Tue 14 Aug 2012
Filed under: Business / Trade,News,Regional
Myanmar has massive potential to become a major production base for Thai companies when the Asean Economic Community (AEC) is established in 2015, starting with light industries.
Santi Vilassakdanont, chairman of the Thai-Myanmar Business Council, said many Thai firms have been awaiting Myanmar’s new foreign investment law to be endorsed by the parliament in the near future to pave the way for their entry into their impoverished neighbour.
The Saha Group, Thailand’s largest consumer products conglomerate, plans to set up companies in Myanmar this year to support the group’s investment in manufacturing facilities in years to come, said Mr Santi, also president of Saha Pathana Inter-Holding Plc.The council is under the Joint Private Standing Committee comprising the Federation of Thai Industries, the Thai Chamber of Commerce and the Thai Bankers’ Association.
Myanmar’s overwhelmingly cheaper daily wages almost guarantee the country will become another production base for Thai manufacturers in three years.
Daily wages in the Yangon area equal about 80 baht compared with the recently mandated 300 baht in seven provinces of Thailand.
Myanmar’s population of 60 million also represents a larger market for Thai products than Cambodia’s 14 million.
The Saha Group, for instance, wants to set up garment, consumer products and cosmetics factories in Myanmar, said Mr Santi.
He said the group also plans to develop an industrial estate in Myanmar with a projected price tag of 2 billion baht, but this project will take time.
Twice a year the council hosts a mission of Thai companies, mainly small and medium-sized enterprises, to visit Myanmar. Typically, 20-30 companies join each trip.
“They are mainly trading firms, garment makers and food producers wanting to ship products to Myanmar first before deciding to build a factory there,” said Mr Santi.
He said local partners who have connections and know the language are recommended for Thai companies looking to set up businesses in Myanmar.
Myanmar’s new investment rules should make clear foreign ownership laws, while the government commits to buying a certain amount of electricity from power projects.
The expectation is more investments will flow into the country and help to solve chronic power shortages.
Concerns about foreign exchange rates in Myanmar have eased, but investors still look forward to foreign banks setting up branches there, said Mr Santi.
He called on Thailand’s government to push for Thai banks to operate in Myanmar and encourage them to offer credit facilities to fund Thai investments there.