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“Dr. Zhigang Li” Chairman of ICBC (Thai) Looking at Sino-Thai Investments through One Belt, One Road that connects EEC

 

By: ThaiPublica

            There is a long history of the bilateral relations between Thailand and China, politically, economically and socially.
            The re-establishment of the Sino-Thai relations in 1975 was the basis of a prosperous economic relationship in later years when China opened its country and reformed its economy, trade and investment. Both countries benefited from the rapid economic, trade and investment expansions even though, at times, Thailand would face political changes but Thailand always kept close ties with China.
            Dr. Zhigang Li, Chairman of the Board of Directors of Industrial and Commercial Bank of China (Thai) PLC, as representative of Industrial and Commercial Bank of China (ICBC), who has been holding the top executive position in ICBC (Thai) for almost 5 years, has recently shared a his thoughts and vision of a businessman investing in Thailand through an interview with ThaiPublica.
            ICBC (Thai) is a subsidiary of Industrial and Commercial Bank of China (ICBC) which is the largest bank in the world with USD 3.45 trillion in assets from the ranking of S&P Global Intelligence in 2017 and has established an economic relationship with Thailand through the acquisition of ACL Bank in 2010.
            “Many Chinese had migrated to Thailand long ago, even though I do not have the exact figure but China and Thailand go back a long way. A large part of the Thai population has at least some Chinese blood in them, most with ancestors from Guangzhou and Chaozhou.”
            Dr. Li added that when looking at the overall picture of the economy, he believed that there was no major issue that could affect the Sino-Thai relations because we are very close. Even though Thailand had changed governments many times but every cabinet continued to keep close ties with China. One reason could be because China is the largest export country of Thailand and the Chinese are the largest tourist group of Thailand. Moreover, geographically both countries are not far from each other, therefore, the Sino-Thai relations are very important.
            Dr. Li further said that Thailand has advantages because Thais are friendly people and they have no racial issue, therefore, expats feel quite at ease in Thailand because Thais do not make racial divisions. Moreover, Thais are good-mannered people and treat foreigners with respect the same way they do with their own people.
            He said that the thing that he liked the most was the Thai culture that readily accepts foreigners into to its society which gives an inclusive feeling. Thai was quite different from many other countries that the Chinese have been excluded and not treated well while Thais treat foreigners including Chinese well.
            “I have been living and working here for 5 years and has never been excluded whether in meeting Thai or other customers. For a Chinese respect is very important, I feel good with Thailand. I believe Thailand has many positive factors economic, social and cultural and I always recommend Chinese who wish to travel abroad that Thailand should be their first destination.”

Tightening Ties through Project Investment

            In an era of globalization that global trades could flow across the globe through every region, Thailand and China have tightened their relations. When China announced its “One Belt, One Road” initiation, Thailand not only is situated on the Silk Road route but the EEC project of Thailand is also strategically located on the One Belt, One Road route and both countries can cooperate have well suited cooperation on the projects.
            Dr. Li added that the One Belt, One Road project of China and the EEC project of Thailand can easily connect because Thailand is one of the countries that joined the One Belt, One Road project and is situated on the project’s route.
            “One Belt, One Road not only creates economic relations but also creates political relations on an international level. Thailand and China have a long history of relations and have been tightening these relations all along.”
            One Belt, One Road (OBOR) is a 21st century Silk Road that the Chinese government reinvented in 2013 with investments through Belt and Road Initiatives (BRI) that aim at building land (Road) and sea (Belt) infrastructure projects including roads, railroads, telecommunication, oil pipelines and sea ports which will connect the both the regional and inter-regional economies covering Eurasia, East Africa and more than 60 other countries around the globe.
            “The Silk Road in the old days started on land from Xi’an to Europe and by sea starting in Fujian to export goods from the South China Sea through Malacca Straits to India establishing good relations along the route. Likewise, the new Silk Road of the 21st century aims at creating good relations with these countries in terms of economy, politics and culture” said Dr. Li.

