The Mekong subregion has great potential to pay high returns on long-term investment in agriculture and related businesses, say investors. Regional support facilities and a growing population can serve as entry points for many businesses, agricultural aid fund managers told an economic forum in Bangkok yesterday. But climate change and a lack of financial facilities are key obstacles.

Simon Hopkins, CEO of Milltrust International, said agricultural businesses in the Mekong could tap the huge potential from feeding the growing Asian middle class in Asia, especially in China.

A big challenge lies in finding capital to fund business expansion, while Thailand and Vietnam will find it difficult to obtain large plot of lands, he said.

Marvin Yeo, managing director of Frontier Investments and Development Partners, said cost-effective agrarian land in the subregion is a key strength. As well, businesses stand to gain from the coming liberalisation of trade, capital and movement of professionals under the Asean Economic Community. “However, the technology gap is an issue for the potential of agri-businesses in the region. Thailand and Vietnam have to play a key role in plugging this gap,” said Mr Yeo.

While investors see the potential for high profits from palm oil, he said attention should turn more to rubber, tapioca and cassava to feed demand in Asia. Technical assistance is a vital part of investment strategy in agricultural businesses, said Mr Yeo. Desmond Sheehy, chief investment officer at Duxton Asset Management, said the Mekong subregion provides additional opportunities for the logistics industry.

One-third of crop yields here are damaged due to a lack of facilities. Mr Sheehy said one challenge for businesses is how to upgrade themselves to become more competitive internationally. Relatively more restrictive land rights are another hurdle.