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   BUSINESS NEWS

HEADLINES [click on headline to view story]:
Kingdom to spend 15 years repaying foreign debt
 
Lucent likely to be disqualified from optical fiber deal
  
KTB employees deplore advisors’ 6,000-layoff proposal
 
Closure of industrial estate in Udorn Thani reflects failure of state policy
 
Boon Rawd firm on alliance with Japanese, British partners
 
BMTA to sue Daewoo (Thailand) for damages

Major internet provider joins free-PC campaign
 
Major car makers to increase use of local parts

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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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Copyright 1998 Pattaya Mail Publishing Co.Ltd.
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Updated by Chinnaporn Sangwanlek.