INVESTMENT INTO THAILAND FROM SINGAPORE-BASED COMPANIES TO RAMP UP OVER NEXT TWO YEARS: HSBC STUDY

Stocks and Financial Services Press Releases Thursday August 2, 2018 14:26
Bangkok--2 Aug--HSBC
*77% of companies indicate they plan to expand abroad.
** Thailand a top four market to enter

A HSBC study shows that overall investment into ASEAN to 2020 is expected to rise amongst Singapore-based companies with Thailand to be a key beneficiary. Thailand's growing consumer market and overall investment climate are driving the expansion plans.

The HSBC-commission report by the Singapore Business Federation sought the insights of 1,036 Singapore-based companies on their interest in overseas expansion. 86% of those surveyed were considered Small or Medium Sized Enterprises (SMEs) defined as those with annual turnover of S$100million or less than 200 workers.

Thailand is a clear favourite destination for internationally oriented Singapore-based companies expecting to expand.

Of the surveyed companies, 80% said they already had operations in Thailand (the highest except for Malaysia at 87% and Indonesia 81%), and 29% expect to further expand there in the next two years (behind only Indonesia, Malaysia, and Vietnam).

Increased trade and investment activity from Singapore is good news for Thailand given Singapore is already Thailand's largest source of investment (behind only China and Japan). In 2017, Singapore invested USD4.3 billion into Thailand compared to USD9.5 billion by Japan, USD7.4 billion by China according to the Bank of Thailand.

Singapore's inbound investment into Thailand includes companies founded in the Republic as well as many international firms. Of the 37,400 international companies in Singapore, 7,000 are MNCs and 60% have regional responsibilities.

Consumer and business ease the drivers for Thailand investment
The growing consumer market and overall investment climate are key drivers for Thailand's future inbound investment.
According to report 83% of respondents with Thai expansion cited potential customer demand, with 79% highlighting overall investment climate and 74% citing the ease of building relationships.

Krisda Phatcharoen, Head of Commercial Banking, HSBC Thailand said: "Whilst Thailand's growing consumer base is already well recognised by Singapore corporates, the report shows that many businesses are looking to double down on our demographic dividend."

"Beyond the consumer piece, Thailand's manufacturing – whilst already strong - is now entering into the higher-end space. So while many corporates may base their treasury and other back-office functions in Singapore, a lot of revenue-making operations are being driven out of Thailand. This is only expected to ramp up with Thailand's widening along the supply and value chain."

Despite Thailand's glittering prize, there remains some barriers to entry

Notwithstanding the very strong interest in ASEAN expansion, surveyed companies expressed concerns over some of the obstacles they faced when venturing into the region, including uncertain economic and political conditions in ASEAN, the lack of knowledge on market opportunities and customer requirements and difficulty in getting permits and licences as potential barriers to expanding into the region.

And despite the general positive sentiment towards the ASEAN Economic Community (AEC)/ ASEAN regional economic integration and the perceived benefits of the ASEAN Free Trade Agreements (FTAs), the lack of accessible, clear information about these initiatives is a major obstacle in terms of companies benefiting from these agreements.

Partnership opportunities for local Thai firms

Most of the Singapore-based SMEs who are entering Thailand or expanding will have or are seeking an in-country relationship. The research found more than 60% (page 13 of the report) of those surveyed in Thailand had a distributor or JV arrangement.

Mr Krisda added "Singapore-based SMEs can make a significant contribution to Thailand's economy; they are looking to expand beyond their domestic markets and can benefit from the cross border activity that was previously seen as the domain of larger corporates."

"However, entering and expanding in any market is never a straight line process and it is inevitable that there will be bumps along the way, particularly for SMEs who may not have the resources to fully navigate the differences in political and business cultural norms in neighbouring countries."

"Circumventing these complexities can often come down to selecting the right partners and advisers. This presents renewed partnership opportunities for local corporates in Thailand."
"However, to fully capture the potential investment opportunities, local Thai companies should reach out to expanding Singapore-based SMEs at the point of entry or even before," he concluded.

Latest Press Release

SET and IPPD join hands to foster research on sustainable development

The Stock Exchange of Thailand (SET) and The Institute of Public Policy and Development (IPPD), under the Thai government think tank, signed a memorandum of understanding (MoU) to jointly conduct insightful and practical researches to benefit the...

Photo Release: Outstanding Women Leaders for Green Growth Award

Recently, at Grand Hyatt Erawan Hotel, Ms. Kattiya Indaravijaya, KBank President, received the "2019 Outstanding Women Leaders for Green Growth Award" for being an exemplary role model in developing businesses which are environmental friendly and an...

Mastercard Strengthens its Leading Position in Real-Time Payments in Asia Pacific with Increased Focus on Thailand

Global payments and technology leader is bringing further innovation to Thailand as part of its push to advance the regional digital payments agenda Today, at the Bangkok Fintech Fair 2019, Mastercard announced a commitment to deliver a growing suite of...

Ultra Sale on Tokinex Completed in 35 Seconds

Tokinex, the Bitfinex and Ethfinex token sale platform, today announces the successful completion of its 5m USD token sale of Ultra (UOS) in just 35 seconds. Ultra is a protocol and platform positioned to disrupt the $140bn gaming industry by using...

Photo Release: Mastercard Presents its Leading Position in Real-Time Payments at the Bangkok Fintech Fair 2019

Recently, at the Bangkok Fintech Fair 2019, Mastercard announced a commitment to deliver a growing suite of real-time and digital payments solutions across Asia Pacific through its regional real-time payments hub, with data centers in Thailand and...

Related Topics