PR for Ma or the real deal for Thai SMEs?

[webfact]

PR for Ma or the real deal for Thai SMEs?

By Wichit Chaitrong, 
Asina Pornwasin 
The Nation 

 

 

Will the impact of Alibaba investment lean toward a win-win or a zero sum game? 

 

The government has assured the public that Jack Ma, owner ecommerce giant Alibaba, will bring large benefits to the country after pledging to invest Bt11 billion in the Eastern Economic Corridor. 

 

 Ma has signed several memoranda of understanding (MoU) with government agencies, pledging both close collaboration and cash investments with several government agencies. 

 

Prime Minister General Prayut Chanocha, trying to soothe public fears about an e-commerce monopoly said he believed that Alibaba investments would benefit the country, particularly Thai farmers. There is some evidence to apparently support Prayut’s claim – sales of over 1000,000 durian fruit on the Alibaba website after Ma met Prayut on April 19. 

 

Critics, however, are still cautious about how large the expected benefits could be from Alibaba’s investment pledges.

 

“The government should not sign MoUs with a single business, because it raises a question of favouritism – why Alibala, why not Tencent or Amazon?” said Teerana Bhongmakapat, a former dean of Chulalongkorn University’s Economics Faculty.

 

“Ma has obviously benefited from the deal at least regarding the public relations as he could show other business leaders that he could access inner circles of the Thai government,” said Teerana.

 

Other investors might think that Ma has a personal connection with members of Thailand’s Cabinet, he argued. 

 

The one-on-one meeting and the MoU signing have also demonstrated that the Thai government desperately needs Ma, Teerana further said.

 

Teerana also argued that Alibaba is part of a Chinese strategy to expand its overseas investment and trade in Asean countries. Alibaba also wants to sell more Chinese goods to Thai consumers, while few Thai products will be qualified to take advantage of Alibaba platform, warned Teerana. 

 

Thai bankers are also aware that Alibaba, other e-commerce platforms and financial technology companies (fintech) will eat up their traditional banking businesses. E-commerce platforms and fintechs also provide some financial services, such as online payment and personal and SME loans.

 

This fear has led Thai banks to recently decide to waive fees for online transactions in order to lure clients to their platforms. Banks also making partnership with tech firms are racing to provide online services, such as management of inventory, payroll, and accounting to SMEs in order to retain their royalty. 

 

Thanyalak Vacharachaisurapol, deputy managing director of Kasikorn Research Centre Co, said that Alibaba would harvest and make use of “big data” related to trade and financial transactions for its future services. It may provide loans and cash management for SMEs which use its e-commerce platform, she said. 

 

Thailand will feel the impact, but it would also affect other Asean markets as well, given the many business units under Alibaba including Ant Financial and Ascend Money, she said. 

 

Kasikorn Bank has worked with Ant Financial, which operates Alipay, one of the largest Chinese online payment systems and able to provide online settlement for Chinese tourists who visit Thailand and spend money here. 

 

But central bank governor Veerathai Santiprabhob, apparently does not much worry about the negative impact of Alibaba investment.

 

“It is not a black or white matter,” he said. “Thai banks have to adapt and we can see they are as they waive online transaction fees.” 

If Alibaba affiliate Ant Financial wanted to provide loans in Thailand, it would have to set up an office here and it would be subject to Thai laws, he assured. 

 

In response to the criticism of government favouritism toward Alibaba, Kobsak Pootrakool, minister of the Prime Minister’s Office, said that government welcomes all business leaders, not exclusively Ma, if they have good proposals.

 

He said that the Thai government’s forming a partnership with Ma is the result of two-year negotiation since Ma first approached the Thai government. 

 

Kobsak was confident that farmers will largely benefit from Alibaba’s e-commerce platform since it eradicates middlemen. For example, when selling an agricultural product worth Bt100, a typical Thai farmer would get only Bt2 after the product had gone through many middlemen, Kobsak claimed.

 

The middlemen might be adversely affected by investment Alibaba in Thailand, but they would be able to adapt to new competition, he claimed. 

 

If Alibaba Group also provides loans to SMEs in Thailand in the future, it would benefit those groups. Many are not now able to seek loans from local banks, he said.

 

The Revenue Department has worried about the level paying field as Alibaba and other giant e-commerce operators from outside the country could avoid paying the 7-per cent value added tax (VAT), while local ecommerce operators would have to pay. The department is drafting a law to collect VAT from global e-commerce operators.

