Esso to eliminate 300 dealers this year to cut costs

Esso Thailand Plc has planned to launch another hard sell drive sometime in the middle of 1999 to boost sales. However, the move is also aimed at eliminating as many as 300 dealers, from about 800 dealers nationwide, in an effort to cut operating costs in the slumping market.

According to industry sources, the new price dumping drive plan is known among its management. Under the plan, retail prices at service stations nationwide will not be supported any more. It is believed that the move will make Esso’s dealers less competitive, forcing many to close down or seek to join other oil producers.

Esso Thailand owns about 80 percent of its service stations throughout the Kingdom while the rest belong to the company’s dealers. Esso has gradually narrowed the marketing margin since October 1 last year - from Baht .50 a liter to Baht .35 a liter. It is believed the margin will be brought down further to Baht .20 a liter in the middle of 1999, said industry sources.

The Petroleum Authority of Thailand, which owns 70 percent of PTT service stations nationwide, also working in the same direction; Esso Thailand reportedly lost Baht 100 million a month since price dumping campaign was introduced; more than 1,000 gas stations reportedly to close down since last year.

Deadline set for TAT to meet new challenges in tourism

Tourism minister Pithak Intaravittayanant said the Tourism Authority of Thailand is to change a great deal to meet the government’s new policy in the country’s tourism industry, as the new target of Baht 320 billion in income has been set to earn from 8.3 million foreign tourists expected to visit the Kingdom this year. All changes must be implemented within 6 months, Mr. Pithak said.

Among new measures to boost tourism sales in the world market, both retail and wholesale marketing must be expanded in the EU and the US markets while developing several other new markets in Africa and the Middle East, he said. "More sales representatives will be authorized in several countries," the minister said.

TAT must expand tourism activities to other locations, from Phuket to Krabi and Pang-Nga and from Songkhla to Stun and satellite islands in the south, and from Chiang Mai to Lumpoon, Mae Hong Sorn and Lampang in the north, for instance. Besides the south and the north, destinations in the remote northeastern part of the country will be highly promoted to attract foreign tourists, said Mr Pithak.

TAT to open Shanghai office while representatives will be authorized in a number of major Chinese cities; Yunnan will be Thai’s flying hub in southern China; from this June, VAT return would be viable for tourists; budget funds set to support tourism businesses; loans opened to new small and medium-scale investors by Krung Thai Bank.

Ucom to launch high-speed Internet service in April

The Ucom Group is to launch the country’s first high-speed Internet service in April, aimed at home users and businesses as well as organization customers. The service would save customers a lot of time & money compared to those currently on leased lines. The ADSL technology would enable the industry to transfer data, voice and graphics all at the same time over a telephone line.

According to Prasert Assawasuwan, senior director of United Broadband Technology Co, of Ucom Group, the multimedia service is likely to replace the current voice service via telephone in the next 2 years and the new, speedier service with ADSL technology has great potential to grow.

An average Internet surfer is currently transferring data at the speed of 28,800 BPS with Baht 30 an hour in service fees; the new high speed Internet, by the group’s service provider WorldNet, will help users save a good deal over medium and long-term periods. A high-speed modem is required, said Mr Prasert.

ISPs said the price would be decisive the factor to draw their attention; Ucom jointly owns United Information Highway Co with the Communication Authority of Thailand in high-speed telephony; more information available on www.Wnet.net.th and www.thaiicq.com.

Thai-made Y2K software attracts major US customers

The SC 2000 card has been among very few Thai-made Y2K products which has won major customers in the U.S. But the University of California at Los Angeles has turned to installing the SC 2000 card because of its precise effect in countering the millennium bug, said the producer.

According to Sawas Lawal, an executive director of SaveCom USA Inc, producer of SC 2000 software, several other California-based companies and agencies have also installed this Thai-made software for its capability for producing effective results. Its low-price of Baht 999 a set is also a major attraction, said Mr Sawas.

"The software, proven to be working very accurately in correcting dates and times in PC’s BIOS and in operating systems, will help both networking and home use PCs in diverting threats from Y2K," said Mr Sawas. A new version of SC 2000 will be able to scan directly into software and applications, he said.

The more effective, newer version will be introduced this March in the US; based in California, the company’s marketing plan this year will cover Asia, Africa and EU; UCLA reported to have intensively tested the software before installing; referring to the Y2K situation in the domestic market, a trader claims PC owners still very slow in responding to the millennium threat.

Hotel chains accused of exploiting Phuket tourism

International hotel management chains, which currently operate most major hotels in Phuket, have been accused of exploiting the tourism industry in the island resort by hiking room rates unfairly. The major hotels, selling room accommodations in US dollars, were quick to increase their rates when the Thai baht appreciated to around Baht 36, from Baht 42 to a green back last year.

According to Mr Charn Vongsattayanont, vice-president of the Phuket Chamber of Commerce, rates at major hotels, normally around US$150 a day, were raised to between US$160-180 at present - a practice which would damage the good image of the industry in the world-class tourist resort island.

