Vietnam as Key Business as Major Manufacturing Base of the Future
Mr. Arkhom Termpittayapaisith, Minister of Finance of Thailand, presided over the opening ceremony of a seminar titled “Vietnam in Focus 2022 : The Dream Journey” in the presence of Mr. Nikorndej Balankura, Ambassador, Royal Thai Embassy in Hanoi, the Socialist Republic of Vietnam, and welcomed by Dr. Rak Vorrakitpokatorn, President of Export-Import Bank of Thailand (EXIM Thailand), at The St. Regis Bangkok Hotel on September 22, 2022.
Minister of Finance said that global economic recovery in the post-COVID-19 Next Normal era has come with plenty of fresh business opportunities particularly in such a new frontier as Vietnam where there is high economic potential with a population of almost 100 million and an annual economic growth prospect of around 7%. Vietnam is Thailand’s 4th largest export market, following the US, China and Japan, and 10th largest source of import. Thai-Vietnamese trade has recorded a frog-leap growth of almost 20% per year from 150 million US dollars in 1992 to around 20,000 million US dollars at present. Besides, the Vietnamese government has vigorously implemented a policy on promotion of free trade and foreign direct investment, making it a promising investment destination for foreign investors including Thai investors who rank no. 8 among top investors in Vietnam. Thus, Thai entrepreneurs should actively expand their collaboration with Vietnamese ones whether in international trade or joint investment.
Mr. Arkhom further said that the Thai government is well positioned to promote cooperation between public and private sectors in international trade and investment as well as fiscal and financial dimensions through EXIM Thailand’s supports. EXIM Thailand seeks to perform its duties proactively toward its role as Thailand Development Bank leveraging on its expertise, financial tools and alliance networks to promote Thai entrepreneurs’ access to new opportunities in global markets, transcending obstacles, and dealing with risks and challenges in international trade and investment, along with driving development of industries of the future in the Bio-Circular-Green (BCG) economy in linkage with sustainable development regionally under the ASEAN and APEC’s cooperation frameworks.
EXIM Thailand President pointed out that crucial factors to Thai entrepreneurs’ competitiveness in Next Normal global markets are their resilience and adaptability. The Bank is fully equipped to perform its duties beyond banking to assist Thai entrepreneurs of all levels from start-ups to existing entrepreneurs in continuing their businesses amid economic, social and environmental uncertainties and challenges. A complete range of financial tools is made available in conjunction with knowledge base and alliance networks to facilitate Thai entrepreneurs’ start-up or expansion of international trade and investment with confidence in both existing and new frontier markets. In particular, Vietnam which was formerly Thailand’s “competitor” has today become its “key business counterpart” on which Thailand has increasingly relied. Vietnam has been the Thailand’s 5th largest business counterpart since 2017, moving up from the 15th in 2012, while ranking the 4th largest investment destination of Thai investors at present, moving up from the 10th rank 10 years ago.
Mr. Rak clarified that EXIM Thailand has armed Thai entrepreneurs with capability to comprehensively adapt to changes in and deal with risks of international business operation coupled with risk hedging tools, e.g. foreign exchange forward contract or foreign exchange option, or trade and political risk hedge tools in case of buyer’s bankruptcy, rejection of goods delivered or non-payment, or buyer country’s governmental control on money transfer, ban on import of goods, or eruption of war or riot. EXIM Thailand will help them pay compensation and make debt collection aiming to relieve Thai entrepreneurs’ concerns about the said risks. The Bank will also be committed to dedicating its time and resources to product and service development to fill up Vietnam’s production supply chain gaps, particularly in the industries in which Thailand has potential and for which there is high demand, such as automobile, electronics, clean energy and foods of the future.
EXIM Thailand has strived to support Thai entrepreneurs’ entry into the supply chains of Vietnam’s BCG businesses as Thai entrepreneurs’ capabilities are responsive to the Vietnamese government policy to promote renewable energy investment to cope with the surging demand for electricity in line with the country’s industrial sector development and urbanization. EXIM Thailand has currently supported investment in Vietnam in the amount of over 17,300 million baht covering several businesses, among which are clean energy power plant business, petrochemicals, wholesaling and retailing. Besides, to support business sectors’ reduction of greenhouse gas emissions and compliance with environmental standards in pace with green economy trends toward sustainable development, the Bank has rolled out products like EXIM Kill Bill by Biz Transformation, offering a credit line of up to 100 million baht, lowest interest rate of 2.00% per annum and a maximum loan tenor of 7 years; and Solar Orchestra for businesses of all sizes which aspire to invest in installation of solar rooftop systems with a maximum credit line of 100% of the project cost, lowest interest rate of 2.75% per annum and a loan tenor of up to 7 years, together with entitlement to registration of full-fledged carbon credit and a 3-year tax exemption privilege of 50% of project cost from the Board of Investment (BOI).
In view of operational performance, as of the end of August 2022, EXIM Thailand recorded total outstanding loans of 67,458 million baht for international projects, a 4,271 million baht or 6.8% growth year-on-year. Classified by principal market, the Bank has consistently supported Thai entrepreneurs in spreading their wings to cover the CLMV (Cambodia, Lao PDR, Myanmar and Vietnam) and new frontiers. In the first 8 months of 2022, total outstanding loans to the CLMV and new frontiers amounted to 53,815 million baht, a year-on-year growth of 7,804 million baht or 17%. Of this total outstanding loan amount, 14,960 million baht was recorded in Vietnam, constituting a 55.4% year-on-year growth.
“There are ample opportunities for Thai entrepreneurs in new frontiers, particularly Vietnam which is in alliance with various countries in political and economic dimensions and is among the top of countries having inked free trade agreements (FTAs), covering more than 50 countries around the world. Meanwhile, Thailand has high potential to fill up the gaps in the supply chains of Vietnam and those globally. EXIM Thailand is fully ready to work collaboratively with the public and private sectors in supporting Thai entrepreneurs in their business start-up or expansion in global markets with confidence. They may start from Vietnam and advance to markets elsewhere in enhancement of sustainable development of the region and the world at large,” added Mr. Rak.
