Catch the Vietnam train now before it overtakes Thailand

[PeteC]

From the Bangkok Post. Pete
______________________________

Thai investors looking for good returns and expansion into the region should consider Vietnam, which one high-profile fund manager believes is poised for a regional leadership role sooner than most people think.

"It won't be a long time before Vietnam takes over from Thailand as the bigger economy and Thai investors should start to take a note of the country," says Marc Faber, who advises many large funds and also writes the widely read Gloom Boom and Doom newsletter.

With a 98% literacy rate and the high determination of its people, Vietnam will likely replace Thailand as the region's second-largest economy after Singapore, he says.

"The fact that countries such as Vietnam are going to grow at a faster pace than those such as Thailand will present an opportunity for investors."

Apart from Vietnam, the investment guru says there's a lot of opportunity in other countries such as Taiwan and China, where the equity markets have performed just around average levels.

"If you look at Taiwan, the market is trading at just around two times bond yields _ this is a simple sign of the market being cheap," he says, referring to the 4% yield on equities against 2% for government bonds.

"In China, although the market has already gone up, it still offers good value and can still go up, whereas India also offers good value in the long term," he said.

Mr Faber says that investors in the regional economies should have little to fear going into the future, even if there were to be a recession in the United States.

"The US has been going through some rough times and even if there was a recession, companies would continue to look for outsourcing to help them lower the cost structure," he said.

"This is the first time in the history of capitalism that we have poor countries that are making an impact on the world _ countries such as China and India where nearly 2.3 billion people reside."

The fact that China and India now consume nearly a quarter of global resources has created a chain reaction that has pushed global economic growth in a synchronised manner.

"The raw-material demand has prompted countries such as Latin America to show growth, where as demand for oil has prompted a boom in the Middle East, apart from the growth that we see in the US and Europe," he says.

"The Chinese and Indian markets have become the engine of growth for Asia and the world."

The wealth transfer taking place from the developed nations to the developing nations is a new phenomenon that will lift the standard of living of Asian people, while those of developed nations have remained stagnant for the past two decades.

Commenting on investment themes, Mr Faber says he likes real estate in the region. "Look at the urbanisation of Asian cities," he says.

"The urbanisation rate in Thailand is around 30%. China is also around 37%, while in India it's around 30%, and the western countries have 98%. This is an indication that we have huge potential for the real-estate market going forward.

"They say that at around $3,000 per square metre, land in cities such as Bangkok is expensive," he added. "You pay three times that amount in cities such as London, New York and Boston.

"Even cities such as Manchester had similar rates of real estate way back in late 1800s, but all they have remaining is a football club," he said, referring to the time when the English city was the world centre of industrialisation.

"Although in some parts of the region we have seen a decline in real estate prices, in the long term there is a huge value in buying assets in the region," Mr Faber adds.

He says investments in REIT (real-estate investment trusts) in countries such as Singapore were a good option as the yields were higher than on 30-year US government bonds.

[lomuamart]

Yes. Now the media, unleashed to an extent, is speaking it's mind.
Personally, I love this country. My wife is Thai etc etc. But the mind-numbing edicts and vitriol that emanated from Thailand whilst I was back home (the feeling I got came from reading the news and views, 6000 miles away) didn't help me think any differently when we returned.
There are pastures new.
The only things that hold me here are my wife, the "knowledge" of the country and the fact that I made a decision in my life 8 years ago.
I don't mind taking another look, though.
BTW, I'm poor!!!!!!

[PeteC]

The main reason I posted it was to highlight the 98% literacy rate in VN and, preach my ongoing sermon about what lack of education is doing to this country. Here it is in black and white.

Unfortunately, communist countries seem to have a leg up concerning getting their populations literate and educated, and thus trained, or easily trained into today's job technology market, not primarily into the factory worker market which seems to be Thailand's MO.

We talked about Seagate on here before, the worlds's larges hard drive manufacturer. Plant in Khon Kaen. When they bought that, they also bought about 200 adjoining rai for the second proposed factory. Last week they just spent 310 million USD on a place in Singapore which will employ 3,000 Singaporean workers. Why? They can't even man their one existing factory here properly. Trained and trainable workers simply don't exist. I'm not saying Singapore is communist but, they tow a hard line on population behavior and mandatory education.

In China, I have 26 people working for me now, 3 of which have been with me for 13 years. All existing and past employees came to me with an engineering degree from a recognized China University. Two have since migrated to Canada and have good positions there. When I found them, they were being paid about USD 2,000.00 per year by their Chinese companies. My offer was and remains more attractive. The point, China overflows at the seams with educated people and no place for many of them to go to make a wage equal to their education and qulaifications. The exact opposite of Thailand. Pete

-- continued---

I'm on a roll with this one now, sorry. The West wants Thailand to be a buffer to China and an emerging VN, no doubt about that. If the skills were here, the country would be overflowing with investment money to take Thailand up the technology ladder. We celebrate a Thai King's birthday this coming Monday who pulled Siam from obsecurity into a moderninzation process, he should be rolling over in his grave. What I see on the ground here and some things I've read, there is resistance to the ongoing push from the West to 'change' things. Not to make Thailand 'The West', but to put serious emphasis on education and individual initiative and improvement. For a long time I think the concept of an educated and intellectual population here has sent shivers up the spines of the rich power people. They would lose control and they don't want to, simple as that.

It's either what I say above or, Southeast Asian people with exception of VN and Singapore are simply a lazy lot, live life day by day and don't give a hoot about their future, their country's future or their childrens's future. Which is it? Personally, I think it is the former. These people are just not given the guidance and opportunity to achieve what they could.

20 years from now we may well see Thailand back to being the rice bowl of Asia, and the smoke stack dump of Asia, supplying all those related things to every other country in the area who has surpassed them. Pete

[johnnyk]

I think people overlook the fact that Thailand has undergone massive, wrenching change over the past 25 years and there is ongoing cultural and economic dislocation.
VietNam is certainly on track however as they have hard-working intelligent people but they still have a long way to go in terms of infrastructure.

[Guess]

I think people overlook the fact that Thailand has undergone massive, wrenching change over the past 25 years and there is ongoing cultural and economic dislocation.
VietNam is certainly on track however as they have hard-working intelligent people but they still have a long way to go in terms of infrastructure.

Too true Johnny but I believe the Thai problem goes back way beyond that. VN is a new country that would well be set for the "economic miracle" that Germany and Japan managed thirty years before.

As for infrastructure, I would hope that the VN government are smart enough to build that funding into any foreign investment deals they may be offered.

Check out this site.

http://web.worldbank.org/WBSITE/EXTERNA ... 65,00.html