Korean Investment in Laos, Cambodia Infrastructure, and Thailand Retail Sector – ASEAN Market Watch

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Laos: Korean businesses seek local franchise partners

Korean businesses are increasingly looking to launch their products in the Lao market through the franchise route. At least seven prominent Korean brands recently participated in the K-Franchise Business Meeting 2017 organised by the Korea Trade Investment Promotion Agency (KOTRA) in Vientiane, where they met with potential Laotian partners. The franchise brands represented at the event include Well-Being Pizza, Elli Cel, Didim (Mapo Seagull), Street Churros, Chicken Derby, Beaupeople and Y Entertainment.

With about 257 projects worth US$ 800 million, Korea is the sixth largest foreign investor in Laos. Bilateral trade between the two countries reached US$ 199 million in 2016. Laos’ exports to Korea were valued at US$22.9 million in 2015. The country’s main exports to Korea include potassium fertilizers, coffee, lead bullion and scrap, fabrics and ingredients for oriental traditional medicine. In 2015, Korea’s exports to Laos were valued at US$ 170 million. The main items of export from Korea to Laos include vehicles, trucks, automotive parts, construction equipment and electronics.

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Cambodia: Infrastructure investment crosses US$ 1 billion

According to Cambodia’s Ministry of Economy and Finance, the country has invested more than US$ 1 billion in local infrastructure, especially in the transport sector. The figure represents about 80% of the government’s total investment and around 7 percent of the country’s GDP. The government is focussing on transport infrastructure to boost economic growth and competitiveness as well as to attract foreign investment.

The government has stated that infrastructure has been upgraded at the country’s border crossings. With only 40% of the country’s roads being tarmacked, the government said that construction and improvement of about 910 km of national and provincial roads are under way with financial aid from China, Japan, South Korea and the Asian Development Bank. According to the country’s transport secretary, the priority for the government’s infrastructure development program would be roads, bridges, railways, ports and airports.

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Thailand: Retail space growing despite weakening spending power

Retail space in Thailand’s main cities continues to grow in 2017 despite declining purchasing power and increasingly popularity of online shopping. About 114,350 square meters of new retail space added in the first half of 2017, pushing the total retail area in the capital Bangkok to over 7.6 million square meters. The newly added space mostly comprises of new malls and office buildings in the Greater Bangkok area, which comprises over 60% of total retail supply. According to Colliers International, about 300,000 square meters of new retail space is expected to be added this year. Shopping malls, which have multiplied in numbers in recent years, are slated to secure the largest share of retail space supply in 2017-18.

According Colliers International, the major players in Thailand’s retail sector will continue to increase the number of shopping malls, especially in major Thai cities, while other retailers will focus on international expansion. Despite weakening spending power, occupancy rates in all retail categories during April-June 2017 were at more than 96%, nearly the same as those in the previous quarter. Average rental rates of all locations in Bangkok in the first six months of 2017 have increased by 5 to 10% in comparison to the previous year. Large shopping malls have the highest rental rates, due to them being expensive projects designed to serve a wealthy customer base, according to Colliers International.

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