Thailand – BBL: SMEs joining more Asean deals

• Nov 06, 2017

More joint ventures deals are expected between Thai medium-sized enterprises and local operators amid high growth potential of emerging economies, according to a high-ranking Bangkok Bank executive.

Some of the bank’s medium-sized customers are expanding beyond their home turf into Asean region, particularly Cambodia, Laos, Myanmar and Vietnam (CLMV), while others are searching for investment opportunities in the region, said Virasak Suthanthavibul, senior executive vice-president.

Thai companies, in normal business practice, will dip their toes into regional markets by shipping products and services before looking for investment opportunities there.

Using neighbouring countries as a production base is another alternative for Thai medium-sized businesses to save operating and labour costs, he said, adding that the partnership model is a key strategy to diversifying risk.

The established medium-sized companies can cooperate with international partners by setting up joint ventures to expand business in CLMV, and such a model would also support local business operators to grow in the region, Mr Virasak said.

BBL, the country’s largest bank by assets, expects a marginal loan growth for the small and medium-sized enterprise (SME) segment this year after its lending increased around 1% for the first nine months of the year from the end of last year.

One of the bank’s mid-sized enterprises that has forged a joint venture is Thung Hua Sinn (THS) Group. The company has joined hands with two Japanese firms, Toppan Printing and Itochu, to form TPN Food Packaging. Initially, THS Group will hold the lion’s share of TPN Food but this will be diluted later to around 50%.

Both the Thai and Japanese companies are in packaging business. The new joint venture company is set to operate innovative packaging products to serve regional markets.

Thailand is a well-known production hub for Japanese investors expanding into Asean.

Ananchart Thangkasemvathana, managing director of THS Group, said the joint venture company will focus on food-related innovative package products with the know-how of the Japanese partners. For the first year of operation, it expects sales to reach 300-400 million baht before reaching 2 billion in the fifth year.

The joint venture would provide THS Group and the two Japanese partners greater business opportunities to expand into new markets in Asean, he said.

THS Group is one of the largest packaging companies in Thailand, with annual sales of around 3 billion baht. Direct exports contribute around 10% of the company’s total sales while indirect exports represent a larger portion.

Source: https://www.bangkokpost.com/business/news/1355315/bbl-smes-joining-more-asean-deals