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Thai corporates flock overseas

AS THE PROLONGED political turmoil damages business opportunities at home, Thai corporates are increasingly investing elsewhere in the region, especially Myanmar, Indonesia and Vietnam, according to a survey by the corporate business division of Kasikornbank.

KBank executive vice president Vasin Vanichvoranun said the survey analysed the investment sentiment of 17,000 firms in Thailand. They project investing a total of Bt1.5 trillion this year, up 19 per cent from last year's projection of Bt1.3 trillion.

Normally about half of projected investment is actually spent, barring unforeseen problems from internal or external factors, he said.

According to the survey, about 60 per cent of the total projected investment is planned for overseas, especially Asean countries. This is a big switch from last year, when only 35 per cent of investment was targeted overseas.

The main overseas projects planned are in utilities, telecommunications, transport, petrochemicals, real estate, food and beverages, and agriculture, Vasin said.

Some 36 per cent of the firms that participated in the survey were interested in investing in Myanmar, a big jump from only 8 per cent last year. Indonesia was attractive to 15 per cent of respondents, followed by Vietnam, Laos, Cambodia and Singapore.

Only 10 per cent of the firms surveyed plan to stick to the investments outlined in their earlier business plans, with most waiting to see how the current political chaos pans out. But almost all of them said that once the political situation calms down, they would quickly rev up their investment plans, such as increasing production capacity and renovating plants.

Most of them are in good financial health and have enough capital to support such investment. Vasin said all 17,000 firms had debt-to-equity ratios lower than 2:1.

Given the current market sentiment, however, no new investment deals were struck during the first four months of the year, he said.

Despite this, the Kasikorn Group still targets total loan volume - combining KBank, KLeasing, and factoring business - to grow by 5-7 per cent in this year. In 2013, the group recorded loan volume of Bt446 billion, up 7 per cent from the previous year. In the first quarter of this year, outstanding loans totalled Bt452 billion, up 1.3 per cent from the end of 2013.

Meanwhile, the managing director of Phatra Securities' research group, Dr Supavud Saicheua, said new investment in Thailand would remain on hold until the country has a new government. As a result, the firm now expects gross domestic product to grow by only 1.1 per cent this year. And this is its best-case scenario, assuming export growth of 3.5 per cent.

"Investors continue to be concerned about the country's political problems and how they will be solved," he said.


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