Asean Pulse, We Bring to Light the Opportunities Awaiting the Business Sector in the Fast-Growing Economies in South East Asia
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Issue 2 / Q2 2013 TRENDS THAT ARE SHAPING SOUTHEAST ASIA EVOLVING OPPORTUNITIES THAILAND HOW DOES YOUR GARDEN GROW? UNDERSTAND WHY THAILAND IS DESCRIBED AS THE GATEWAY TO THE ASEAN BLOC VIETNAM A FISH OUT OF WATER? WHY VIETNAM IS STILL A GOOD IDEA MYANMAR THE TRAIN IS LEAVING THE STATION ARE YOU ON BOARD? © 2013 Ipsos www.ipsosasiapacific.com In the second quarterly edition of Asean Pulse, we bring to light the opportunities awaiting the business sector in the fast-growing economies in South East Asia. Countries in focus include Thailand, Vietnam, and Myanmar. You will find in this issue specific insights about the economic and social elements of these countries that will play an important role in evaluating your branding or market entry strategies. This issue also provides a narrowed profile of each country’s consumer: their characteristics, culture and traditions, and other important influencers of their purchase behavior. Along with this issue is a separate feature report on Thailand as the next luxury shopping hub. CONTENTS A Country View: THAILAND 3 Reaching the Thai Consumer 8 A Country View: VIETNAM 12 Reaching the Vietnamese Consumer 17 A Country View: MYANMAR 20 FIND OUT MORE 25 © 2013 Ipsos A COUNTRY VIEW THAILAND © 2013 Ipsos THAILAND The right Figure 1: Real GDP Growth in 2012 China 7.8% choice for Philippines 6.6% Thailand 6.4% your ASEAN Indonesia 6.2% Malaysia 5.6% hub? South Korea 2.0% Hong Kong 1.4% Singapore 1.3% Taiwan 1.3% After the ASEAN Economic Community (AEC) was agreed by political leaders, a number of foreign investors began to look closely at ASEAN and its plans to develop into one of the world’s most important economic blocs. Thailand, the second fastest growing economy in ASEAN continues to be a focus of many investors – both within ASEAN and around the world. The growth rate of 2012 has been largely driven by government policies to stimulate the economy. These include the First Car Policy and the significant increase in the minimum wage of employees holding at least a Bachelor Degree. But does all this mean that Thailand is ready to become the hub for foreign investment within ASEAN? Let’s look at some key areas that can help to reveal the answer. Figure 2: Thailand & ASEAN Car How does your Production in 2012 garden grow? 2% 2% A 2012 growth rate of 6.4% firmly positioned Thailand as one of Asia’s 13% fastest growing economies. This was helped in Q4 2012, when we saw a dramatic rise of 18.9% y-o-y, driven by massive growth in the manufacturing 25% 58% sector (+37.4%). The First car policy was successful in stimulating impressive demand for new vehicles - leading to the highest sales on record, (almost 2.5 million units sold), a 70% Thailand Indonesia Malaysia increase from 2011. Thailand thereby claimed the title of the world's highest Philippines Vietnam growth in car production. © 2013 Ipsos THAILAND The increase in minimum wage US$ 229.5 billion US$ 56.7 billion nationwide to THB 300 was a 7% key election pledge of the 8% 17% current Thai government. 10% 9% While there has been much 6% debate about the impact of an increased minimum wage, we saw a 7% increase in domestic 75% household consumption from 67% 2011 in terms of value. Despite Thailand's NPL in Q4/2012 falling to its lowest World ASEAN (9) record in history (2.25% of total Principle manufacturing products loan - 1.94% for consumer and 2.36% for corporate), some Agricultural products business leaders and Agro-industrial products academics have expressed Mining and fuel products concern about the medium to long term impact of these Figure 3: Thailand Export Structure specific policies , specifically in relation to inflation levels and the number of non-performing loans. These are two areas to monitor closely in the near 'Thailand’s impressive economic future. performance in 2012 was not driven by domestic consumption alone; exports The only have also risen dramatically. way is up! Thailand’s impressive advantages of the ASEAN World Bank report on ease of economic performance in 2012 economic bloc and the doing business positioned was not driven by domestic opportunities that are Thailand in third place after consumption alone. There was available for exploit. This can Singapore and Malaysia, and also an amazing export be witnessed in the Agro- 18th amongst the 185 countries performance. Its exports have industrial products, where in the survey. risen dramatically over the last exports to ASEAN markets Strong government support for 5 years, with increased trade have doubled from 2009 to foreign investors; modern and among ASEAN neighbours and 2012. key driver, China. efficient infrastructure; and high quality