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Kingdom to spend 15
years repaying foreign debt
Thailand is now over US$80.3 billion in debt after just
a couple of years of trying to manage the economic crisis, and Finance
Minister Tarrin Nimmanahaeminda has initialized a plan that will spend 15
years servicing the debt.
Under the plan, the Chuan Leekpai administration would
be responsible for just over Baht 23.4 billion in foreign debt repayments.
However, PM Chuan said two weeks ago the government is ready to make early
repayments.
In a rather amazing twist, Tarrin has been chosen by a
foreign magazine as Finance Minister of the Year 1999, even though the
government is bringing in Baht 40-billion in debt each month. The next
governments to come will be faced with the difficulties of trying to repay
the debts inherited from this government.
Despite arguments on debt amounts made in recent
months, Tarrin is still to go ahead with a plan to borrow another US$3.5
billion to fill the 2000 fiscal budget. The government is seeking massive
loans from 4 foreign institutions to heal the crisis-hit economy next
year.
The debt per GDP ration rose to 9%, from between 5% and 6% in the
pre-crisis years. Foreign debt in the private sector has been declining
while debt in the public sector has been on the increase.
Lucent likely to be
disqualified from optical fiber deal
The future of the US-based group TTI and Lucent
Technologies in three fiber optic deals with the Communications Authority
of Thailand became dimmer last week when CAT invited the rival Marubeni
group into the price bargaining. CAT will not call for new bidding in case
the TTI-Lucent alliance is disqualified from the race, said CAT sources.
TTI-Lucent was announced the winner in bids for optical
fiber projects worth nearly Baht450 million in northern and southern
Thailand. But other competitors argued that optical fibers by Lucent are
not made in Thailand, and thus against the term of reference. Lucent
Technologies Micro Electronics (Thailand) has never produced fiber optic
in its Thai plants, said the sources.
The CAT board is to rule on the future of TTI-Lucent
sometime this month. If they rule to disqualify, it will likely affect
Lucent in future projects, including the installation of the gigantic
synchronous digital hierarchy network by the Telephone Organization of
Thailand.
Protests against TTI-Lucent deals were led by local fiber optic
producers - Hitachi Bangkok Cable Co, Thai Fiber Optics Co and Siam Fiber
Optics, which have no relation with the Marubeni-Alcatel camp.
KTB employees deplore
advisors’ 6,000-layoff proposal
Krung Thai Bank employees are furious over reports that
foreign advisors have proposed the bank layoff 6,000 employees. They have
condemned the study and point out that those same advisors have charged
KTB more than 1 billion baht in consulting fees.
The advisors were hired under a reengineering program
by KTB chairman Dr Mechai Veeravaidhya and vice-chairman Chalermchai
Juruvast.
Representatives of the employees met with new KTB
president Singh Tangtatsawas last Friday demanding the facts. The
representatives said if the layoff plan has been thought up by the foreign
advisors, it means that they were ignorant of the basic rules of the Thai
state enterprise stating that layoffs are possible only on a voluntary
basis.
The representatives said that the management has hired
more than 4 advisors, yet very little progress can be seen on how to get
the bank through the crisis. Two advisors have sent only one or two men to
work at KTB.
Some KTB directors are not even aware that there are 7 consulting
groups working for the bank.
Closure of industrial
estate in Udorn Thani reflects failure of state policy
Udorn Thani Industrial Estate recently ceased
operations after 6 years of struggle, and they say government policy is to
blame. The estate, established in 1994 under the government policy to
expand investment promotions to rural areas, dubbed as Zone 3, has not
sold a single piece of land even though construction of the first phase
was 60% complete.
“The government has not done enough to persuade
foreign investors to invest in Zone 3 areas,” said Surachai
Taveesaengskulthai, Managing Director of Udorn Thani Industrial Area Co.,
which owns and operates the industrial estate. Though many foreign
investors have visited the estate over the past several years, all of them
have turned away fearing that the distance would cause them huge
transportation costs. No officials from the Industrial Estate Authority of
Thailand has ever visited the Udorn Thani Estate.
The company said the government lacks sincerity in
pursuing investment in Zone 3, and financial institutions have stopped
providing loans in the crisis. Loans were need to cover about 50% of
construction costs.
The company has yet to restructure Baht 80 million in debt owed to
banks and contractors.
Boon Rawd firm on
alliance with Japanese, British partners
Boon Rawd Brewery group said Japan’s largest whisky
group, Suntory, is ready to join forces in upcoming bids to manage the
government-owned whisky distilling plants here after the concession term
expires at the end of 1999. Besides the Japanese group, the British parent
company of West End whisky will also join the Boon Rawd-led consortium.
