Addidas says goodbye and turns to shoe-makers in Vietnam and China

While Adidas (Thailand) Ltd. said last week it would renovate many of its sales outlets in Thailand in an effort to maintain the same level of sales in Thailand this year as last, its US parent also made changes to the production strategy of the world-famous shoes. The change would cost the Kingdom billions of baht and thousands of jobs, as Thailand will no longer be an Adidas production base.

The US Adidas, which was recently bought by Taiwan’s Pao Chen Group, informed Thai producers that the company’s new policy is to switch production to its own factories in Vietnam and China. The Taiwanese group, which now is the majority-owner of US Adidas, said 8 or 9 Thai factories currently making shoes for Adidas would stop production immediately after completing current orders. Among those local producers is Thai Rubber Co. of Saha Group.

US Adidas ran in the red before the Taiwanese takeover.

While the Baht 4-billion-a-year Adidas orders will be gone forever, production for other top shoes, Nike and Reebok, for instance, face an uncertain future.

Thai plants made 700,000 pairs of Adidas shoes last year. Pao Chen group reportedly hired 20,000-30,000 workers at shoe plants in Vietnam and China.

Loxinfo claims to have broken even in Internet service

Loxley Information Service, a local Internet service provider, said it had hit the break-even point in the first quarter this year, as Loxinfo Internet expanded by 40-50% after 4 years of service. Meanwhile, Loxinfo has been in talks with 6 or 7 US and EU-based companies in the same industry for a possible partnership. "It’s important to find a foreign partner with technologies," said Vivatvong Vijitvadhakarn, the company’s managing director.

"The Internet has a strange nature for its growth despite the crisis. We could even have a small profit from the service in the first quarter," Vivatvong said. Loxinfo would expand its service area, currently in 17 provinces, to cover 32 provinces by the end of 1999, as more Thais, probably tens of thousands, are connecting to the net each year, Vivatvong said.

A Baht 100 million in fund is set to support the expansion plan in 1999, compared to Baht 50 million last year. The company plans a nationwide network for the end of 2000. A partner with a vision and the technology is wanted, to support the Loxinfo’s local expertise.

More Australian tourists divert to Phuket from Bali

Thailand’s most popular southern island of Phuket has won more Australian tourists this year as local tourism has already entered the traditional low season. More Australians have diverted from Indonesia’s tropical island of Bali, which is much closer, to Thailand’s popular attraction Phuket after road shows to Perth and a few other cities late last year by Phuket Tourism Association.

"Thai Airways International will fly one more direct flight between Phuket and Perth, adding to its regular two flights a week, as more Australian tourists are coming to Thailand during winter months in the continent," said Preecha Manavong, Thai marketing manger for the upper southern region. THAI would also fly a larger plane between Perth and Phuket to cater to an increasing number of Australian passengers, he said.

More direct flights are being urged to connect Phuket to Sydney and its satellite cities. Nearly 100,000 Australian tourists visited the Kingdom last year, a 78.60% increase from 1997. All 560 seats from Perth have been fully booked each week.

Lucen wins in bids for CAT’s optical fiber projects

Lucen Technologies has won the bids to construct optical fiber links in the provinces, projects which bidders said were adapted by the Communications Authority of Thailand to favor the US-based company. Between 7-9 companies in the communications industry bid for three projects worth about Baht 500 million, to link optical fiber systems between Khon Kaen and Chiang Mai in the northeast and the north, and Chumporn and Songkhla in the south.

Three major producers of optical fiber cable in Thailand, Hitachi Bangkok Cable Co., Thai Fiber Optics Co. and Siam Fiber Optics Co., earlier complained in a co-signed letter to CAT that they were handicapped by changes in the specification of the cable, from a loose-tube type to a central-tube type, as only Lucen Technology and a few other foreign companies were producing the central-tube cable.

CAT, however, said it was necessary to change cable type in order to connect with international links. CAT further said that some local producers would soon start producing the central-tube optical fiber cables.

Complainants said only Lucen and another US-based firm were to set up fiber optical plants here to bring out the central-tube cables.

Mercedes still looking for auto assembly plant

Mercedes Benz (Thailand) has not been successful in negotiating with the Thonburi Group to assemble Mercedes model cars in Thailand, and talks have been going on with few other assembly plants. Industry sources said there might not be enough Mercedes cars to feed the market in coming months, as sales of its arch rival BMW had exceeded those of Benz for the first time in many years.

Mercedes Benz (Thailand) has been in talks with Bang Chan General Assembly, which assembles Volvo cars and Chrysler’s Jeeps, while talks have been under way with Siam Nissan Automobile Co. in an effort to overcome the hurdles with the Thonburi Group, Benz’s old-time trading partner, said the sources. Thonburi’s plant in Samut Prakarn’s Phrapadaeng district had brought out Mercedes cars for years before German’s Mercedes Benz AG came up with a plan to market the car in the Kingdom itself, and formed Mercedes Benz (Thailand) without Thonburi participation last year.

Thonburi was said to ask for compensation to cover losses it suffered after the Benz assembly line was cut off. The Thonburi plant is still bringing out its last lots of Mercedes cars for the German company.

Computer budget for Interior Ministry ordered frozen by FM Tarrin

Finance Minister Dr. Tarrin Nimmanahaeminda has told the Budget Bureau to freeze the Baht 1.4 billion computer budget for the Interior Ministry. The Finance Minister cited that the budget, which received cabinet approval last week, was not appropriately allocated. The ministry should get its own funding for computer installation projects, he said.

The Interior Ministry said the computers are very important for the upcoming national elections.

