With the formation of the Asean Economic Community (AEC) drawing near, Amata Corporation Plc is gearing up to expand its industrial land area by tenfold to 1,000 square kilometres by 2020 to serve the expected surge in regional investment and trade. Vietnam, Myanmar and Thailand will be its main focus.
Amata Industrial Estate
Four more estates are being planned for the company to achieve its 2020 target, said Somhatai Panichewa, Amata's chief business officer and head of Vietnamese operations. At present, Thailand's leading industrial estate operator has 100 square kilometres of land with two sites in Thailand and another in southern Vietnam.
The SET-listed entity's subsidiary Amata VN last month signed a cooperative agreement with the People's Committee of Dong Nai to develop Amata City Long Thanh on 8,031 rai in southern Vietnam at a cost of US$530 million. Another estate in the pipeline is on the Thailand-Myanmar border in Kanchanaburi province.
"To reach the target, we are looking at one more [estate] in northern Vietnam as we now have two projects in the south. As well, we are eyeing another one in northern Thailand," Ms Somhatai told Asia Focus.
To raise funds for new projects, Amata is likely to triple its registered capital to between 3 billion and 4 billion baht, she said, but did not elaborate on the total capital expenditure required.
Amata chief executive Vikrom Kromadit, during a recent talk at the German-Thai Chamber of Commerce, said the company aimed to have a total of 100 sq km available in Thailand and 130 sq km in Vietnam, a country with high potential and advantages in terms of shoreline.
"From Haiphong port in Vietnam, containers can be shipped just 200 kilometres to reach China which is the largest and fastest-growing market in Asia," he said while stressing the future of Asean.
Last year, Vietnam attracted the same amount of Japanese investment as Thailand, and the Japanese government has been providing loans for Vietnam to develop infrastructure including seaports, he noted.
The company acknowledged that its Amata Bien Hoa Industrial estate in Dong Nai felt some impact from Vietnam's territorial dispute with China earlier this year. The conflict over a Chinese oil rig deployed in contested waters in the South China Sea sparked violence against Chinese businesses in Vietnam.
"Some factories at our Bien Hoa estate were attacked. However, the police there took only a couple of days to bring the situation under control and it is unlikely that violence like this will accelerate in the future," stressed Mr Vikrom.
He said Amata would continue to expand in Thailand where the opportunity is strong for research and development activities. The country has also launched a scheme to attract international investors to set up regional operating headquarters (ROH).
But Thailand is quite small, resulting in limited opportunity in the region, in his view. As the AEC will knock down barriers to allow borderless connections to provide a bigger market with lower cost to investors, Amata has examined every possibility to expand in each country.
"A labour shortage has arisen in Thailand whereas the unemployment rate represents a major concern for the Vietnamese. This is one of the main reasons for Amata's expansion outside Thailand," said Mr Vikrom.
"Myanmar is also part of our future given the fact that the country's GDP is still low."
Ms Somhatai said Amata expected to conclude a feasibility study by year-end on a planned 25-square-kilometre industrial estate on the Thailand-Myanmar border in Ban Phu Nam Ron. The project is intended to complement the massive Dawei industrial development in eastern Myanmar.
According to executives of Dawei Development Co (DDC), a proposal for first-phase development will be submitted to the Myanmar government on Sept 22. Initiated by the Thai contractor Italian-Thai Development (ITD), which was granted the 75-year concession to develop a special economic zone and a deep-sea port in Dawei, the project was stalled for the past year by political tensions in Thailand that culminated in the May 22 coup.
Due diligence has been completed for ITD's investments at Dawei and a special purpose vehicle (SPV), a joint venture of the Thai and Myanmar governments, will negotiate the price ITD will receive as compensation for the work it has done so far.
"Dawei is a strategic location for an industrial estate. However, implementation is not easy including who will be responsible for road and rail infrastructure," said Mrs Somhatai. "Bilateral cooperation between Thailand and Myanmar is not enough. How to attract third and other parties such as Japan and China is very crucial."
Based on its belief that Dawei is viable, Amata has included its estate on the Thailand-Myanmar border in its 2020 vision. Concerns, however, remain in terms of unsettled investment regulations in Myanmar and the threat of natural disasters such as landslides at the site, she added.
Amata's Long Thanh project, which the Hanoi government is expected to approve in mid-2015, will be developed in phases starting with the Hi-Tech Industrial Park on 2,500 rai. It aims to attract investments in the biotech, nanotechnology, research and pharmaceutical sectors.
(Additional reporting by Marisa Sangrit)