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Business News




HEADLINES [click on headline to view story]:
Fears loom over redundancy poans of state enterprises
Honda's new subsidiary will help increase use of local parts
Australian ship builder to build landing craft for Royal Thai Navy
One World alliance extends services to Eastern Seaboard
Atec Computer ventures into world market
Hundred-thousand new graduates will be jobless

That's enough, says CRC after Big C sell-off
Tourists have spent less, earning target missed

Provincial operators unite to bargain with cable TV giants

Fears loom over redundancy plans of state enterprises

Fears have mounted in state enterprises as more than 10,000 employees could be off loaded in redundancy plans amid protests against a reform law. Thousands of state enterprise employees have vowed to join another march against the government’s privatization plan later this month.

According to Deputy Minister of Transport and Communication Sontaya Kunpleum, about 4,000 of between 16,000-17,000 employees of the Bangkok Mass Transit Authority will be laid off under a reorganization plan. BMTA has implemented an early retirement program which has already attracted about 1,200 employees, Mr. Sontaya said.

The Metropolitan Electricity Authority said, though, it has no lay-off plan. An early retirement program has been implemented to reduce its workforce of 12,000 to about 8,000 from now until 2004. No new employment is expected during the years of restructuring of the organization, said MEA’s governor Dr Kasem Jaihong.

Workers union of the Telephone Organization of Thailand demands pledge by ministry there be no layoff under privatization plan; TOT has however said that there should be only 8,000, from currently 12,000 in the phone monopoly; the National Housing Authority plans to cut nearly one half of its 2,600-men strong workforce.

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Honda’s new subsidiary will help increase use of local parts

Asian Honda Motor Co. has opened a new subsidiary in Thailand, which should help increase the use of locally made parts as the local contents rule will be abolished by the end of 1999. The new company, Honda Engineering Asian Co., will also produce molds for exports to other Honda operations in this region.

Asian Honda Motor, with Thailand its largest production base outside Japan, said the opening of the new company has emphasized Honda’s commitment to the Kingdom. Honda Engineering Asian, with a Baht 100-million registered fund, has won an investment promotion package from the office of the Board of Investment.

The car maker set up Honda Research (Thailand) in 1994 and later in 1997 opened Honda R&D Southeast Asia Co. in Thailand to be their center for researching and developing new products for the company’s car and motorcycle industries. With Honda Engineering Asian, Thailand has become Honda’s fourth largest research center after the US, Europe and Japan, said Mr. Satoshi Toshica, chairman of Asian Honda Motor Co.

New Honda unit to produce engineering tools and equipment for Thai and regional operations; parts industry gets a boost as European and the US producers are coming in next year; Honda car, with 156 units of motorcycles and 95 units of Honda cars exhibited, was successful at the Bangkok Motor show at BITEC.

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Australian ship builder to build landing craft for Royal Thai Navy

The Australian-based ship builder Australian Submarine Corporation, with Thai partner Silkline International, will later this month start making a landing craft for the Royal Thai Navy. The company is to delivery the first 3 patrol boats to the RTN in mid-1999. ASC has chosen Thailand as its regional production base.

ASC’s manager for international marketing, Graham Storah said in a recent press meeting that tests on the first three of 7 vessels held early last month off the coast of Ban Pak Nam Pran, Prachaub Krirkhan, had met and exceeded contract requirements of the boat’s endurance and maximum speed.

The company has built a vessel to international standards with the Thai team and "stringent adherent to quality standards and rigid control of weight has ensured a first class result," Mr. Storah said. Though ASC was concentrating its sales efforts in Southeast Asia, Asia Pacific and the Middle East, "Thailand remains our focal point," Mr. Storah said.

The Australian-Thai company is building six PC 30 patrol boats for coastal patrol and surveillance duties for the RTN; ASC, with Celsius Group of Sweden, has built 6 Collins class submarines for Australian navy; the company sees enormous export potential of boats.

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One World alliance extends services to Eastern Seaboard

The One World flying alliance has entered into Pattaya and Thailand’s Eastern Seaboard with business activities aiming to attract customers in the country’s largest industrial zone. The alliance said Pattaya and eastern provinces have great potential for the airlines as foreign investors are moving in and out.

The grouping, the business umbrella of 5 airlines - Cathay Pacific, British Airways, Canadian Airline, American Airline and Qantas, which started networking services last February, said it expected to earn about Baht 20 million from Pattaya and other major eastern cities in the next 3 months.

Documents on the alliance’s activities have been distributed to sales agents in Pattaya and in other eastern cities, said David Sae Siew, Cathay Pacific’s general manager for Southeast Asia, India and the Middle East. The alliance is now offering a free-ride opportunity on BA’s Concord supersonic jet to all the group’s first class passengers.

The "Grand Australia" campaign also under way to attract about 1,200 passengers to the south continent in the next 3 months; business people still fly in the economic crisis; Pattaya has been a popular destination for chartered flights since many years ago.

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Atec Computer ventures into world market

Atec Computer Co., a leading computer maker, will target the US and European markets this year as the company aims double sales revenue from Baht 600 million in 1998 to Baht 1.2 billion in 1999. The company said that what gives it a competitive edge is that almost all its computer parts had been produced in Thailand and Southeast Asia.

