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INVESTMENT
NAREERAT WIRIYAPONG
Thai companies are being encouraged to seek offshore loans for investments in Vietnam by taking advantage of the weakened Vietnamese currency and rising interest rate there, says an executive of Bangkok Bank.
Tharabodee Serng Adichaiwit, BBL's senior vice-president and general manager for its Ho Chi Minh City branch, said opportunities had arisen for Thai and other foreign firms to invest in manufacturing facilities for export, as well as infrastructure development and the hospitality sector.
In order to cool down the economy, lending rates in the dollar-driven Vietnamese economy have been increased to 21% from 8.5% earlier, resulting in higher financial cost for companies operating there, he said.
But foreign companies could use offshore borrowing to finance their investments, for example with interest of about 4-5% in Thailand, to lower their financial costs, added Mr Tharabodee.
''Then, they can export from Vietnam with minimal foreign-exchange risks as the Vietnamese government has attempted to react quickly to stabilise the local currency,'' he said, adding that the Vietnamese dong had depreciated by 10% so far this year.
Despite speculation on land prices on the outskirts of big cities, Mr Tharabodee said prices of industrial land in Vietnam were still reasonable, at $150 per square metre for 30-year leases.
Wages have also remained competitive, staying at $60 per month, he added.
Given the relatively small state budget for developing infrastructure, Thai developers and contractors still have a chance to penetrate the property sector and cash in on a huge need for roads, utilities and petroleum-related projects.
The hospitality sector, especially hotels, is also in need of expansion to serve increasing tourist arrivals, he said.
Thailand currently ranks 13th among foreign investors in Vietnam with accumulated investments of $1.6 billion. The Charoen Pokphand (CP) Group is the top Thai investor with Siam Cement Group (SCG) stepping up its presence with a $200-million kraft paper project.
SCG is still waiting for a licence to operate a $3-billion petrochemical complex in eastern Ho Chi Minh City.
BBL, the only wholly Thai-owned bank operating in Vietnam, last year expanded its lending portfolio by 50% to 18 billion baht, ranking only after HSBC among foreign banks operating there, he said.
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