Vol. XI No. 19
Friday 9 May -15 May 2003

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by Parisa Santithi


HEADLINES [click on headline to view story]: 

Chiang Mai Chamber of Commerce looks to Mekong region

Profit-making TT&T still looking for strategic partner

Asian investors queue to put money in Thai SMEs

Bangchak Petroleum may split businesses to privatize

SET chief say’s Thailand’s stock exchange will remain open

First UHT milk factory at Chitralada Palace starts operations

MOC may put precious stones under price control law

The Eastern Seaboard German Language Business Lunch Club meets at Royal Cliff Beach Resort

Property business still looks promising this year

Clothing exporters urged to turn crisis into opportunity

Chiang Mai Chamber of Commerce looks to Mekong region

The new president of the Chiangmai Chamber of Commerce, Jumphol Chutima, said in his recent inaugural speech that the chamber would focus on boosting trade and communications networks in the Mekong sub-region and called on the government to create communications routes linking Chiang Mai with Chiang Rai, Myanmar, Laos and China.

Jumphol said that under his presidency the chamber would focus on giving out information to its members in order to prepare for increased competition in services and investment in line with the World Trade Organization (WTO) framework on free trade.

The latest technology will be used to develop the news and information system, with companies informed of criteria, regulations and agreements relating to international trade on a regular basis.

He added that particular attention would be paid to shipping routes, as Thailand was at a disadvantage compared to China as ships from Thailand had to go upstream, thus leading to higher transportation costs. (TNA)

Profit-making TT&T still looking for strategic partner

TT&T, formerly called Thai Telephone and Telecommunication is the country’s third largest fixed-line operator. But the company recently conceded it is having trouble finding a partner to inject funds into the firm.

The company must pay 1.5 billion baht in annual interest, or 5 percent of the overall debt of about 30 billion baht owed to a group of creditors led by Kasikornbank.

President Pisit Leeahtam said, "We need about 5 billion baht of fresh capital, but we are having difficulty finding a strategic partner at this time. We do, however, still have a good cash-flow situation at the moment."

The firm plans to pay back around 6 billion baht of debt by offering warrants to creditors in September. Pisit said, "Another lot of warrants are planned to be offered to creditors in March 2004."

Creditors had predicted that the company would lose more than 800 million baht last year and 900 million baht this year. But TT&T actually made a profit of 568.57 million baht last year after losing 466.42 million baht in 2001. Most of the profit came from a currency gain of about 444 million baht and an operating profit of about 126 million baht.

TT&T plans to invest about 2 billion baht in improving its network and launching new services, such as high-speed Internet access. The company projects revenue growth of about 4 to 4.5 percent this year.

"More services such as incoming caller ID and short-message services will be added because we feel this area will really expand from now on. We now have about 1.2 million lines outside Bangkok but have plans to add about 300,000 more this year, mainly for corporate customers," Pisit said. (TNA)

Asian investors queue to put money in Thai SMEs

A leading broker is urging Thailand’s small and medium enterprises to show off their potential, saying that Thai SME’s are attracting a lot of interest from financial institutions and investors across Asia.

Phitak Kittiakarasathien, general manager of IB Securities Co. Ltd., said that financial institutions and investors from across the region were eyeing up Thai SME’s, particularly financial institutions from South Korea and Singapore, which were ready to invest immediately if they found companies with sufficient growth potential.

Particularly attractive investment prospects for Asian investors are the electronic components manufacturing industry, the food industry, and the hotel and tourism industry, as these industries enjoy a high level of potential and competitiveness when compared with similar industries across the world.

Phitak denied that SME’s are currently having difficulty in finding capital. "It’s not true that as far as SME’s are concerned there are no sources of capital. As far as we can tell from meetings with financial institutions and other sources of capital, each company is ready to give financial support to SME’s, but SME’s must show their potential and submit business plans which can pull in investors."

Bangchak Petroleum may split businesses to privatize

20 billion baht debt to be restructured

As suggested by the Finance Ministry, debt-ridden Bangchak Petroleum looks likely to split its businesses into retail oil and refinery to allow a debt restructuring and privatization plan go through. Deputy finance minister Varathep Rattanakorn said the concerned government agencies will help the company to refinance its debts. Loans to be acquired from local financial institutions must be guaranteed by the Finance Ministry.

