Story here.
This is a prospect that IS beginning to worry Thailand. Already, we’re losing a lot of foreign investment to Vietnam, with the stream threatening to become a flood.
After the BRICs, investors are turning toward the VISTAs for developing economy opportunities.
Emphasizing how foreign investment is leaving Thailand for Vietnam, here is a short article in the Sin Chew daily out of Kuala Lumpur, quoting *The Nation * in Bangkok, detailing how the Japanese are leaving us for Vietnam despite a new free-trade agreement that took effect last month. The economy here has not been good for at least a year and a half, ever since even before last year’s military coup.
Vietnam is a real up-and-comer. I’ve long predicted that this would be India’s century rather than China’s, but Vietnam is going to prove to be some tough competition.
I think the only limitation to Vietnam’s success is its population size, and viable landmass. They could do with upgrading their infrastructure (and teaching the population how to drive without killing self/others), though things have improved in the ten years between my visits: National Road 1 was unrecognisable from when I was there in 1995.
But isn’t this the Asian model? Look at Japan, S. Korea and Hong Kong: they all started out with a reputation for making shoddy products; quality control grew, the quality and complexity of the products improved; the country’s manufacturing started to be well regarded; the next emerging country’s workforce working for peanuts was identified and the factories left; the economy became service- and finance-oriented, and much of manufacturing in the new country was owned by people from the original country.
If the new Thai government handles this correctly, they could emulate the above. That said, it’s a big place - what about the poverty-stricken parts of Isaan and the north? Speculating aloud, what’s to prevent the poor agrarian people in Isaan becoming the emerging peanuts-paid workforce to compete with Vietnam?
Then again, there’s that little corruption problem to deal with…
A good part of the problem is the series of restrictive laws that have been placed on foreign investors here. Their details are complicated, but they’re resulting in fewer and fewer foreigners willing to pour in the capital it would take for the poor Isaan (that’s northeastern, to the uninitiated) farmers to compete. Vietnam has begun offering a much better deal now to anyone wanting to invest, and the word is spreading. Old foreign investors in Thailand have begun to vote with their feet. Thailand is finally starting to get worried, but whatever the government ends up doing could be a case of too little too late. Once some of these investors have gotten all settled in in Vietnam, why would they want to go to all the trouble of coming back?
Re–Vietnam’s infrastructure.
Rivers & coastal freighters can compensate for poor roads & few railroads, at very favorable cost. Remember that water travel is the cheapest for of transport, on a cost per ton per kilometer basis.
And recall Vietnam’s geography. River deltas & lots of coastline.