Tourism had brought Baht 30-40 billion into Phuket in 1998, about a 30-40 percent increase. "Room occupancy rates at major hotels was 90 percent through the whole year," Mr Charn said. However, only beach side hotels had done well in past years, while downtown hotels benefited less from Phuket’s booming industry, he said.

Downtown hotels would be highly promoted by the chamber this year; the chamber to continue efforts to make Phuket a duty-free port and cruising center in Southeast Asia; there have been regular cruises from Singapore since last year; cruising business increased by 50 percent in 1998.

Six nations to pursue ‘Mekong Airlines’ agenda

The six member countries of the Mekong sub-region economic hub - Thailand, Laos, Burma, China, Vietnam and Cambodia - have agreed in principle to establish Mekong Airlines, a sub-regional airline for tourism purposes. A memorandum of understanding could be signed this year.

The airline, aiming to transport visitors to and from tourist attractions in the member countries, will be a joint venture of the 6 countries in which the governments should hold 60 percent of the shares while other regional airlines or private investors should hold the rest. The new airline could follow the example of the Scandinavian Airline System of managing, said Thailand’s tourism minister Pithak Intaravittayanand.

The initial investment should be around Baht 1 billion; each of the member countries would take an equal part in the holding, said Mr Pithak. In case that some member countries are not ready for the investment, the Asian Development Bank, as well as the World Bank, have both expressed interest in extending support to the sub-regional airline project, he said.

The airline is ideal to link northeastern and northern Thailand, Mandalay in northern Burma, Yunnan in southern China, Luang Phrabang in northern Laos, Angor Wat in northern Cambodia and, maybe, Vietnam’s ancient capital of Hue and the seaside resort city of Danang.

Kloster launches half-breed BrewMax to compete with Heineken

Dutch Heineken has found a real enemy at last, after years of enjoyment in the Thai premium beer segment which last year covered about 7 percent of the Baht 42 billion beer market. Thai Asia Pacific Brewery, brewers of Heineken, said that while the general market is likely to fall further, to under 10 percent, premium beer is likely to grow two fold this year.

Kloster (Thailand), brewer of the premium Kloster beer, quietly introduced its BrewMax beer earlier this month but sales were limited in Kloster’s beer gardens. The launch, to test the market, was warmly welcomed by up-scale drinkers, said Thanarak Wannasrisawas, assistant managing director of Kloster(Thailand).

The German-styled BrewMax comes out in three different tastes in three differently colored 330 cc bottles - the mild Pilsner in silver, the caramelized Dunkel in black and the fruity Weizen in yellow. The company is to launch the new premium beer to supermarkets in Bangkok first before launching nationwide sales promotions.

Kloster beer, meanwhile, is to come out in a new look; Boon Rawd Brewer, with Singha and Leo beers covering 67 percent of the lower and middle markets, plans to launch its Midvida in long-neck bottles to contest in the premium segment in the next two months; Asia Pacific Brewer, however, said Heineken is confident it will expand its market share to over 10 percent this year.

Airlines quick to respond to liberalization policy

Local airliners, in a jovial mood over the government’s liberalization policy of the airline industry, have aggressively expanded their services to destinations never before opened to any other airlines besides Thai Airways International. "Here comes a totally new era in the industry," sources in the Aviation Department revealed.

PB Air Co, a charter airline, would soon start new regular flights over 4 routes: to Roi-Ed to the northeast, to Chumporn, Krabi and Phuket to the south and an indirect flight to Chiang Mai via Khon Kaen. The policy of the Transport and Communications Ministry to float prices of air tickets of THAI is one of the boons in the industry, said sources.

Meanwhile, the country’s second airline, Angel Air, would next month increase flights to Chiang Rai to 4 flights a day, while one more daily flight from Bangkok via Chiang Rai to Kunming in southern China was planned, said sources. Flights to Chiang Mai were reserved for THAI flights only.

Bangkok Air plans a Bangkok-Sukhothai-Siem Riep daily flight later this year; Orient Thai Air has just won an extension to its flying license and domestic flights would resume soon; ticket prices would be among decisive factors in competition; smaller planes by private airlines would benefit more from short-range flights.

Price cut works well in seaside condo sales

VIP Condo chain has found that the great discount sales promotion launched in December has been fruitful as 80 units of its condominiums in Pattaya, Rayong and Cha-am have been sold. The "fire sale" campaign will last until the end of March for the rest of last 100 units. The company, VIP Real Estate Co., said it would spend all the earnings in debt repayment.
"There has been almost no benefit made in this hard-sell drive," said Apaspong Poonphon, executive manager of VIP's condo chain project. "It's a golden opportunity for customers," he continued. "From now on, an old customer who introduces a new customer to the company's condo would be given a TV set as a gift," Mr. Apaspong said.
VIP, selling condominiums for over one million baht a unit during boom times, have offered a 50-65 percent price discount, which brought condo prices down to Baht 500,000-800,000 a unit. VIP Real Estate is a major property developer in the beach side condo market.
Banks rush to extend loan supports after sales passed the 30-unit target; mortgage would be arranged for customers; all the VIP condos are 100 percent ready-to-move in; over Baht 100 million repaid to creditor banks.

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Created by Andy Gombaz, assisted by Chinnaporn Sangwanlek.