Bangchak Petroleum is attempting to refinance and restructure its 20 billion baht of debt. The Thai government holds 47.87 percent of Bangchak, through the Finance Ministry, PTT owns 24.3 percent and Krung Thai Bank owns 7.91 percent.

Bangchak Petroleum president Narong Boonyasanguan said, "The firm suffers from a lack of effective financial structure which has not been properly addressed."

Bangchak presently has a payable interest burden of 1.3 billion baht a year from an outstanding debt of about 20 billion baht with an interest rate of 6.3% to 6.5% per year. (TNA)

SET chief say’s Thailand’s stock exchange will remain open

The president of the Stock Exchange of Thailand (SET) Kittirat Na Ranong stated that Thailand’s stock market would not follow China’s lead by closing, saying that the impact of Severe Acute Respiratory Syndrome (SARS) on the Thai economy would be relatively small.

Noting that Thailand was not on the World Health Organization (WHO)’s list of countries at risk from SARS, Kittirat said that the SET had no plans to temporarily shut down. "The role of the SET is to allow investors to trade on a continual basis, regardless of whether the outside situation was positive or negative," he said.

China recently suspended trading on its stock exchange for seven days in order to help contain the impact of SARS on its economy. But the SET president said that the impact of SARS was mainly psychological, as the disease was not only spreading in Asia.

However, Kittirat admitted that because the disease was prevalent in China it was causing investors to see the whole Asian region in a negative light. He urged investors to trade as usual.

His assurances were echoed by Suthep Phetakanon, president of the Association of Securities Companies, who expressed confidence that once it became apparent that SARS was under control, the Thai stock market would improve.

First UHT milk factory at Chitralada Palace starts operations

The first UHT milk plant which was built in the compound of the Royal Chitralada Palace in Bangkok as a part of a royal initiative to aid local milk-cow raisers started operations this month.

The UHT milk plant will buy raw milk from farmers to help them after local private UHT milk factories refused purchasing milk from them. UHT milk producers said they use skimmed milk instead of whole milk to cut their production costs. They claimed that they could not make profits from using high-priced raw materials. The experimental plant will buy about 20-22 tons of raw milk from dairy farms.

HRH Princess Maha Chakri Sirindhorn presided over the opening ceremony of the first UHT milk plant in the Chitralada Palace on May 8, Thailand’s Royal Ploughing Ceremony Day.

The royal initiative to produce UHT milk will not only provide consumers with high quality milk, but also pave the way for what is expected to be a promising dairy business.

Chitralada UHT milk will be firstly distributed to school children.

MOC may put precious stones under price control law

It has been suggested that the Commerce Ministry come up with a plan to put precious stones and ornaments on the list of products under the price control law. Deputy Commerce Minister Wattana Muangsuk said the plan was initiated in response to Prime Minister Thaksin Shinawatra’s move to supervise the business.

The industry has suffered from a barrage of complaints from tourists claiming they are being sold gemstones at outrageously inflated prices. Thaksin expressed concern that the malpractice could have a negative impact on the nation’s tourism and called for a proposal which would regulate the price of precious stones.

Under the proposal, precious stones and ornaments would be categorized as a product under the price control act on goods and services which would enable authorities to monitor the business more closely.

Wattana said if the premier gives the nod, the ministry would propose the matter to the Central Committee on Product Prices and Services for consideration and approval. (TNA)

The Eastern Seaboard German Language Business Lunch Club meets at Royal Cliff Beach Resort

Elfi Seitz

The Eastern Seaboard German Language Business Lunch Club (GBL) met at Royal Cliff Beach Resort on April 26. Christel Pilz, GBL initiator who usually presides over the meetings, was traveling for business reasons and asked Walter Kretschmar to take the chair, and Walter filled in admirably.

The Eastern Seaboard German Language Business Lunch Club (GBL) met at Royal Cliff Beach Resort on April 26.