industrial estates are Indeed, ASEAN countries now The heart often cited as the strength of the contribute around a quarter of Thai offering to foreign Thailand's total export value. of ASEAN? investors. With its strategic With the ASEAN Free Trade positioning in this Mekong Sub- Area (AFTA), which should be It is quite common to hear region and land borders with 4 fully implemented by 2015, international commentators other ASEAN countries, Thailand’s impressive Thai referring to Thailand as Myanmar, Lao P.D.R., exporters are increasingly strategic gateway to the Cambodia, and Malaysia, – the convinced about the ASEAN bloc. The June 2012 country offers a strong base for © 2013 Ipsos THAILAND the important cross-border Thailand import (USD) trend trade, easily reaching a 300,000 population of over 150 million. This is reflected in the trade 250,000 CAGR '07-'12 is 12.1%, and 10.0% activities among Thailand and for ASEAN (9) other ASEAN countries as 200,000 presented in Figure 4. The export from Thailand to other 150,000 ASEAN countries has grown substantially at 11.6% CAGR 100,000 from 2007 to 2012. This growth helps to illustrate 50,000 how ASEAN trade has become an important element 0 of the Thai economy. Such growth outstrips trade with other regions. Add to this the 2012 World Investment Report ASEAN (9) Japan USA EU (27) Others where Thailand ranked at 8th place (up from 12th), noting 300,000 that the country was a top prospective host economy for 250,000 CAGR '07-'12 is 8.3%, and 11.6% 2012 - 2014. for ASEAN (9) 200,000 150,000 The Destination 100,000 of Choice for 50,000 Expatriates 0 Historically, the assumption has been that Singapore Thailand export (USD) trend offers expats the best Figure 4: Thailand Trade Activities in value (USD) experience. However, even in this area, Thailand is able to make a claim for the top spot. The country was voted as the single expatriates had found the reasons for the country number 1 for the overall a long-term relationship in doing so well include low expatriate experience, Thailand. Add to this the cost of living, high quality of according to an HSBC Bank fact that a recent survey by life and standard of living, as International survey that International Living rated well as friendly local people. canvassed the opinions of Thailand as Asia's second It is not called the land of over 3,000 expats working in best retirement destination. smiles for nothing! 30 industries across 50 Then, the case for Thailand countries. The survey also becoming a regional hub reports that around 69% of starts to build up. Some of © 2013 Ipsos THAILAND Healthcare an Figure 5: Number of Tourist Travel to Thailand opportunity Number of Tourists (Thousand) not to be missed 25,000 22.0 M CAGR '07-'12 is A high-quality health 20,000 9.0 care system is one of CAGR '02-'07 is 6.0 the most important reasons that the 15,000 country continues to attract tourists, particularly to 10,000 Bangkok. The highest number of tourists 5,000 coming to Thailand was 22.0 million. It is estimated that more - than 600,000 of which 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 travelled specifically for medical treatment. but it too is still largely Medical tourism is forecasted to A land of limited to urban areas. generate revenue for Thailand of Despite the aggressive over THB 100 billion by 2015. The tradition expansion of reasonable cost of treatment with hypermarkets and modern premium quality healthcare What we see in Thailand convenience stores like provides a competitive edge to today is infrastructure of Thailand medical tourism industry, much higher quality, with 7-Eleven and BJC, unmatched by key competitors the dramatic traditional trade remains such as Singapore and India. improvements envied by the backbone of trading many of its neighbours activities in Thailand and The cost of a heart bypass is around ASEAN. That currently accounts for around USD 130,000 in USA, but said, most of the more than half of all only USD 11,000 in Thailand, infrastructure projects are FMCG trade in value compared to USD18,500 in concentrated in urban terms. Singapore. We are now seeing areas. this sector being much more aggressively promoted by the Access to the Tourism Authority of Thailand modern trade (TAT). Hence, healthcare promises channel a great deal of opportunity for is also companies to grow their business undergoing and leverage their entry into the transformation, Thailand market for expansion within ASEAN. © 2013 Ipsos THAILAND Welcome to Amazing Thailand! What we can see from all these is that Thailand has bounced back from its No. of Stores Avg dairy sales / store (THB) economic and political 9,000 91,781 100,000 troubles of the past 5 years 82,265 90,000 to turn in a performance 8,000 78,316 72,393 that most countries would 68,709 6,822 80,000 7,000 65,143 be delighted with.