THAI BANKS in Vietnam believe a large labour force and low wages will still be magnets for trade and foreign direct investment (FDI) in that country even if the Trans-Pacific Partnership is scrapped in line with US President-elect Donald Trump’s policy.
Vietnam is among the 12 Pacific Rim nations that have signed on to the TPP. Vietnam’s manufacturing industry, especially the textiles sector, would expect to receive incentives from zero tariffs under the TPP trade deal.
Bangkok Bank’s executive vice president of the international banking group, Chaiyarit Anuchitworawong, believes that Vietnam will remain a key trade partner of the United States and the two countries could make a bilateral agreement if the TPP were withdrawn.
“A bilateral agreement will support Vietnam’s trade and FDI. Furthermore, [the number of] people of working age and low wage costs are positive factors to lure FDI, and we believe that Vietnam’s economy will not receive a negative impact from the TPP withdrawal,” he said.
Siam Commercial Bank, which opened a branch in Vietnam in May, also believes that a TPP withdrawal would not affect its business plan because FDI in Vietnam is quite strong and the low wage cost is another key factor attracting investment, said Kamalkant Agarwal, the bank’s first executive vice president.
Last year, FDI in Vietnam surged to US$22.76 billion (Bt812 billion) from $12.5 billion the previous year.
Thai investors ranked 11th in FDI in Vietnam.
Kamalkant said the bank was at the stage of building a firm foundation in Vietnam and Thai companies were its priority focus, while the TPP was not a factor in its 2017-18 business-expansion plan.
Vietnam still is on the radar of Kasikornbank, the fourth-largest Thai bank by assets, with the lender ready to establish a presence there once the central bank of Vietnam grants it a licence, said KBank president Kattiya Indaravijaya.
Chaiyarit said a TPP withdrawal might have an impact on China’s economy if authorities there reverted to running the economy like they did before the reforms three years ago focusing on domestic consumption, while China’s “Go South” policy is positive for Asean.
Mainland China and Taiwan are the focus of Bangkok Bank in line with the Go South policy, particularly Taiwan, where corporates are seriously looking at overseas expansion to diversify risk as a result of the economic slowdown in Thailand, Chaiyarit said.
Bangkok Bank has three branches in Taiwan, which can refer corporate clients to the bank’s head office in Bangkok to facilitate financial services, he said.
Chaiyarit said Taiwanese firms wanted to expand their value-added business in Asean, meaning Bangkok Bank’s international business in 2017 is expected to perform better than this year.
Still, the growth of its international banking is projected to be in the single digits as the bank remains conservative to tackle unexpected risks, he added.
KBank hopes to become the second Thai bank after Bangkok Bank upgraded to local-bank status in China, Kattiya said.