Thai firms bypass military rule to invest a record abroad

Manila • Bogged down by policy uncertainty under military rule, companies in Thailand are spreading out.

Thai businesses invested a record US$13 billion (RM55.6 billion) abroad in 2016, dwarfing inflows of US$1.6 billion, according to the United Nations Conference on Trade and Development. In contrast, companies in Singapore and Indonesia cut investment overseas last year, while deals by Malaysian firms slumped to the lowest in a decade.

Three years after the military seized power in a coup, Thailand’s economy is losing its might with growth rates that are lagging peers in South-East Asia. As consumers rein in spending, companies including Asia’s biggest cement maker, Siam Cement pcl, are turning to overseas markets. Investment abroad totalled US$2.9 billion in January to April, according to the central bank.

“With robust but moderating growth in the home market, Thai companies have been comparatively more ambitious in seeking to become regional or even global champions,” Eugene Gong, head of mergers and acquisitions for South-East Asia at Deutsche Bank AG, said in an email.

Siam Cement, or SCG, the largest producer in Asia by market capitalisation, bought a Vietnamese manufacturer of building materials in March in a deal valued at US$440 million, while BCPG pcl, an owner of clean-energy projects, announced plans in April to pay as much as US$358 million for a stake in Singapore’s Star Energy Group Holdings Pte Ltd.

Overseas acquisitions announced by Thai companies totalled US$1.5 billion this year, compared to US$1.7 billion in the same period a year ago, according to data compiled by Bloomberg. That figure stands at almost US$48 billion in the past five years compared to US$19 billion in the previous period.

The biggest areas of investment from 2011 to 2016 were in finance, extraction of crude petroleum and natural gas, manufacturing of beverages and food, and wholesale trade, according to the central bank. The top destinations were countries in South-East Asia, particularly Cambodia, Laos, Myanmar and Vietnam.

In contrast, domestic conditions remain subdued. Consumer confidence has weakened, while private investment has slumped this year. — Bloomberg