Ho Chi Minh City.—File Photo

By Bamrung Amnatcharoenrit

Vietnam is a land of opportunity, especially Ho Chi Minh City, but Thai investors should be more strategic by creating both "aggressive and passive" business plans to maximise benefits when the Asean Economic Community (AEC) takes effect in 2015, a trade specialist says.

Thai operators should not set up business operations to exploit only natural resources in Vietnam. Instead, they should work with them by creating a friendly business environment through joint operations, Malinee Harnboonsong, director of the Thai Trade Centre in Ho Chi Minh City, has suggested.

She said Thai investors should study all aspects of the Vietnam investment environment, especially regulations, tax incentives for exports to the European Union and other non-Asean countries, and language barriers. At present, Vietnam continues to gain tax privileges under the EU's Generalised System of Preferences.

Thai investors should not think of Vietnam as a rival. Businesspeople should view Vietnam as an ASEAN partner and find ways to work together, as the two share similar national resources. Product launches from Thai counterparts could then be differentiated in the market through innovative business models as a way for their businesses to survive.

"We want to see that there is business cooperation between Thailand and Vietnam over the next two years, not production relocation from Thailand to Vietnam to cash in on lower costs." She said this idea would help spread production facilities to other places regionally to channel product output to new markets as well.

"It will be a win-win situation," Malinee said.

In 2012, investment from Thai companies in Vietnam was roughly ranked 10th. At present, Japan and South Korea are playing major roles, beating Singapore, which was on top previously. However, Singapore is investing more by capitalising on such incentives as industrial zones to increase its role in the market. Real estate and electronics are major industries invested in by the island nation.

Malinee said Thailand intended to increase its role in Vietnam. After a previous visit by Prime Minister Yingluck Shinawatra to Vietnam, Thailand hoped to increase trade value by 20 per cent annually. Food and energy are strong industries in which Thailand can compete with others, while textiles also provide opportunities, but thought has to be given to innovation and design. Charoen Pokphand Group (CP) and SCG have gained a foothold there.

At present, the Vietnamese government is in the process of studying the environmental impact for the launch of an oil refinery project before inviting foreign investors to participate.

According to the Customs Department, in the first half of this year, exports from Thailand to Vietnam rose by 2.26 per cent to US$3.3 billion (Bt103 billion), while imports increased by 26 per cent to $1.68 billion. Last year, Thai shipments to Vietnam were valued at $6.48 billion - a drop of 8.16 per cent - while imports grew 47.02 per cent to $2.98 billion.

Southern Vietnam has rich national resources. It is a base for food production for export and also produces 70-80 per cent of food for domestic consumption. There are various industrial zones offering incentives to foreign investors. Overall in Vietnam, foreign companies are allowed full ownership of their operation. But land ownership is prohibited. The minimum wage is more than Bt200 a day.

Vietnam has good relations with Thailand. The perception among Vietnamese towards Thailand is good and they like to use Thai products as well. — The Nation/ANN/VNS