BANGKOK -- Amata Corp. of Thailand plans to develop industrial estates in cheaper neighboring countries along the Mekong River where it is betting manufacturing will pick up.
Amata will begin development of two sites in Vietnam and one in Myanmar next year. It has also started a feasibility study in Laos, CEO Vikrom Kromadit told The Nikkei in a recent interview.
Amata is currently developing and operating three industrial parks in Thailand and Vietnam. Many of the companies operating in those parks are Japanese manufacturers. The oldest park, the Amata Nakorn Industrial Estate, serves about 700 companies, and is located about an hour drive from central Bangkok. Toyota Motor makes engines, and Bridgestone, Mitsubishi Electric and Daikin Industries have factories there.
Major projects underway
Amata will begin development of its second industrial estate in Vietnam early next year. The estate is to span 12.6 sq. km eventually, and will be situated in Dong Nai Province, near the Southern commercial capital of Ho Chi Minh City. The first location, opened in 1994, is in Bien Hoa, the capital city of the same province. Amata hopes to woo companies to operate in the estate, by highlighting its track record over the two decades.
In Northern Vietnam, another park development will begin by the end of 2018. The biggest industrial estate for Amata, spanning 58 sq. km, will be situate in Ha Long, the capital city of Quang Ninh Province -- about 180 km away from the Chinese border. Amata hopes this park will serve Japanese and South Korean companies looking to sell their products in China, as well as Chinese companies.
In Myanmar, Amata has secured a deal to rent 50 sq. km of land from the local government in northern Yangon, and plans to partially open its new park as early as 2018. Once developed, the site will be 10 times the scale of the company's Thilawa industrial park, located southeast of Yangon. The bigger scale adds a competitive edge, Vikrom said, as it facilitates infrastructure development for electricity supply and other needs.
Japanese trading companies hold stakes in the Thilawa park.
And in Laos, Amata sees potential in the rapidly urbanizing capital city of Vientiane to court more companies. Laos only has a few, smaller industrial parks currently.
Riding the shifts in economic tides
More than two decades after opening its first industrial parks, Amata is looking beyond Thailand as Japanese and Thai manufacturers are setting up more factories in the neighboring countries.
To put cost comparison in perspective, monthly wages for workers at Japanese factories in Bangkok average $338, whereas the figures for Yangon and Vientiane stand at $124 and $140 respectively.
Economic growth is in the 3%-range in Thailand, whereas its four neighboring countries enjoy growth of 6-7%, according to the Japan External Trade Organization. With the Thai population aging, companies there are quickly realizing staying home will not lead to sustained growth into the future.
As the Thai economy gradually matures, Amata's move is in line with the government's push to move up the value chain by courting more information technology, aviation, and biotechnology companies -- under an initiative called Thailand 4.0. Manufacturers' expansion into Thailand's neighbors has been supported by increased economic exchanges among the member states of the Association of Southeast Asian Nations following the 2015 establishment of the ASEAN Economic Community.
Meanwhile, Amata faces tough competition from Japanese trading companies employing their broad business connections to set up their industrial parks. Location, infrastructure and service quality are increasingly looked at as differentiators.