Having more or less reached the limit of their domestic market, Thai companies are now heading to South-east Asia (and beyond) in search of new business.

FOR the past decade we have tended to assume that Singapore and Malaysia are the main proponents of pan-Asean corporate expansion.

Analysts and business journalists have followed closely as DBS Bank, SingTel, CIMB and Air Asia have rolled out across Southeast Asia.

What has been less well-documented is a similar wave emanating from Thailand as the country’s corporate giants – Charoen Pokphand, Siam Cement Group (SCG), PTT and Thai Beverage PLC have embarked on similarly ambitious roll-outs.

Indeed, Thai investments in Indonesia have been surprisingly large and to a large extent extremely low-key, despite their size.

Nonetheless, this will certainly be about to change.

For example, one sight that has caught my attention during my frequent trips to and from Jakarta’s Soekarno-Hatta Airport is a massive sign advertising SCG.

As Thailand’s largest cement company and owned by the Crown Property Bureau, which is linked to its royal family, the SCG elephant (an age-old symbol of the Thai nation) depicted on the vast signboard really stands out.

With a market capitalisation of US$13.79bil (RM42bil) and over US$864mil (RM2,635bil) in profits last year, SCG has been very active in Indonesia lately.

In September 2011, SCG purchased a 30% stake in Indonesia’s Chandra Asri Petro­chemi­cal Tbk (the republic’s largest pe­­tro-chemical company) for US$442mil (RM1,348mil).

In the same year, SCG also acquired 93.5% of PT Keramika Indonesia Assosiasi Tbk and 99% PT Kokoh Inti Arebama Tbk for undisclosed sums.

In February 2012 too, SCG acquired the Indonesian construction materials subsidiary of Australia’s Boral Group for US$135mil (RM412mil) – citing renewed confidence in the republic’s booming construction sector.

SCG’s Indonesian activity to me represents just one part of a wider, significant trend: namely the growing tendency for Thai firms to venture abroad.

Having more or less reached the limit of their domestic market, these companies are now heading to Southeast Asia (and beyond) in search of new business and better returns.

As Kan Trakulhoon, SCG’s president and CEO told the press in March, the company is planning to invest US$5bil (RM15bil) in Asean over the next five years, including US$1.3bil (RM3.9bil)-US$1.5bil (RM4.6bil) this year alone.

Besides SCG there’s the on-going multi-billion dollar battle for control of the iconic Fraser & Neave (or “F&N”) drinks manufacturer.

Thailand’s champion here is the US$8.1bil (RM24.7bil) market cap, drinks manufacturer and distributor Thai Beverage Plc (ThaiBev) whose iconic product is Chang Beer.

Also, Thai tycoon Dhanin Chearavanont’s Charoen Pokphand Group in December purchased a 15.5% stake in China’s Ping An Insurance for US$9.39bil from HSBC. This is a major coup as Ping An is China’s second-largest insurance company by premiums.

Meanwhile the state energy company PTT Exploration & Production Pcl (PTTEP) has also been expanding abroad aggressively. In November 2010 it purchased 40% of Statoil ASA’s oil sands project in Canada for US$2.28bil (RM6.9bil).

In August 2012, PTT made a US$959mil (RM2.295mil) offer to buy out 55% of Singaporean coal miner Sakari Resources, of which it already owns 45%.

More significantly, in July 2012 PTT beat oil giant Shell to purchase UK-listed Cove Energy for US$1.9bil (RM5.8bil).

Cove’s major asset is an 8.5% stake in the massive Rovuma 1 gas field which is located in Mozambique.

This represents a huge victory for PTT – who’s President and CEO Pailin Chuchottaworn I met earlier this year in Davos.

Indeed PTT’s most substantial overseas foray has been in Myanmar where cumulative investment are well over US$6bil (RM18bil) when you add up the operations – ranging from the Yadana and Zawtika gas fields.

At the same juncture, PTT is also planning a further US$3bil (RM9bil) investment in Myanmar.

Myanmar is a clearly a critical chunk of PTT’s business as Khun Pailin explained to me when I caught up with him again in Bangkok back in June: “Gas from Myanmar fuels 25% of the kingdom’s requirements.

Thailand is Myanma­r’s second largest trading partner.

“PTT is in a unique position as we have been doing business in Myanmar very amicably for a long time.”

In addition, the well-known infrastructure construction giant Italian-Thai Development Public Company Limited (ITD) is developing – along with the Myanmar Port Authority – a US$8.6bil (RM26bil) deepwater port in Dawei, the capital of the Tanintharyi Region.

All of this has implications for Malaysia.

Thai companies are clearly going where the money is. They’re going to countries with large natural resources and markets.

Malaysia clearly meets neither criteria and this is why Thai investment here seems rather minor.

At the same time, it is unlikely that Thai companies will be able to fly under the radar for very long.

Their investments in countries like Myanmar are likely to come under increased scrutiny as the latter opens up to global attention.

The Dawei project, for instance ran into controversy in December 2011 when local villagers who were being forced to relocate protested their eviction.

All in all, business in Southeast Asia is likely to get more interesting moving forward.

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