FRENCH INVESTORS have started using Thailand as a business hub in the Mekong region and are placing high hopes on the meeting of the two leaders – Prime Minister General Prayut Chan-o-cha and French President Emmanuel Macron – in Paris later this month.
While Japanese investors have long used Thailand as their main investment target in the region, it is only recently that the French and others have started following suit as they see Thailand’s potential as a springboard for investing in neighbouring countries, say French investors who live here. Those other countries include Cambodia, Laos, Myanmar and Vietnam, collectively known as CLMV.
“We will expand our business in the region along with Amata Corp, our business partner,” Arnaud Bialecki, counter president of the Sodexo (Thailand) Ltd, yesterday told The Nation. He was speaking on the sidelines of a conference entitled “Thailand, Business Hub of the Mekong Region” jointly hosted by the French Foreign Trade Advisers, the French Embassy, the Franco-Thai Chamber of Commerce and Business France.
Bialecki said his service businesses – building and factory maintenance, cleaning and food for hospitals and schools – had grown rapidly this year and was expected to expand 30 per cent as a result of the company entering into a joint venture with Amata Corp, the leading industrial estate developer, three years ago.
Currently, the company serves customers around Thailand and provides services for about 50 factories at the Amata industrial estate in Chon Buri and Rayong provinces. The company has the potential to expand services to 500 factories and it plans to expand into other countries such as Vietnam, where Amata operates industrial parks, he said.
The high foreign interest in the Eastern Economic Corridor (EEC) will also contribute to his company’s rapid growth in the next few years, he said.
With Prayut scheduled to visit Macron later this month, Bialecki said he expected the meeting between the two leaders to further boost confidence.
The two sides were also expected to renegotiate a free trade agreement between Asean and Europe, he said.
Bialecki also believes that Airbus, the giant aeroplane manufacturer, will decide to invest in an aircraft maintenance, repair and overhaul (MRO) centre in the EEC. There are two challenges facing investors in the region: the inconvenient cross-border customs procedure and an underdeveloped infrastructure. However, investors should not wait for everything to be place – they should invest early in order to reap large benefits later, he argued.
Alexandre Dupont, president of the Franco-Thai Chamber of Commerce, also has high hopes for the leader’ meeting and expects it to lead to a conviction among French investors that Thailand is the region’s true hub. “Traditionally, French investors have always gone to Hong Kong and Singapore [for investment] as they saw those two economies as regional hubs,” said Dupont.
“Japanese investors have long been using Thailand as a hub, so the French should do likewise,” he said.
He went further, saying that Japanese investors use Thailand not only as a hub for CLMV, but also for Australia and the larger region.
He also praised the EEC initiative as a big step for Thailand and revealed that one French company plans to build a factory to manufacture aircraft parts in the EEC.
He also called on the Thai government to liberalise the services and professional sectors. The government has liberalised many businesses in the EEC region but this market liberalisation should expand to other parts of the country, he suggested.
A key challenge for Thailand is increasing its pool of qualified workers, said Dupont. This is partly due to Thailand having full employment, leading to a shortage of qualified people, he said. Unemployment in Thailand is currently just 1.2 per cent.
Meanwhile, Kan Trakulhoon, director of the Siam Cement group, has been telling French investors that Thailand’s spend on research and development will reach 1 per cent of gross domestic product this year, up from 0.78 per cent of GDP in 2016.
He also projected R&D spending would reach 1.5 per cent of GDP by 2021. The private sector now spends more on R&D than the public sector, he said. “When R&D spending reaches 1 per cent of GDP, it will change Thailand,” he added.