Thai groups strengthen intentions across vibrant Vietnamese sectors

27/04/2020

Thai investors are continuing to beef up investment and merger and acquisition activities in Vietnam even through complex global developments.

Delta Electronics (Thailand) Plc. is planning to establish a new subsidiary in Vietnam this year. The wholly-owned subsidiary will be incorporated in Vietnam with the registered capital of $500,000. The new company will trade and provide smart and green business solutions using Delta’s electronics products to benefit stakeholders and support local customers.

According to Jackie Chang, president of Delta Thailand, the company prioritizes long-term sustainable growth and the ongoing pandemic will not change its plans to become a leader in Southeast Asia. The main reasons are the region’s positive long-term outlook, especially in Vietnam, which is driven by foreign companies moving their factories China.

He stated that Vietnam is a key market and a lynchpin for Delta’s regional strategy. The latest forecast the International Monetary Fund shows that Vietnam will have the highest growth in the ASEAN in 2020-2021 despite COVID-19, which further justifies the company’s business decision. “However, there are many uncertainties due to the pandemic. If the situation improves in 2021 as many are expecting, the company will certainly be continuing its investment in local talents to expand presence in Vietnam,” he added.

Meanwhile, David Nardone, group executive of Industrial and International at WHA Industrial Development Plc., told VIR that Vietnam is a key country in the group’s strategic development plan. In 2019, the group continued its expansion with completion of the initial 145-hectare area of the first phase of WHA Industrial Zone 1 in the central province of Nghe An.

The group, via its subsidiary WHA Utilities and Power (WHAUP), acquired 34 per cent equity in Duong River Surface Water Plant, one of the leading water providers to Hanoi. Furthermore, WHAUP also purchased 47.3 per cent in Cua Lo Water Supply JSC in Nghe An.

“Looking forward, WHA Industrial Development will accelerate its efforts to attract investors to its high-quality project in the north-central region. In parallel, we will proceed with the issuance of permits and licenses to develop the remaining 498ha of Phase 1,” he said.


WHA Industrial Zone 1 – Nghe An - first project of WHA group in Vietnam

Despite the downturn caused by the coronavirus, Thai investors are still betting on the Vietnamese market. Super Energy Corporation announced that it will allocate $457 million for asset acquisition in Vietnam this year, as reported by the Bangkok Post.

The company will take over four solar farm projects in Vietnam at a combined capacity of 750MW. The four projects located in the southern province of Binh Phuoc are under construction and are expected to begin operations in December, with internal rates of return estimated at 15-17 per cent.

“The assets we acquired are one of the biggest steps in our business expansion plan, improving our financial performance in the long term,” chairman and acting managing director Jormsup Lochaya said. “I believe the slowdown will soon end and we will one day resume high growth and demand for electricity. Renewable energy is part of a global trend for clean energy, so we decided to go with this business for our expansion.”

Similarly, Thailand-based SCG announced that SCG Packaging is in the process of acquiring a majority stake of ordinary shares of Bien Hoa Packaging JSC. This acquisition will be carried out through Thai Containers Group Co., Ltd., which is a 70/30 joint venture between SCG Packaging and Japanese cardboard maker Rengo.

Bien Hoa Packaging is Vietnam’s leading downstream producer of fibre-based packaging. With a combined capacity of 90,000 tonnes of corrugated containers per year and 10,000 tonnes of annual offset laminated packaging, the company has three manufacturing facilities located in close proximity to Ho Chi Minh City. In 2019, Bien Hoa Packaging earned $6 million in net profits and about $73 million in revenue.

The Thai company said in a statement that the transaction is part of SCG Packaging’s strategic ASEAN downstream expansion.

As of March 20, Thailand was the ninth-largest foreign investor in Vietnam, with the cumulative investment capital of $10.89 billion over 567 projects. The total newly- and additionally-registered capital as well as capital contributed and shares purchased by Thai investors was $43.64 million in the first quarter of 2020, according to data by the Foreign Investment Agency under the Ministry of Planning and Investment.

A representative of the Thai Business Association in Vietnam told VIR that Thai companies have a strong presence in Vietnam. CP and SCG are two large conglomerates whose brands are becoming household names across Vietnam, blending themselves seamlessly into the business environment and society. Meanwhile, Central Group and TCC are also gaining a growing foothold in the retail businesses.

“These companies are here to stay with their intention to grow within the country. Within the next generation, Vietnam will surpass Thailand in every aspect due to its rapid development and also because the majority of its population are very young with the average age being only 27 years,” the representative said. “This would mean that many are much more open-minded and willing to spend more than save, which helps boost the economy. In Vietnam, opportunities are everywhere.”

By Thanh Van

Remarks: The article was published on Vietnam Investment Review Newspaper on April 27 – May 3, 2020

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