The COVID-19 pandemic dealt a major blow to the global economy in 2021 but Thai listed companies delivered record foreign income in the year, suggesting that their foreign direct investment provides a buffer against the economic headwinds and could give a significant boost to income in the time of the burgeoning economy.
In 2021, listed companies reached a record high of USD 136.88 billion (THB 4.38 trillion) in foreign-sourced revenue, attributable to overseas businesses and exports. The foreign revenue accounted for 32 percent of their total revenue and soared by USD 43.44 billion (THB 1.39 trillion) or 46.35 percent from the previous year, bolstered by a 48-percent jump in overseas business income and a 22-percent surge in export income.
Though companies in the resources industry attributed the largest year-on-year increase of USD 49.38 billion (THB 1.58 trillion) among its peers in other industry groups following an increase in output and oil prices, the agriculture and food industry trailed behind with a hefty increase of USD 33.13 billion (THB 1.06 trillion).
Thanks to the foreign-sourced revenue, listed companies’ combined revenue was as high as USD 427.50 billion (THB 13.68 trillion) in 2021, a 23.1 percent increase from the previous year, even when Thailand faced rounds of serious infections and economic activities came to a halt. The combined net profits of USD 32.50 billion (THB 1.04 trillion) was even above the 2019 level, when the world was free from COVID-19.
Despite emerging uncertainties from the COVID-19 outbreak in 2021, a number of domestic listed companies in the year maintained the overseas investment spree.
In the year, 278 Thai listed companies or 36 percent of the total number of companies listed on both The Stock Exchange of Thailand (SET) and Market for Alternative Investment (mai) made net foreign direct investment worth totally USD 3.44 billion (THB 110 billion). The sum was below USD 4.45 billion (THB 139.4 billion) in 2020 and the record USD 9.51 billion (THB 295.3 billion) amount in 2019, but it reflected Thai companies’ enthusiasm to grow international exposure and diversify business risks in light of uncertainties.
The outbound direct investments in 2021 were made mostly by large size companies and those with international exposure had a combined market capitalization of 77 percent of total. The lower foreign direct investment was consistent with the results of the Stock Exchange of Thailand’s CEO Survey in 2020 that showed the companies’ plan to invest more domestically and less overseas, with focus on the efficiency in supply chain management.
To these companies, ASEAN was the most popular destination, attracting the investments of 217 companies. Vietnam was the most attractive destination, receiving the investments from 84 Thai listed companies, followed by Singapore and Myanmar. The investments also went to North Asia, South Asia, Europe, the Middle East, the U.S., Australia and Africa. Remarkably, North Asia and South Asia witnessed an increase, compared to 2020.
By industry group, the Services was the most active in growing overseas exposure with 65 companies or 38 percent investing abroad in 2021, followed by the Industrials and Property & Construction at 47 and 42 companies, respectively.
It will not be surprising if these companies invest more overseas, as long as there is a window of opportunity.
The article is based on SET Note Vol. 4/2023: “Investment trend of Thai listed companies during the COVID-19 pandemic and growth of foreign income in 2021.”