AEC
expected to boost demand for firm's products, strengthen regional presence
Merck, the Germany-based pharmaceutical and
chemical giant, sees a good opportunity to grow its business in Southeast Asia
thanks to the single-market framework, which will facilitate regional trade of
its products.
Aman Bhattacharjee, managing director of Merck
Thailand, said the Asean Economic Community (AEC) was expected to strengthen
the company's regional presence and boost demand for its products, particularly
in the healthcare, automotive, renewable-energy and cosmetics industries.
"Asean could be such a big market for
Merck. Medical tourism is a big opportunity for us, and Southeast Asian
countries like Thailand can go well in this industry. The automotive industry
is also a key driver for us, despite the disruption from Japan's tsunami
devastation and the floods [in Thailand] last year.
"The cosmetics sector is also
interesting. This sector changes fast, but grows quickly as well. Regarding the
implementation of the AEC in 2015, duty-free trade will be another factor to
help us grow in this region as expected," he said in a recent interview.
Merck operates in six Asean countries:
Thailand, Vietnam, Malaysia, Indonesia, Singapore and the Philippines.
Last year, the company celebrated its 20th
anniversary in Thailand, where it is involved mainly in the marketing of
pharmaceutical and chemical products domestically and in Indochina.
Merck Thailand imports all the chemical
products it sells locally, while it has two local contract manufacturers to
produce up to 40 per cent of its pharmaceutical products. Pharmaceuticals
contribute 45 per cent of the Thai unit's revenue.
In terms of regional operations, Indonesia is
now the company's biggest base, with two chemical manufacturing plants.
"The sales contribution from the whole of
Asean for Merck worldwide now is bigger than that from India alone. We also
plan to focus more on marketing in Indochina," Bhattacharjee said.
Newly opening-up countries such as Burma will
also provide good opportunities for Merck, he said, adding that the company now
sent a team there on a monthly basis to observe the market.
He views the economic situation in Burma as
very positive, but poor infrastructure will limit opportunities for serious
investment for at least the next five years.
In Cambodia, unmet medical needs offer a great
opportunity for the company's products, he said.
Merck Thailand has set a target to grow its
revenue by double digits this year, also driven by the strong integration of US
chemical company Millipore into the parent last year. The integration will be a
springboard for Merck to expand business in this region, where Millipore has 95
per cent of its clients.
Last year, the Thai unit missed its
double-digit target, after the earthquake and tsunami in Japan and severe
flooding in Thailand. While the Japanese crisis disrupted supplies to Thailand,
the floods caused domestic auto manufacturing to plunge, which reduced demand
for Merck's pigment products.
Much of the local business growth this year
will be supported by expansion in the automotive, food and tourism industries,
Bhattacharjee said.
He backed the government's assistance to the
auto industry after the flood disaster, including waivers on vehicle and
auto-parts import duties, which it is hoped will prevent the relocation of
assembly plants to other countries.
Through those measures, the government can use
the Japanese platform to tell investors that they stand to win official
support, he added.
In the food industry, bacteria-test kits are
now popular among exporters, while demand for pharmaceutical products will rise
in tandem with tourism, the executive said.
He highlighted political stability as the
biggest risk for operations in Thailand, as any unfavourable event could drive
away foreign tourists, with the drop-off continuing for some months each time.
A reoccurrence of last year's devastating
floods is another thing that concerns him.
"The flood disaster in Thailand last year
should be the worst" the country ever has to face, he said, adding that
the firm's growth expectations were "based on the condition that such
flooding will not recur".
The Nation
Business & Investment Opportunities
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