 

Teerana said that it may be too early to tell who will benefit the most from the deal, as Ma has not fully implemented what he pledged.

 

“Wait and see – it may be just a PR event for Ma,” he said. 

 

Source: http://www.nationmultimedia.com/detail/Corporate/30344256

 

-- © Copyright The Nation 2018-04-30

[Darcula]

30 minutes ago, webfact said:

sales of over 1000,000 durian fruit on the Alibaba website after Ma met Prayut

 

An extra zero is really like adding nothing at all to the original figure.

[tracker1]

One wonders how much of an insentive was handed over to allow him to get more then a leg into Thailands trading ????

[Samui Bodoh]

 "...Ma has signed several memoranda of understanding (MoU) with government agencies, pledging both close collaboration and cash investments with several government agencies..."

 

One of the great fears is that Ma has signed understandings for cash investments with several government agencies!

 

"...Teerana also argued that Alibaba is part of a Chinese strategy to expand its overseas investment and trade in Asean countries. Alibaba also wants to sell more Chinese goods to Thai consumers, while few Thai products will be qualified to take advantage of Alibaba platform, warned Teerana..."

 

There is validity to this concern. The idea that Alibaba is somehow NOT affiliated directly to the Chinese government flies into the face of all we know about doing business in China. One has to view this deal as allowing the Chinese government to expand its DIRECT control over a huge amount of Thai E-Commerce, with all the implications that surround that.

 

"...Thai bankers are also aware that Alibaba, other e-commerce platforms and financial technology companies (fintech) will eat up their traditional banking businesses..."

 

Again, great validity to this point. I haven't stepped into my bank branch in...ten years? Banking is an industry that will soon be almost all on-line (remember Thailand 4.0?) and Alibaba's sheer size and deep, rich reserves make it a direct threat to all the Thai banks.

 

"...But central bank governor Veerathai Santiprabhob, apparently does not much worry about the negative impact of Alibaba investment.

“It is not a black or white matter,” he said. “Thai banks have to adapt and we can see they are as they waive online transaction fees.” 

If Alibaba affiliate Ant Financial wanted to provide loans in Thailand, it would have to set up an office here and it would be subject to Thai laws, he assured..."

 

 

Yes, Thailand is famous for its rich and powerful living in fear of the government and its laws. C'mon dude; the Alibaba bank (whatever the name it goes by) will have capital reserves larger than most if not all Thai banks, and it will certainly have access to Chinese State funds if/as needed.

 

I can't really blame Jack Ma and/or the Chinese for accepting this deal; I'd take it if I had the dosh. However, Prayut and his cronies are so desperate for a deal that they have allowed for what is almost a certain monopoly over HUGE swathes of the Thai economy by Alibaba and the Chinese government.

 

Sad, sad times for Thailand and it sovereignty. This deal seems to be a giant sell-off of very large swathes of the Thai economy. And a badly executed one at that...

 

Edited April 30, 2018 by Samui Bodoh
Lack of coffee

[yellowboat]

Quite honestly why should people be interested in Thai SME's ?  What do the offer that is compelling ?   How good are their products and services ?  Alibaba is a platform for already vibrant Chinese businesses.   Many who sell using the platform are responsive and customer oriented.   Thais were selling on Alibaba long before the junta even seized power.  If Ma is going to sell fruit and tourist packages, Thai "intelligentsia" must ponder why can't we do this for ourselves ?  Instead of talking to Ma, Thailand should be talking to those who Ma's platform a success, Ma's customers.

[shady86]

Anyone would believe Alibaba is coming for nothing. Why bother to invest somewhere without benefits?

[Anak Nakal]

Jack Ma and China buy Thailand economy.

Commission? 

[mok199]

Thailand adapt!!!!..

[JAG]

One and a half centuries ago Great Britain built a huge empire, to a very large extent by rocking up at various places, and offering commercial deals which benefitted the local rulers. The economies and resources of these countries (colonies) were then used to trade within that empire, to the ultimate benefit of Britain. The local rulers were often left in place to run local affairs more or less as before. It was known as colonialisation.

 

Plus la change, plus la meme chose...

 

Sent from my BG2-U03 using Thailand Forum - Thaivisa mobile app

 

 

 

 

[Srikcir]

5 hours ago, webfact said:

Will the impact of Alibaba investment lean toward a win-win or a zero sum game? 

A third option needs to be added: Lose-Win (Thailand loses & China wins).