Peter Malhotra, MD of Pattaya Mail and Pattaya Blatt and GM of Chiangmai Mail, was invited to be the club’s guest speaker. Peter, known for his loquaciousness, this time addressed the gathering in the German language. Fluent and funny, he delighted members and invited guests with two subjects dear to his heart - Pattaya City and the newspaper business.

Peter told his audience how the city and the whole Eastern Seaboard developed from a cluster of sleepy fishing villages and plots of agricultural land and fruit orchards into a pulsating metropolis and an important center of the Thai economy.

Some members had heard this story before, but it was much more interesting for them to hear it from somebody who was ‘there’ at the beginning, since most of the audience has only been in the region for a few years.

Peter went on to discuss some of the problems business people had to face in the beginning - about their fight to make Pattaya a better place, their efforts to put Pattaya on the world map, and how hard they worked to change the city’s sleazy, low-life reputation into one of respectability and a world-class tourist destination.

Recounting how the Pattaya Mail was founded nearly 10 years ago, Peter explained, "I wanted to give Pattaya its own voice. I was sick and tired of reading in the national newspapers only about Pattaya when there was something bad to report. You won’t believe it now, but Pattaya Mail had to face lots of problems at the beginning. Many people predicted that we wouldn’t make it through the first year." With a smile he added, "And there were many times we almost believed it ourselves. But we never gave up and now the Pattaya Mail has readers across the globe."

Talking about Pattaya Blatt, Peter expressed pride in publishing a German language newspaper which has run smoothly. Smiling again, he said, "I never dreamed in a million years that I would start out as a tailor and become the publisher of three successful newspapers."

In his address to the audience, Walter Kretschmar said the German business community should use the press to express their beliefs, to introduce their businesses and to strengthen their image. He suggested that they stress the word German in their businesses as reminders of German quality and workmanship. "This good image will also to help the exchange of ideas between German and Thai business partners," Kretschmar added.

As always The Royal Wing and its resident manager Nick Bauer provided gracious service, pampered the guests with champagne sponsored by Ambrose Wines and served a delicious meal.

Property business still looks promising this year

The property business will remain a sunrise sector in the following eight months of this year given low interest rates and a possible appraisal price adjustment, according to an industry executive.

Banyong Visetmongkok, president of Commercial Bangkok Asset Management Co, said the property business outlook in the remaining eight months was more promising that in the first four months of this year.

"People’s purchasing power continues to be high as local interest rates stay low and offshore interest rates are unlikely to increase in the short run. The low interest rates are a key factor that accelerates people’s decision to buy new or old houses. Those who already have purchasing power won’t hesitate to decide on the matter because they can pay only 10,000 baht in monthly installments for the purchase of a house priced at 2 to 3 million baht," Banyong said.

Bangyong also attributed the bright outlook of the property business to commercial banks’ efforts to accelerate the provision of housing loans and the easing of the United States-led war on Iraq. The SARS outbreak had little impact on the property business. News that the government would adjust appraisal prices and no longer extend tax impediments for property business transactions is expected to accelerate people’s decision to buy houses. (TNA)

Clothing exporters urged to turn crisis into opportunity

Clothing exporters and state agencies concerned should try to distinguish their products from those of rivals and seek new destinations following the easing of the United States-led war on Iraq and the Severe Acute Respiratory Syndrome virus epidemic, according to Thai Farmers Research Center (TFRC).

Thailand’s leading think tank said the war and the SARS outbreak had impeded the export of ready-to-wear clothes. Now the direction of clothing exports will depend on whether exporters and state agencies can turn the crisis into an opportunity to reap maximum benefits.

TFRC said they could assure trading partners that Thailand was free of the epidemic of the deadly pneumonia. Simultaneously, they should increase efforts to develop unique products and distinguish them from those of rivals where production costs are cheaper and try to expand markets into new destinations including the Middle East instead of relying mainly on the United States, European Union, and Japan.

They should also pay greater attention to exporting the product to other member countries of ASEAN with which Thailand had a free trade agreement.

TFRC said Thai clothes were generally of better quality than those of other ASEAN members. With the agreement, the Thai clothes would be more competitive in the intra-ASEAN market and non-member destinations. (TNA)

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