Airfares likely to be higher as ticket agents suffer from new rates

Over 500 companies and agencies that sell tickets for airlines in Thailand have been adversely affected by lower commission rates and higher insurance premiums to be collected by a new insurance company this month. Unless the problem is addressed, agencies would soon adjust airfares to meet with rising costs.

Other airlines are going to follow United Airlines in bringing down the commission rate from 9% to 7%. The new rate has been widely condemned by agencies, said industry sources. In addition to that, new insurance premiums of Baht 27.90, starting August 1, will further complicate things for agencies. The new premium is nearly double that of the Baht 15 previously collected by Samaggi Insurance Plc, they said.

The smaller commission, offered by airlines for every ticket sale, has made between 60% to 70% of local ticket agents suffer as they earn 20% less from the business. Nine members of the Star Alliance umbrella, which includes Thai Airways International, are to pursue the new commission rate. The International Air Transport Association is to meet soon to address the problems.

Local Benz and Chrysler units merge as old parthers discarded

Mercedes-Benz (Thailand) has undergone a major change in its operation in which the company’s name is to be changed to Daimler-Chrysler (Thailand). The new company, a merger between MBT and local Chrysler operation, Chrysler Sales and Services Co, will take care of producing and marketing both Mercedes and Chrysler cars in Thailand, said MBT sources.

DCT is to follow its German and US parents in managing production and marketing of the cars under Daimler-Benz and Chrysler. CSS moved to the MBT office in Rajanakorn Tower on Sathorn Road earlier in June, as MBT said it would need about two months to complete the merger. Benz’s long-time partners, which include the Thonburi Group, are likely to be excluded from DCT operations in the future, said the sources.

Benz cars will probably be assembled by other companies; Thonburi Group is not even among 20 Benz dealers selected last month. Thonburi Group owes to Germany’s Daimler-Chrysler a huge debt. The Thai group, which distributed Benz cars in Thailand for decades, will probably be an independent distributor.

Nationalizing Bang Chak Petroleum - a military option

A group of top generals of the Royal Thai Armed Forces said Bang Chak Petroleum Plc should be nationalized and given back to the military to control if the refinery is to be sold to foreigners. Top generals discussing the Bang Chak issue in the past several weeks have agreed to pursue the course through the ministry of defense, which is ministered by PM Chuan Leekpai.

According to the generals who declined to be named, it is necessary that Bang Chak continue to be the only Thai-owned refinery for national economic security reasons. The refinery, which was owned by the defense ministry until 1985, was nationalized under the administration of Gen Prem Tinsulanonda, when it was named after the location, Bang Chak.

Generals argue that Bang Chak was originally formed to take part in solving economic problems and rural developing, and the task has been well undertaken by its outgoing president Sopon Supapong.

Bang Chak used to be owned by a Singaporean-Thai company, Summit Oil, when it came to the brink of collapse, and was later nationalized.

German groups to compete for 30% of new airport shares

Five German banking and investment groups said they are ready to acquire 30% of shares in the New Bangkok International Airport when the portion of shares comes up for auction under a privatization plan of the state company. Top executives of the groups expressed interest in meeting with Transport and Communication Minister Suthep Thuagsuban on Monday.

The groups - KfW bank, Siemens, B-Grimm Holding Co., Ltd., am Main (FAG), Hochtief, and Asia Brown and Boveri (AG) - said the Nong Ngu Hao International Airport, with its excellent geographical position, will be the largest air transport hub in Southeast Asia in years to come. The airport construction should be accelerated for the operations scheduled in 2004, urged the German groups.

German investors have contributed DM7 billion in loans to development projects in Thailand during the past 25 years.

KfW bank chairman, Dr Gert Vogt said the bank is ready to be a partner in NBIA.

Siemens AG has experience in providing services in piloting and signaling, while B Grimm has the expertise in operating major airports.

Publishers bullish as book sales up in first 5 months

Major publishers said the year-on-year combined sales of books have slightly increased in the past 5 months. Many publishers have planned more outlets in months to come, hoping that the market will continue to grow. However, there have been 50% fewer books published this year, compared with what it was during boom times, said industry sources.

Matichon Plc, owner and publisher of Matichon and Khoasod dailies, and Prachachart Thurakij, had taken an exceptional lead with 70% growth in the same period. Matichon assistant manager Prayong Krongmuang said the company has brought out more books in the past several months. Samakkee Sarn Plc said it will open up 5 more Dokya stores in Bangkok after sales increased by about 20% each month.

SE-Education Plc predicts a more bearish mood as sales grew only 5% to 10% during the five-month period. SE-Ed said only 14 titles of books were being sold each month, down from between 25 to 30 titles. Ammarin Printing Plc said earnings from printing services has constituted 70% of the company’s income.

Compaq launches fresh sale drives to be No 1 in home use segment

Compaq Computer (Thailand) will this month introduce two new models in the Presario family to the market, offering an interest rate of 1% in an 18-month installment plan option. The installment package, under an agreement with First Choice leasing group, will help make the computer easier to buy, said Anothai Vattayakorn, consumer business manager, Compaq Computer (Thailand).