Boon Rawd Brewery, which brews Singha and Leo beers,
established Boon Rawd Trading Co. to distribute and sell Suntory and West
End whiskies. Sources said the two foreign partners will add financial
strength to the group in a long-term plan to invest in Thailand’s
lucrative whisky industry. The alliance will be officially formed as soon
the government policy on liberalization of whisky industry is clear, said
a Boon Rawd manager.
Several other foreign groups are also waiting to hear
more of the government’s liberalization policy.
Boon Rawd is well prepared to set up 4 new distilling plants in Bangkok
and the provinces to compete with the Suramaharaj and Sutathip Groups,
which have controlled the industry for decades.
BMTA to sue
Daewoo (Thailand) for damages
Daewoo (Thailand), a subsidiary of Korea’s
financially-troubled Daewoo Motor, will be sued by the Bangkok Mass
Transit Authority for failing to fix more than 350 units of public buses
in time for BMTA, causing the debt-ridden state-run enterprise losses that
ran in the millions per day. Deputy minister of transport and
communication Sonthaya Kunpleum has ordered BMTA to seek court orders for
payments to cover damages amounting to Baht 210 million.
Sonthaya said that Thai Daewoo failed to meet its
commitment to fix the 350 buses out of about 450 units BMTA purchased from
the company nearly 10 years ago. Delays in bus repair have caused the
transit authority a loss of Baht 600,000 per unit, the minister said. BMTA
will hire other garages to look after the crippled Daewoo buses, he said.
There was no explanation why Thai Daewoo failed to meet
the agreement, nor were there hints if the delays have any relation to
troubles in the Korean parent company.
There has not been enough buses for BMTA services over
recent weeks: while 200 more buses, worn out after 20 years of use, will
be overhauled.
Meanwhile, the ministry has sought cabinet approval to buy 200 new
buses for BMTA.
Major internet
provider joins free-PC campaign
Competition heated up when KSC Internet, the largest
Internet service provider in Thailand, decided to join the race by
offering Net surfers a larger package of services with a speedier free PC.
A-Net, another major ISP, a couple of weeks ago
launched sales campaigns by offering users a package of 60-hours-a-month
usage time for 2 years with an Acer PC. A-Net users under the promotion
package will be charged Baht 2,000 a month.
But KSC Internet, in a bid to maintain control over the
market, will charge users only Baht 1,800 a month with 72 hours usage
time. Under this package, which also involves a 2-year period, KSC will
give customers a complimentary PC. KSC’s free PC, though not a
brand-name, is powered by a 400 MHz Pentium Celeron Processor, while the
one offered by A Net is run by a 350 MHz MD K6-2 Processor.
KSC’s free PC will be made by a local company, Final
Computer Co., while A-Net’s are made by Taiwanese-based Acer Computer.
KSC’s selling point is a lower monthly rate and a PC
with an Intel processor and Intel system board. The KSC PC will also be
equipped with 64 MB RAM, compared to 32 MB RAM in the A-Net unit by Acer.
A-Net said their campaign has received a better response than expected
from Net surfers.
Major car makers
to increase use of local parts
Almost all major car makers in Thailand have pledged to
use more local parts in assembling their respective cars both for export
and for domestic use. The move is seen as a big push for local auto parts
industry.
A major breakthrough was made this month by
AutoAlliance Thailand, a Ford Motor consortium, which for the first time
exported a large lot of parts to overseas Ford and Mazda plants.
Ford Operation (Thailand) said more than 70% of the
parts used to make Ford pickups here are locally-made. The same parts are
also used in making pickup models for export.
AAT plans to send Thai-made parts worth more than Baht
1.4 billion to several continents next year, while both Volvo Car
(Thailand) and Daimler Chrysler (Thailand) said they will increase the use
of local contents.
Only General Motors (Thailand) says it will use more
foreign-made than Thai-made parts in producing the first Opel Zafira
utility car here. GMT said 85% of Zafira models will be exported. Only 30%
of the parts used are Thai-made.
AAT said the largest market for Thai-made Ford and Mazda parts next
year will be Africa. One fact behind their popularity is that most
Thai-made parts are made by Japanese producers.
Copyright 1998 Pattaya Mail Publishing Co.Ltd.
370/7-8 Pattaya Second Road, Pattaya City, Chonburi 20260, Thailand
Tel.66-38 411 240, 411 241, Fax:66-38 427 596; e-mail: [email protected]
Updated by Chinnaporn Sangwanlek. |
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