The trend of mergers and acquisitions (M&As) is set to intensify in Thailand because of the country's economic scale and the growing purchasing power of its middle class, says leading consulting firm KPMG.
Tham: Auditing has come a long way
Tham Sai Choy, KPMG's Asia-Pacific chairman, said Thailand's status as the second-biggest Southeast Asian economy after Indonesia and its sizeable purchasing power are attracting foreign businesses to tap the domestic market through M&A deals.
"There is a huge opportunity for Western companies to participate in the Thai economy beyond looking at it as a base for lower costs and high-quality labour," he said.
The most successful foreign businesses are those that capture the local imagination and sell their products directly to domestic consumers, said Mr Tham, citing Japanese companies as a notable example.
Automotive, food, retailing and shopping malls are some of the better money-making sectors for M&As in Thailand, according to KPMG, as these segments have grabbed emerging middle-class consumers.
Mr Tham said astute Thai businesses are relatively strong in their ability to invest abroad and take part in the global economy, judging by the success of some of their foreign business ventures.
Asean's newbie, Myanmar, also has huge potential to attract foreign investment with its untapped resources, he said, but this will depend on its future prospects in terms of education, infrastructure and the political environment.
To facilitate M&As, auditing practices must be good. Mr Tham lauded the job Thailand has done in cooperating with the International Forum of Independent Audit Regulators and improving its auditing practices with the Asean Audit Regulators Group.
The quality of financial reports in Asia has been generally sound since the turbulent days of the 1997 financial crisis.
Mr Tham said the crisis in Europe that forced European countries to agree to reforming auditing legislation has had a minimal impact on Thailand despite a great deal of activity across continents.
KPMG has prepared for fiercer competition and the ongoing auditing reform process by focusing on auditing quality and supporting clients with their financial reporting, he said.