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3 May 2006

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Vietnam vs. Thailand: Competitors in Trade-Investment-Tourism

In the midst of spiraling oil prices, it is feared that the global economy may be in a downward trend. However, countries with crude oil resources may be little affected by the oil crisis. Vietnam, rich in natural resources, especially oil, is expected to post an economic growth of around 7.6-8.0 percent in 2006, the best performance in ASEAN. For Thailand, its economy is expected to grow in a range of 4.0-4.5 percent this year, lagging behind the other six leading ASEAN countries.

KASIKORN RESEARCH CENTER (KResearch) has made a comparison between Thailand's economy and Vietnam's, where there exists similar economic fundamentals in three key areas, i.e., trade, tourism and investment. In summary:

1. Thai-Vietnamese Trade ? Over the past ten years, Vietnamese exports more than quadrupled from USD7.256 billion in 1996 to USD32.233 billion in 2005, a relatively high growth of 20 percent per year, on average. By comparison, Thailand's exports doubled to USD110.883 billion in 2005, from USD55.941 billion in 1996, representing an average annual increase of 10 percent over the past ten years. Evidently, Vietnam's export growth has been double that of Thailand.

Point of Note: Presently, the Vietnamese export value accounts for around one-third of Thailand's export value. However, if Vietnam's export growth is able to reach 20 percent per annum while Thailand's export growth averages 10 percent annually, Vietnam will undoubtedly overtake Thailand in export value within the next 14 years. By 2020, Vietnamese exports are expected to total almost USD500 billion against Thailand's exports of USD 463 billion in that same year.

2. Thai-Vietnamese investment ? In the first quarter of this year, foreign investment projects that Vietnam and Thailand approved investment licenses for have had similar values. The Vietnamese authorities approved 215 new investment projects with a total registered capital of USD1,625 million, while Thailand's BOI approved 200 projects, increasing 9.9 percent, and investment capital rising 58 percent to around USD2 billion for the same period.

Point of Note: Foreign businessmen who invest in Vietnam and those who invest in Thailand are virtually the same foreign investor groups, e.g., Taiwan, Japan, South Korea, Singapore, Hong Kong, Malaysia, China, the US, etc. If Thailand's investment atmosphere gets gloomy, particularly due to political turmoil, foreign investors will lose confidence, and it is possible that they will shift more investments to Thailand's neighboring countries, including Vietnam, because the political situation there is rather calm. However, if Thailand's political situation gets back on track in the last half of the year, foreign investments in Thailand will tend to improve.

3. Thai-Vietnamese Tourism ? Foreign tourists traveling to Vietnam rose 18.4 percent to 3.47 million persons in 2005, which accounted for one-third of the around 11 million foreign tourist arrivals to Thailand in 2005. However, Vietnam's tourism has been growing steadily over the last 2-3 years, and was not affected by the recent Tsunami. The Vietnamese authorities have set a target of attracting around 3.6-3.8 million foreign tourists to Vietnam this year, which has been designated the "Vietnam Tourism Year, 2006".

Point of Note: Vietnam has very high potential to develop tourism into a wide variety of attractions, including cultural tourism, historical sites, tours on natural wonders and nightlife tourism in business cities to such a degree that the country has been ranked the "Most Outstanding New Destination of the Far East Region". Examples of popular tourist cities are Hanoi, Ho Chi Minh City, Hue, Hoi An, Dalat, Ha Long Bay, Danang, Dien Bien Phu, etc. Foreign tourists visiting Thailand and Vietnam are much the same groups, too, so the two countries should cooperate on creating a market as a common package to encourage and support mutual tourism benefits.

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