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            Dr. Li further added that China is developing at a very fast pace, therefore, would like to share this prosperity with its allies not only from the export of Chinese goods but also the import of goods by China. Chinese businesses want to expand their investments to its allied countries that are situated on the One Belt, One Road whether they be on land or on the sea route. From the map of One Belt, One Road one could see that there are many countries on the route. One clear example is the import of crude oil from the Middle East which is mainly done through sea transport, by connecting the sea ports along the route, it could greatly reduce the transportation time.
            One Belt, One Road will be beneficial to the ASEAN region. First, there is a lot of demand for Chinese goods from the ASEAN market and ASEAN could take this opportunity to export goods to China as well. Second, the Chinese government wants to promote Chinese operators to expand their businesses out of China which ASEAN will see more investments from China. Third, the Chinese people want to travel more which will make the tourism and service sectors of this region grow rapidly. In the case of Thailand’s tourism, it can be clearly seen the number of Chinese tourists grown to approximately 10 million Chinese tourists traveling to Thailand each year. Their spending has greatly benefited Thai businesses like the consumer sector.
            Dr. Li said that Thailand is strategically located in the ASEAN region and on the One Belt, One Road route which can connect the ASEAN region with China. The Thai and Chinese governments continue to hold discussions related to the Thai-China railway and the ASEAN railway projects which are mega projects that are important to the One Belt, One Road project.
            The Thai government approved the State Railway of Thailand (SRT) to be responsible for the developing the high-speed railway system from Bangkok to Nong Kai (Phase 1 Bangkok-Nakornrachasima) or known as the Thai-Chinese railway on 11 July 2017. The aim is for the system to be the connection and be in line with the transportation network of the One Belt, One Road project of China. The first phase which is 3.5 km. long (from Baan Klangdong to Baan Pang Asok) started in late 2017.
            “The Thai-Chinese railway and the ASEAN Railway are mega projects that are important to the One Belt, One Road project which have just started and have yet to complete. There are a lot of Chinese companies that are interested in these projects and have visited Thailand seek the opportunity to invest in these projects.”
            Dr. Li said that the Thai-Chinese railway projects will take some time to complete, however, the biddings for the 14 phases are expected to be completed by the first half of this year and next year we will see the progress more clearly.
            Dr. Li also said that previously the Chinese government encouraged Chinese companies to travel to Thailand to conduct feasibility studies for the Bangkok- Rayong railway because it was expected that many countries would be interested in the bidding since this project will connect 3 main airports, Suvarnabhumi, Don Muang and U-Tapao and is a part of the Eastern Economic Corridor (EEC) project of the Thai government. On 18 June 2018, the SRT opened the bidding for the Bangkok- Rayong railway project which interested parties to submit the TOR have until 9 July 2018 to submit them.
            In addition to the high-speed railways, Dr. Li said there are other projects that the Chinese investors are interested namely 1) the 2nd Phase expansion of the Suvarnabhumi Airport which Chinese operators are interested in submitting the bidding and 2) the Phase 3 expansion of the Laem Chabang Port.
            Earlier there were news that 2 Chinese corporations from Beijing and Shanghai with expertise in building airports had submitted bidding for the Phase 2 Suvarnabhumi Airport. 
            “These Chinese companies are not here to compete but rather join Thai companies as allies because these Chinese companies have advanced technologies so that they can use these technologies and equipments in the projects, while the Thai companies know all the Thai laws and regulations well in order to prevent any violation that could occur.”