"Foreign companies are marketing computers here while we (Thailand and Asia) produce 90% of computer parts. We’re now ready to sell them ourselves," said Mr. Adisak Srisuwan, managing director of Atec Computer. Only 1% share in the US computer market would be more than enough for the Thai company, said Mr. Adisak.

Atec Computer is producing PCs and notebooks with its own brand-name. Most of the products were sold in the domestic market last year, but the company will increase exports in 1999, said Mr. Adisak. The company won ISO 9002 certification last year.

Thailand produces computer hard drives, body cases, monitors and integrated circuits; only central processing units, application cards and mainboards are imported from Taiwan, Malaysia and Singapore; the marketing potential is that Asia has been the largest computer maker and the fastest growing computer market at the same time; Atec Computer to follow Taiwan’s Acer in world market.

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Hundred-thousand new graduates will be jobless

The unemployment situation is expected to worsen this year as thousands of new graduates are to join the job market in the next 2 months. If the implementation of the government’s new recovery package, announced on March 30, turns unfruitful, the unemployment figure will increase to 2.68 million in 1999.

According to a report by the Ministry of Labor and Social Welfare, submitted to the cabinet, there will be about 680,000 new graduates of all levels this year, while 1.35 million people are currently unemployed. There will be 32.86 million people in the nation’s workforce this year, 57,000 more than last year.

The situation will be worse if the economy fails to pick up in the middle of the year because there would be more layoffs. The wide-spreading draught has already made thousands in the agricultural sector jobless, said the report. The unemployment figure is, however, stable in the first quarter this year, but the figure is expected to rise as dry season approaches.

Ministry to spend Baht 17 billion to create 1.53 million jobs; more than 26,000 new employ people have appeared in the social welfare program, which totaled 5,433,865 in February; the number peaked at 6,202,600 in the middle of 1997 before falling to 5,407,424 in January this year as layoffs continue in industries.

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That’s enough, says CRC after Big C sell-off

Big C Superstore Plc would be the last piece of the cake to be sold by Central Retail Corporation, and now the group is ready to go ahead. Big C last week inked MOUs to sell all the company’s 530 million capital-increase shares to France’s third largest retailer Groupe Casino Guichard-Perrachon SA, the Netherlands-based Geant International BV and a local investor.

The fresh capital of more than Baht 6 billion, which would increase Big C’s registered capital from Baht 2.7 billion to Baht 8 billion, would enable Thailand’s largest discount store chain to expand, said the sources. CRC’s chairman Suthichart Jirathiwat reportedly said last week that the group would not sell any other subsidiary or operation as the liquidity problem in the group has been solved.

CRC was seen selling off a number of unprofitable operations in the past 2 years in the economic crisis. The company has also sold its shares in Carrefour hyper-market to French partner Carrefour SA, and gave shares in Tops Supermarket to the Netherlands-based Royal Ahold, in exchange for fresh capital. CRC was entitled to buy back its Tops shares in the next 5 years.

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Tourists have spent less, earning target missed

The Tourism Authority of Thailand has found that although more foreign tourists visited the Kingdom last year, earning from the industry has fallen to only Baht 240 billion, or almost Baht 30 billion under the target, as tourists are found spending less by an average of Baht 3,600 per day/per head.

TAT sources said 7.76 million foreign tourists visited Thailand last year, slightly above the target of 7.72 million. The Asian crisis was to blame for declines in spending as fewer Asian tourists, Thailand’s traditional visitors, had come. Only 4.2 million Asian tourists visited the Kingdom last year, a 1.18% increase from the year before, said the sources.

There were 2.1 million European tourists visiting Thailand in 1998, a 21.51% increase. The European groups of tourists, though, were not keen on shopping, and had only increased their spending by 20 percent on average, said the sources. More Europeans are expected to visit the Kingdom in 1999, the year of a royal celebration.

TAT said Korean tourists started to come back - 30,112 entries were recorded in January, a 312.21% increase; arrivals of Japanese and Chinese visitors increased 12.52% and 19.75% in the same month, in year-on-year statistics; the over all target for 1999 is 8.28 million tourists with over Baht 309 billion in earnings.

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Provincial operators unite to bargain with cable TV giants

Cable TV operators in the provinces have formed a company represent them in dealing with foreign operators. The new company, Itec Cable Television Co. represents dozens of cable TV operators nationwide. It will help local operators buy foreign programs in bulk, not in individual packages.

The new company was fully supported by Star TV and CNN, and helps local operators save between 20%-25% in purchasing foreign programs from major operators. Programs run by Universal Broadcasting Corporation, the only nationwide cable network, would be available to provincial operators at the same rate.

According to vice-chairman of the Association of Provincial Cable TV Operators Mr. Kasem Inkaew, foreign programs have been more expensive since 1997 after the baht flotation, while pay TV operators nationwide are paying at a higher rate than of UBC, though there are much fewer subscribers in a provincial network.

Star TV and CNN said the new company would help reduce broadcasting right violations; the rate would be adjusted to subscriber bases, a cable TV operator in Germany recently offered a free-to-air package of 5 channels to Thai operators in provinces.

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