Analysis the determinant of investment in Vietnam, Thailand or Indonesia
Vietnam, Thailand and Indonesia are developing country in South East Asia which attempt to develop to become industrial hub of Asian.
Overview of Vietnam, Thailand and Indonesia
|Geography||Vietnam is plentiful with marines resources due to Eastern area adjoin to the sea by the distance are estimated longer than 2,000 kms. Northern connect to China and links to Laos and Cambodia in Western.||Thailand is the central of South East Asia. North and East are connected to Burma. North and North East is link to Laos and Cambodia. Southern adjoin to Malaysia and the Sea||The areas are islands in horizontal line of Pacific ocean. West is connected to Malaysia, Singapore and Thailand. Southern is closed to Oceania.|
|Resources||88.78 Million people ¹ , Natural gas, Oil and Coal||67.04 Million people ², Natural gas and Lignite.||245.76 Million people ³ , Natural gas and Oil|
|Government||Communism, stable and flexible||Democratic, instable, explicitly promote investment||Democratic, stable, explicitly promote investment|
|Law||Government has committed to the investors that they will not occupy the business and allowed the investor transfer the capital and profit back to the investor’s country. Privilege tax for Export zone and Industrial zone, free import tax for machinery and equipment for production.||Free Trade Zone, BOI zone, privilege of import tax and vat. Operation is necessary to be under Thai’s law. However, there are easy to trade and sources.||Free Trade Zone, Economic Development zone, privilege of tax and vat. Required high amount of capital for foreigner investor.|
|Infra- structure||Inconvenience in transportation and insufficient in electrical city, however, government attempt to develop the train for logistic||Convenience for total of infrastructure and logistic system, including effectiveness of communication system||Convenience for total of infrastructure and logistic system, including effectiveness of communication system|
|Education and Health||Government attempt to develop and promote the education to the children. People can access to health service of public.||Government is continuously emphasize to Education and Health of people||Government is continuously emphasize to Education and Health of people|
|Economic||Growth trend, GDP 5.6%, Inflation 6.2% ⁴||Growth trend, GDP 2.9%, Inflation 2.4% ⁵||Growth trend, GDP 5.7% , Inflation 5.7% ⁶|
|Banking||Allow the foreigner bank to establish in Vietnam for International transaction.||Local bank can provide domestic and international transaction||Local bank can provide domestic and international transaction|
|Labor||USD.50– 70 per month with enough labor||USD. 450-500 per month with limitation labor||USD. 700-800 per month with enough labor|
|Competitor||Hitachi, Panasonic and LG||Mitsubishi, Panasonic, Hier, Sharp, Fisher&Paykel||Hitachi, Sharp and Local brand|
|Risk||(1) There is no shelter from the monsoon due to the long distance of East is the sea. (2) Communism.||(1) Political issue (2) Limitation of material||(1) Natural disaster|
|(2) Law enforcement|
¹ http://www.adb.org/countries/viet-nam/main: 2013
² http://www.adb.org/countries/indonesia/main: 2013
³ http://www.adb.org/countries/indonesia/main: 2013
⁴ http://www.adb.org/countries/viet-nam/economy: 2014
⁵ http://www.adb.org/countries/thailand/economy: 2014
⁶ http://www.adb.org/countries/indonesia/economy: 2014
|Strength & Opportunity||- Various of sea port||- Central area||- Island|
|- Logistic development||- Logistic development||- Logistic development|
|- Demand in Domestic||- Demand in Domestic||- Demand in Domestic|
|- Low cost of fuel||- Privilege tax and vat, Industrial zone and free trade zone||- Privilege tax and vat, Industrial zone and free trade zone|
|- Privilege tax for Export zone, Industrial zone and equipment of production.||- High skill of labor||- Skill development of labor|
|- Skill development of labor||- Convenience for all transaction||- Expanding market to Oceania|
|- International Transaction||- Attractive interest rate||- Infrastructures|
|- Low cost of Labor fee||- Gov. intervention program||- Gov. intervention program|
|Weakness & Threat||- Communism||- High labor cost and operation cost||- High interest rate|
|- Cost and time of transportation||- Instability of political issue||- High labor cost|
|- High inflation = high cost.||- Import material||- Law enforcement|
|- Infrastructure||- Natural disaster|
|Return on Investment (ROI)||If market share of export is higher than domestic, may predict to high return due to exchange rate. Instead, if domestic share is higher than export, the return might low due to inflation lead to higher cost and higher price which is effect to economic of scale.||If forecast the percentage of market share between domestic and export is equal or less gap, ROI can be predict as middle rate. However, history of Thai baht is not strong for long period due to Gov. attempt to balance between domestic and export.||Predict that both domestic and export market can be expected high return due to exchange rate and purchasing power from domestic. Unit cost of goods is varied to economic of scale.|
Home Appliance production may refer to household products such as Television, Refrigerator, Electric-fan, Washing Machine, Air Condition and Microwave etc. As private’s perspective, Indonesia is a potential country for investment if investor have own capital and high cash flow due to the reasons as following;
(1) Balancing market may provide, investor can preserve both domestic and overseas.
(2) Chance to expand to Oceania due to their geography.
(3) Government intervenes to stimulate business, create more job and poverty reduction, and then increase demand of domestic market.
(4) Technology development, infrastructure and communication system is quite mature.
(5) Using the technology for reducing the labor cost due to tax barrier is reduced; no import tax for material and machines. To develop the employee skill, investor can develop knowledge management to encourage their competency and performance. However, the constraint of Indonesia is law enforcement which government will force immediately after their announcement and natural disaster which investor is required for vertical study before establishment the company.