The Right Time for Chinese Investors to Invest in Thailand

            Dr. Li further said that since the initiation of One Belt, one Road, Chinese businesses have been continuing to expand their investments along the Silk Road. This can be seen from the number of Chinese companies that have invested in the Rayong Industrial Park with over 100 factories built including producers of auto tires, auto parts, telecom parts, solar equipments, machines, electronics and advanced technologies equipments.
            He added that the EEC under the “Thailand 4.0” strategic plan of the Thai government will further attract Chinese businesses because EEC was established under a special law that grants special tax and work permit privileges for expats especially for businesses operating in the digital parks of Thailand or EECd.
            The EEC also promotes 10 target industrial sectors which the Chinese have expertise in most of them and will attract more Chinese investors.
            The 10 industrial sectors consist of 5 First S-curve and 5 New S-curve sectors. The First S-curve sectors are next automotive sector, smart electronics sector, affluent/medical and wellness tourism sector, agricultural and biotechnology sector and food for the future sector.
While the New-S-curve sectors consist of robotics and automation sector, aviation and logistics sector, biofuel and biochemical sector, digital sector and medical hub sector.
            Dr. Li said that it can be clearly seen that EEC is progressing quite well from the approval of the special economic zone or the EEC law which already took effect, the expansion of the Suvarnabhumi Airport which already started and the expansion plans for Don Muang and U-Tapao are in progressing well and the Bangkok-Rayong Railway is in the TOR process.
            He added that EEC opens the opportunity for both Chinese investors and ICBC (Thai) since as a Bank, ICBC (Thai) is ready to support the businesses that want to invest in Thailand through many of its products and services from loans, debt instruments to syndicated loans.
            “Since Thailand announced the EEC project, a great many Chinese investors have expressed their interest through the Bank and ICBC (Thai) has been welcoming many more investors than before. In the first week of June 2018, the Bank welcomed 2 groups of investors from large Chinese corporations that are looking to invest in Thailand.”
            Dr. further added that ICBC has been trusted by the Thai government to be the financial advisor to the EEC project working in cooperation with the EEC Office. The Bank has arranged 2 roadshows to attract new investors to the EEC in China and has brought Chinese investors to Thailand to explore the investment opportunities and meet with Thai authorities 4-5 times.
            Dr. Li said that it is not possible for him to estimate the amount of investments Chinese investors will invest in EEC but he believed that the high-speed railway project alone which is the most important project is estimated to be around Baht 200 billion which is a very large investment.
            Medium to large Chinese companies are the target groups to invest in Thailand because they have good technologies and potential to invest overseas and are increasingly investing in Thailand. Moreover, Chinese tourist are traveling more and more to Thailand reaching 10 million this year meaning Chinese people are getting to know Thailand much better.


“For Chinese businesses, I believe this is the time to invest in Thailand”


            Dr. Li further said that each country has its own set of pros and cons, Thailand has many pros because of its location in the heart of ASEAN becoming the center of export, center of production which foreigners can establish factories in Thailand to produce goods and export to other countries such as the CLMV region or other countries conveniently and less costly. Moreover, Thailand also has a lot of rubber which can readily supply the tire industry that will reduce their raw material cost and can easily be directly exported to Europe and USA.
            Dr. Li reiterated that One Belt, One Road and EEC are projects that will benefit both countries as well as ICBC. What ICBC will do is introduce EEC to Chinese businessmen by inviting the EEC team to China to explain the project. At the same it will bring these Chinese businessmen over to Thailand to learn more about EEC.
            “ICBC acts as intermediary between investors and the target investment countries, to introduce them so that they can match their business needs and go forward with their dealings.
            Since ICBC started operating in Thailand, it has introduced numerous Chinese investors to invest or operate in Thailand as well as providing financial support to them. For example, the joint investments between the CP Group and Shanghai Automobile to produce MG cars which the first phase had already been completed and it is currently under phase 2 which the Bank provided financial support.
            “Most Chinese businesses investing or operating in Thailand are ICBC’s customers including Chinese businesses establishing factories in Sino-Thai industrial parks. This is because ICBC has customer base in China and has expanded its banking business to Thailand for some time now, it also has information on the economy, financial situation and state policies of Thailand. ICBC (Thai), therefore, is able to provide financial and information support to these Chinese businessmen” said Dr. Li.
            In 2018 ICBC (Thai) aims to cooperate closely with the ICBC network to satisfy the needs of large corporations that wish to expand to Thailand’s neighboring countries in the ASEAN region. At the same time, the Bank focuses on introducing interested Chinese investors to the ECC which is a crucial project for Thailand’s future growth. The Bank is quite confident that it can answer the needs of these target Chinese investors with its personnel who are experienced in credit and have good understanding on Thai and Chinese cultures.
            For the SME group, we will focus on the operators that have business related to China such as import/export with China. Moreover, the Bank will also focus on the businesses that are related to the infrastructure projects of the Thailand government.


(2018-08-24)
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