According to government spokesman Akom Sorasuchart, the Interior Ministry would need more than Baht 4 billion to fund the whole computer project from now until the year 2001. The ministry was seeking Baht 2.2 billion to fund the first phase of installation, in a special agenda raised before the cabinet meeting on Tuesday last week. The Budget Bureau, however, said only Baht 1.4 billion could be sliced from the government’s central fiscal budget for the ministry.

The central budget is reserved for troubleshooting crisis and for emergency relief, which includes price sanctions and relief for drought or natural disasters.

Government critics wondered why the Interior Ministry sought such a huge budget fund for elections, as it is the National Election Commission that will take care of the elections.

Ten percent of employees join SCB retirement program

Siam Commercial Bank would have to pay Baht 860 million in compensation for 1,460 employees, comprising more than 10% of its 12,010-strong workforce, who have joined the bank’s early retirement program. Several managers were transferred or re-appointed in the past few weeks in an internal reshuffle to cope with organizational changes after one of the bank’s largest redundancies in recent years.

Among those who applied to join the early retirement program, under which retirees would be paid up to 10 months of salaries as bonus, adding to a compensation package in accordance with labor laws, were 5 managers and senior managers. According to SCB sources, 1,080 retirees are between 10-50 years of age. Thirty-five of 52 employees who are over 55 years of age have joined the program, said the sources.

The redundancy would help cut about 5% of costs, about which 30% is in payrolls. SCB has a total of 5,850 employees who are between 31-50 years old. Some administrative branches have lost one half of the workforce under the program.

Mega concert planned to celebrate HM’s birthday

A gigantic international concert festival has been planned in December by the Tourism Authority of Thailand to celebrate His Majesty the King’s 72nd birthday. More than ten of the world’s popular pop and rock bands, singers and stars have confirmed they will participate in the international event, never before seen in this region. The concerts would be organized by a local and a Netherlands-based company, according to TAT’s deputy governor, Ms. Juthamas Siriwan.

U-Tapao air force base in Sattahip would be the venue for the concerts, estimated to be worth Baht 6 billion in operation costs, said Ms Juthamas. Millennium Entertainment Thailand and K&B Event International of the Netherlands would be responsible for the project, supported by an international fund in the UK and several government agencies and offices in Thailand, including Thai Airways International, the Department of Customs and the Royal Thai Navy.

About 48 billion baht would be needed to organize the Amazing Thailand Concert festival. About 800 coordinators have already started work on the project.

1.54 million concert enthusiasts are expected to head for U-Tapao on December 4, 11, 18 and 25, as Mariah Carey, Alan Parson, The Eagles, Pink Floyd, Rod Steward, Madonna, Aerosmith, Bon Jovi, The Backstreet Boys, Janet Jackson, Tina Tuner, Elton John and Phil Collins are among those confirmed to join the celebration.

Malaysian firm introduces first ever rechargeable alkaline battery

Malaysia’s Grand Battery Sdn Bsd has started marketing the first rechargeable alkaline battery in the Thai market as sales of alkaline batteries have immensely increased in recent months. The company, holding 49% in Grand Battery Technology (Thailand), has set Baht 50 million as its sales target for 1999. Convenience stores would be prime outlets for the company’s battery products.

According to general manager of Grand Battery Technology (Thailand) Suthep Raksathep, the company, which is 51% controlled by Thai groups, would first test the market with AA-size alkaline batteries. The smaller AAA-size would be available in the next 2 months. The rechargeable batteries are manufactured in Malaysia by Grand Battery Sdn Bsd, Suthep said.

The battery, under the brand name Grand Sale, is now available in some convenience stores, discount stores and filling stations, while negotiations are underway with 7-Eleven and AM/PM chains for placement in their stores.

The sales target would be increased to Baht 200 million in the second year of operation. Zinc chloride-type batteries share 65% of the Baht 1.8-billion-a-year market, while alkaline batteries are likely to increase their market stake from 28% to 35% this year.

CAT’s public Internet project stalled by ministries

The plan to invest more than Baht 554 million to install Internet network in rural areas ran into problems last week as the Finance Ministry and the Science, Technology and Environment Ministry expressed caution about the nature of the investment, now that the state owned Communication Authority of Thailand, which is on the road to privatization, is to compete with private-owned Internet service providers in which CAT holds up to 40% stake.

Finance Minister Tarrin Nimmanahaeminda and Science, Technology and Environment Minister Suvit Khunkitti have questioned the wisdom of the public Internet service by CAT in a letter presented to the weekly cabinet meeting last week, said government sources. Private-own ISPs are now operating in 40 provinces. Many of them have planned nationwide services in the next 2-3 years, the ministers reportedly told the cabinet.

The project received kudos for the access to the Net it provided to underprivileged residents in rural areas. CAT has proposed a Baht 60-per-hour tariff, as several ISPs charge only Baht 30 an hour from Internet surfers. Some ISPs were found charging as low as Baht 9 an hour in shopping centers in provinces. Transport and Communication Minister Suthep Thuagsuban told a ministry committee to review the project.

Water treatment project to be probed after complaints by German company

Science, Technology and Environment Minister Suvit Khunkitti said he will order a probe into complaints by a German company which suspected that bidding for the ministry’s waste water treatment project might not be fairly done and lacks transparency. The minister said he received the complaints in a letter from the German embassy in Bangkok last month.

According to ministry sources, the company, Von Nordenskjold Verfahernstechnik GmbH, said in a letter to the embassy that the Pollution Control Department, which operates the water treatment plant, has failed to consider its air filling system for a highest technical feature and a lowest possible price. The system chosen by the department had posted risks to water treatment works and could force a shut down of the whole plant, the company was quoted as saying in the letter.

The embassy seeks the minister’s advice and a guarantee of fairness in bidding, as the company is ready to provide inside information.

The company also said its technical information was leaked to bidding competitors. The government’s anti corruption commission was also informed of the complaint.

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