Seven Eleven and partners plan to launch E-Purse card

CP Seven Eleven Co., operator of the 7-Eleven convenience store chain in Thailand, along with local commercial banks and a foreign systems-integrating firm, are planning a new payment system to enable Thai shoppers to pay for goods they buy with a new cash card called ‘E-Purse’. Each of the five parties will hold 20% in the new company, which will have Bt. 100 million in registered capital.

CP Seven Eleven, Siam Commercial Bank, Bangkok Bank, and Krung Thai Bank have been in negotiations with a foreign company, a leading system integrator in electronic banking. “The plan is to establish the ‘electronic purse’ system here some time in 2000,” said Chalermchai Chatchai-anan, assistance managing director of CP Seven Eleven. The partners expect to have the company set up within the next 3 months.

Transactions with E-purse cards are expected gain a 30% share of all transactions in the system each year. Different from credit or debit cards, E-purse cards will service off line, which will be more convenient.

The E-purse card will be accepted at 1,200 Seven Eleven stores nationwide.

Vietnamese makers feel heat from Thai-made models

Thai-made motorcycles, especially Honda’s Dream series, have been highly popular in Vietnam. So high, in fact, Vietnamese motorcycle manufacturers are asking the Japanese parent company to sanction exports from Thailand. “Although Vietnamese-made models are much cheaper, the Thai-made bikes are still highly sought after in the market,” said Kittirat Kultangwattana, owner of Trakulpanich Co. Ltd. in Thailand’s Mukdaharn Province.

“Distributors in the border province have been hunting for the 110-CC Honda Dream, and the 100-CC Honda Wave models to meet with rising orders from Vietnam,” Kittirat said. “Some distributors have gone as far as some eastern provinces (to find) the colors ordered,” he said.

A total of 14,004 units of Thai-made motorcycles were exported to Vietnam through the Bungkarn customs checkpoint in Nong Khai in the first seven months of this year. A total of 5,037 units were exported between July and December 1998.

All Thai-made motorcycles will be “knocked down” and packed before being sent across Laos to importers in central Vietnam. A brand new Honda Dream, which goes for Bt. 37,000 per unit retail in Thailand, costs Bt. 120,000 in Vietnam.

Honda distributors in the Lao capital of Vientiane are also feeling the heat, as orders from Vietnam go directly to Thai distributors.

Nissan and Honda to launch low-price auto parts

Siam Motor Co. and Nissan Sales (Thailand) will soon launch new low-price genuine parts series to the market as part of the group’s policy to improve after sales services. Nissan sources said the group recently expanded their production line to bring out as many as 28 more items to better serve Nissan car owners in Thailand.

The Key Value, or KV parts, will attract more car owners to use Nissan service centers as prices of parts are now about 20% cheaper than the original parts, one source said.

Sources in Honda Cars (Thailand), meanwhile, said the company has planned to introduce a new series of parts to the market later this year. The new parts, genuine but cheaper than the original parts, will help Honda car owners save up to 10%.

Sources feel that the new low-price parts will dissuade car users and garages from using imitation products.

Honda After Market Parts (HAMP) for Honda motorcycles will be the first to be launched. Honda is currently offering a 15% discount on parts, a price campaign which has drawn more customers into Honda service centers.

Fierce hotel competition leads to price crash

The good days might be gone for hundreds of hotels, as dozens in tourist resort cities have been put up for sale to fetch cash after fierce competition sent room rates plunging. However, hoteliers have found that the value of their assets have sharply fallen from what they were last year. Moreover, it is more difficult to find investors.

More than 50 hotels, worth some Bt. 15 billion, are now up for sale in the late months of 1999. Estimated prices are about 50% down from what they were earlier this year, industry sources said.

The general manager of Radison Hotel in Bangkok said competition has made room rates and servicing prices 15% to 20% lower than real rates and prices.

The general manager of the Grand Pacific said foreign tour agencies could easily find rooms at US$15 to US$20 per day at several three-star hotels in Bangkok, while rates at four-star and five-star hotels fell to US$40 and US$60. Only a few luxury hotels can maintain premium rates of US$120 to US$180.

Jail terms and harsh measures to deter price collusion

Bad news for 2,000 contractors and hundreds of companies that, over the past several years, enjoyed price collusion when bidding for government projects. The draft of the new anti-collusion law, passed by the House of Senators last week, made price collusion a crime against the state. Violators will be subject to a maximum jail term of 10 years.

If the draft is made law by both Houses, those found guilty of price collusion in bids for government projects will be harshly punished. Government and state employees found colluding with private bodies and individuals “in the crime” will eventually lose their jobs and be fined. A maximum 20-year jail term has been set against government officials cooperating in price collusion.

Contractors and companies guilty of price collusion will be bared from government bids for years, and the fines they face are being set as high as 50% of bidding price. Companies that fail to complete contracted work in time also face harsher penalties.

The budget for government construction projects will rise to Bt. 800 billion in the fiscal year 2000.

Unemployment may rise to 2.5 million

Though the government insists that the economy has already started to bottom out, and that the labor situation is under control, the new economic environment could cause the labor crisis to restart, with unemployment rising to around 2.5 million by the end of the year. Takeovers by foreign investors of Thai businesses may lead to a new round of layoffs, labor specialists and academics claimed.

The government claims that this year’s number of jobless people is fixed at 1.4 million, the same number as two years before, and that the number is going down as the economy gets better off. However, the economy is not as good as what was portrayed by the government, and the number of unemployed was found rising to 1.7 million in surveys by non-government agencies last February.

Notes: Debt restructuring programs by companies and manufacturers could lead to new redundancies. 150 bankruptcies pending in the courts could kick start a new round of the labor crisis. The rising oil price, if not solved properly, will worsen the situation.

Loxley-IBM joint venture wins bid for Bt. 800-million school project

A consortium between Loxley Information Co. and IBM (Thailand) has been selected to be the supplier of PCs and peripherals in a project to install computer networks in 216 schools under the Bangkok Metropolitan Administration. The consortium has been among four companies in the race for the installations under a 4-year leasing agreement with BMA.

According to sources in the BMA education bureau, the consortium - Professional Computer Co. - got the highest score in technical proposals, and has proposed the lowest bidding price of Bt. 745.99 million, from a Bt. 800 million median price. The three other bidders were CDG, UCOM, and ADI. CDG proposed Hewlett Packard PCs, while the UCOM Group proposed Compaq. ADI, a leading local brand PC manufacturer, was disqualified from the race.

PCC must ensure that it is able to bring out enough PCs to be delivered within 60 days, or be replaced by the first runner-up. The winner must also provide training for school teachers. All 40 PCs in each school must be Internet-ready and must work on LAN.

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Updated by Boosiri Suansuk