September 21, 2012

CP Group targets more investments in Indochina

In light of their growing economies and regional trade liberalisation through the Asean Economic Community in 2015, Charoen Pokphand Group is leaning towards investing more in Indochina.

Cambodia, Laos, Myanmar and Vietnam have a wealth of natural resources that could support the group's products from farm to table. In particular, their political stability is conducive to production. However, Myanmar is just beginning to open up its market and relax some stringent regulations to draw more foreign investors.

Thailand should focus on setting up plants in those countries for re-exporting to third countries, CP believes.

CP executives heading offices in these high-growth countries met in Bangkok. They agreed that abundant resources, cheap labour and political stability would help smooth operations.

Sakol Cheewakoset, president of CP Cambodia and CP Laos, said Laos had overcome its landlocked geography by connecting to more trading partners via road. This has drawn more investors from China to the country.

Cambodia has great potential to become Thailand's raw-material production base, particularly for corn. It should be able to double annual production to four million tonnes. The human resources in those two countries, especially young people, are ready to learn more about technology to support foreign investment.

CP has set up a feed-meal plant in Vientiane and plans to spend THB150 million (US$4.9 million) to build another one in Champasak province. A pig farm worth between THB200 million (US$6.5 million) and THB300 million (US$9.7 million) pig farm will be completed next year. The capacity of its food-processing plant will be doubled to 120,000 tonnes by the end of this year.

The group also spent THB200 million (US$6.5 million) for farm-business expansion and THB20 million (US$648,000) for food-plant expansion.

CP's business in Myanmar now comprises a feed-meal plant with the capacity of 250,000 tonnes per month, a layer-hen and poultry farm with the capacity of one million birds per week, and a food-processing plant with total production of 7,000 tonnes per year.

Chainan Nuphet, senior vice president of CP Vietnam Corporation, said the weak point of Vietnam was that transport was not well developed. However, Vietnam has already constructed a water tunnel through the river while Thailand has not. Foreign firms will enjoy almost the same investment privileges as Vietnamese businesses.

CP in Vietnam is mainly focusing on the domestic market, with a feed-meal plant and livestock and aquaculture farms. Its sales in the country grew 20% to THB42 billion (US$1.4 billion) last year and reached THB21 billion (US$681 billion) in the first half of this year.

The group has set aside THB1.2 billion (US$39 million) for another feed-meal plant with the capacity of 700,000 tonnes and THB600 million (US$19.5 million) to establish two processing plants for pangasius fish and shrimp to facilitate exports of chilled products.