one of the subsidiaries, would complete the baht250 million plan on expanding the paper plant in Binh Duong province, raising the production capacity from 22,000 tons to VND250,000 tons per annum.

SCG does not conceal its plan to continue exploiting other regional markets. In 2012, together with Vietnam, Indonesia was also the targeted market for SCG to expand its business to take full advantage of the available materials and low labor force there.

However, SCG does not intend to set up new businesses in Vietnam. The current gloomy real estate market, the high inventories of houses and building materials in Vietnam have prompted it to take a shortcut to enter the market.

Through SCG Building Materials, SCG spent baht7.2 billion to buy 85 percent of stakes of Prime Group, the Vietnamese biggest tile manufacturer which can provide 75 million square meters of products, or 33 percent of the output in Vietnam.

Also in 2012, SCG, through its subsidiaries, bought 23 percent and 20 percent of Tien Phong and Binh Minh Plastics Companies. The deals were worth baht1.3 billion.

In the chemicals manufacturing sector, SCG, together with Qatari and a Vietnamese partner, received the license for the chemical complex worth $4.5 billion in the southern province of Ba Ria – Vung Tau.

Analysts believe that these are not the final deals of SCG in Vietnam, and the big guy are still seeking the opportunities to buy Vietnamese small and medium enterprises operating in the fields that SCG is developing.

Local newspapers recalled a statement of SCG made three years ago that SCG would invest some $9 billion in Vietnam in the next three years.

Vietnam, an ideal leverage market

Not only SCG, but other big Thai groups have expressed their satisfaction about their business performance in Vietnam

The Nation in late 2012 quoted Deputy President of CP Vietnam Corp Sooksan Jiumjaiswanglert as saying that though foreign investors are eyeing Myanmar, CP still considers Vietnam an important market thanks to its high growth rate, from which CP would make further steps towards the other regional markets of Laos, Cambodia and China.

CP Group has announced that in 2013-2015, it would spend baht50 billion to expand business in emerging markets.

Setting foot in Vietnam in 1993 with the animal feed manufacturing factory in Dong Nai province, CP Vietnam is now leading the animal feed market.

The CP’s ambition to scale up its business in Vietnam can be seen in its decision to pay twice as the price to acquire the 40 percent s stakes of Minh Phu JSC, the biggest shrimp processing and export company. However, the deal has failed.

Don T, the Thai businessman, said the outstanding feature of Thai investment is that the investors don’t spend money in too many different business fields, while they would only focus on their forte sectors. Distribution is one of the sectors.

“Thai goods have more reasonable prices than the European products, while they are more favored by Vietnamese than Chinese goods. This is the reason which prompts Thai to open distribution chains in Vietnam,” he said.

Mongkol Banthrarungroj, Vice President of Thai Corp International said it plans to set up a retail center in Vietnam in 2013 where 70 percent of the goods to be displayed would be sourced from Thailand.

DNSG