Compaq will, however, maintain its image as the premium PC in the market, while planning to win back home users who recently turned to lower priced local brand models.

The 1% rate is far lower than a normal rate of between 1.5% and 2.1% First Choice offers to customers in electrical and electronic appliance market, he said.

CCT in June followed IBM (Thailand) in offering on-site free service for 3 years to every new purchase to the end of the month, while IBM extended its campaign for another month.

Compaq is to open more outlets in the communities, to make for better access to the computer.

Provider to launch free Internet for education

E-Z Net Co, one of about 16 Internet service providers in Bangkok, said it will next month launch a new service to educational institutions free of charge to provide schools and universities nationwide better access to the World Wide Web. A PC maker in Hong Kong is, meanwhile, making 200,000 units of specially low priced PCs for school users in Thailand, said E-Z Net general manager Suwan Deesantiah.

Those institutions will, however, cover the installation costs, and the expense on lease lines, while the unlimited connection will be free of charge, Suwan said. The use of E-Z Net must not be strictly for educational purposes with no commercial use involves, he said. Prices of the company’s PCs with multimedia kits will range from Baht 12,650 to Baht 20,900.

Notes: Provincial network will be greatly expanded to woo more upcountry users. The connecting speed will be increased from 45 megabytes at present to 145 megabytes in the next 2 years; a student package for use outside school with a 3-hour-a-day access is only Baht 1,800 a year.

Acer Computer to launch new products with prices lowered

Acer Computer in the third week of July will launch a new family line of PCs, adding to its Aspire series, aiming to be No 1 and controlling about 30% of the market this year. Prices of new models in the Power S family, with 300 MHz to 550 MHz Intel Celeron, Pentium II and Pentium II processing units, will range from Baht 16,000 to Baht 38,900.

In addition to that, Acer will open the first 3 Bomb Shops inside two of Bangkok’s IT City superstore branches, and in IT Mall, to sell Acer PCs, accessories and peripherals, said Alan Jiang, Acer computer business manager. Ten branches of the Bomb Shop IT chain will be opened by the end of the year, he said.

A top-of-the-line unit with 500 MHz Pentium III Processor will cost only baht 42,900, compared with more than Baht 50,000 for a PC of the same range by brand-name makers.

Acer was considered unsuccessful when it launched the low-price Basic PC series to the market last year. Prices of Power S family are still 10% to 15% higher than most local-brands.

US group Omnicom plans new media operation in Thailand

US media giant Omnicom will set up a new operation in Thailand, with plans to expand more into the Asia-Pacific market. Negotiations have been underway with at least three local media groups to set up a join venture, a media specialist, to serve industries here. The new entry will certainly heat up competition in the business, said sources.

According to industry sources, Omnicom, which already holds shares in some local advertising firms, will expand into the media segment of the industry. Omnicom, with expertise in business research, has set up offices in Hong Kong, China, Singapore and Taiwan in the past 4 to 5 years, to tap from Asia’s booming advertising industry.

Notes: Pricing has been the key factor to success, besides technology and know how. Local media sales business is worth Baht 25 billion last year. The entry gets mixed reactions as local media specialist firms said ‘local expertise will overrun foreign experience’ in the Thai market.

Star Cruise returns to Laem Chabang

Talks to form a joint venture between Star Cruise ocean liner and Sriracha Harbor Plc have failed and the Singaporean-based company returned to use Laem Chabang deep seaport instead of constructing a new pier. Sriracha Harbor said discussions with investors from Europe have been under way to expand the facility.

According to Vice Admiral Thanong Sirirangsri, managing director of Sriracha Harbor, the talks ended on Tuesday when Star Cruise said its parent company did not agree to the investment plan, which is too costly. Constructing a new facility at Sriracha Harbor would cost up to Baht 300 million.

Moreover, the fact that the harbor has been used mainly for exporting cement and construction materials has discouraged tourism activities, he said.

Laem Chabang management said Star Cruise will join the bid to administer Pier 1, and to develop the facility for tourism purposes.

The port will earn Baht 4.4 million a year from servicing Star Cruise.

Foreign chambers urge government to improve environment for investments

Twenty-two foreign chambers of commerce, 25 local business associations and 20 government agencies met to discuss key areas involving foreign investments in Thailand. The discussions have been aimed to improve competitiveness of Thailand as one of the business hubs in Southeast Asia, now dominated by Singapore and Malaysia.

According to sources, both tariff and non-tariff issues were addressed during the meeting chaired by PM’s Office Minister Savit Bhodhivihok, who overseas the office of the Board of Investment. Among non-tariff problems is visas for foreign investors which is still less persuasive compared with those in its neighboring countries. Multiple-entry visas are much needed to keep foreign investments, they said.

Foreign chambers also raised concerns on the ‘Buy Thailand’ campaign as to its implications on non-Thai made goods. The campaign should be changed to ‘Buy Made in Thailand’ instead, to help reduce adverse impacts.

The Customs system was singled out as it complicates import and export activities; the government should increase support for those in supply industries.

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Updated by Chinnaporn Sangwanlek.