Thailand is set to be a strategic investment destination for Chinese companies, not only to cash in on a huge domestic market, but also using the Kingdom as springboard to export products to Asean and other markets around the world.
However, Thailand needs to improve the efficiency of government services as the processing of work permits and visas for foreign firms that want to set up operations here, as well as helping them lower their production costs, one Chinese investor says.
Xu Gen Luo, chairman of Thai-Chinese Rayong Industrial Realty Development Co, said that with the rapid development of China’s economy, its companies had been integrating more and more with the world economy.
Despite its higher production costs compared with China, Thailand has other strengths make it an attractive country in which to invest.
The main factor is Chinese manufacturers’ desire to enrich their products’ diversity of origin. They also want to expand their business into the Thai market and use this country as an export springboard into global markets. Moreover, Chinese companies want to take advantage of the Kingdom’s resources such as rubber.
The Chinese government has encouraged companies to invest abroad, providing low-interest loans and tax incentives, as well as direct capital support.
“China is a young country whose modernisation and industrialisation progress has taken place for only 30 years. It takes time for Chinese companies to improve and strengthen themselves first before expanding their business into global markets,” Xu said. Thailand is located in the centre of Asean and has a great investment atmosphere and harmonious cultural environment. Investment security in Thailand is quite well ensured. That is why more and more Chinese investors have come to Thailand, he said.
He said more than 1,000 Chinese companies are operating here, including trading and manufacturing firms.
Thai-Chinese Rayong Industrial Realty Development was set up in 2005 as a joint venture between China’s Holley Group and Thai industrial-estate developer Amata Corporation.
Its core businesses are an investment advisory service and the rental and sale of land and factories. Its purpose is to build a platform for Chinese investors to develop and expand their business in Thailand.
Xu said the group decided to form the partnership with Amata for three reasons. First, Vikrom Kromadit, chief executive officer and managing director of Amata Corp, is a strategic-minded businessman who enjoys a very high reputation in Thailand. Second, Amata is a well-developed and successful industrial-estate company with years of experience. Third, Amata City is in Rayong, which enjoys the Board of Investment’s Zone 3 investment privileges.
“Factories in our industrial zone have invested US$1.2 billion so far in the first and second phases,” he said.
“Currently, there are more than 60 manufacturers in the industrial park, occupying total land area of 2,000 rai. Most of them are in such industries as electronics, motorcycles, vehicle parts, and renewable-energy industries like solar panels. They have employed about 1,000 Chinese workers as well as 10,000 Thai workers.”
Xu added that about 60 per cent of the estate’s products were exported to many markets around the world, particularly the US and Europe.
“We plan to add another 1,000 rai initially in our Phase 3, which will start this year, and will add another 200 factories in our industrial estate.”
Industries specialising in renewable energy and high-technology products will be the new focuses, he said, noting that with its relatively high costs of production, Thailand needed to concentrate on high-value-added industries. He said this year marked the 40th anniversary of the establishment of diplomatic relations between China and Thailand. It is apparent that the cooperation between the two countries, such as on the economy, politics, culture, and communications, has stepped into a new stage.
China is now Thailand’s No 1 trading partner and importer of its products. Chinese investment in Thailand last year totalled Bt38 billion. Xu said the government needed to improve the efficiency of its visa and work-permit processing to attract more foreign investors.
As well, as the Asean Economic Community becomes fully effective this year, affecting the movement of the regional labour market, Thailand should be doing something to bring down its production costs.
“We are looking forward to the AEC,” he said, adding that Asean could become a mutually complementary and beneficial ecosystem in terms of resources, capital, trade and labour.
He said the government’s railway project would be mutually beneficial to China and Thailand. Its significance is not only economic but also in politics and culture.