Bangkok Business Brief - Volume 3, Issue 4 - May/June 2014 by Mango Mango Ltd. Part.

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BUSINESS BRIEF Vol. No. 3, Issue No. 4 • May / June 2014 Read new business briefs everyday at www.BBBrief.com

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Not all roads should lead to Bangkok By Benjarong Suwankiri and Warapong Wongwachara Reprinted with special permission from the Bangkok Post

Thailand’s capital city and its vicinity share about half of the country’s gross domestic product. Because of its sheer size, the Greater Bangkok area also accounts for about half of the rate of GDP expansion each

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year, regardless of its performance. If you think half of GDP is already a lot, chew on this: 62% of bank deposits come from Bangkok and vicinity, as well as almost 70% of bank loans. Hence, by all measures, the city is literally the heart of the Thai economy. And we know all too well what happens when the heart stops pumping.

the capital city would expand at a cultural product prices put pressure subpar rate of 2.3%. on farm incomes elsewhere.

And while forecasts are now being revised down again, it doesn’t mean that economic growth is equally depressed throughout the whole kingdom. The East, for instance, will still thrive on the back of its manufacturing-based economy. The benefits it can reap will become more pronounced in the coming months as Thai exports Amid the protracted political un- gain traction from the global ecocertainties plaguing the capital, nomic recovery. Bangkok will turn out to be a drag, instead of a driver, on the Thai The central region also enjoys a economy this year. According to relatively large share of non-agriour estimate, if 2014 aggregate cultural activity, so its economy can GDP were to grow by around 3%, remain buoyant when falling agri-

In our view, too much emphasis has been placed on Bangkok as if it’s the only province that matters. This mentality in macroeconomic management – and development planning too – needs rethinking for the sake of a more sustainable Thailand. Take tourism as an example. International tourist arrivals at Suvarnabhumi and Don Mueang airports in the capital have dropped dramatically since the beginning of this year. The figure now stands 16% below the 2013 level. Although this in Story continues on Page 12

P l a n n i n g , S u p p l y i n g a n d B u i l d i n g A s i a ’s R e c r e a t i o n a l I n f r a s t r u c t u r e

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May / June 2014

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English, leadership ‘crucial’

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English-language proficiency, leadership skills and cross-cultural adaption are the main weak points of Thai employees, who must improve to meet rising competition in the upcoming Asean Economic Community (AEC), says recruitment consultancy Robert Walters Plc. Founder and chief executive Robert Walters said the advent of the AEC late next year will increase demand for bilingual personnel, particularly those with English literacy.

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“The high demand for staff with Englishlanguage skills is likely to increase further when the AEC is launched,” Mr Walters said in an interview. He said salaries can increase by 20-25% for those proficient in English and who can work for international companies. Leadership and cross-cultural adaptation are other major areas Thai employees need to brush up on the better to compete in the AEC’s employment... Full story: http://goo.gl/eCG6CA

High-school student Piriyakorn Kornpitack was certain he made the right decision when he applied for the science programme at one of the country’s most prestigious secondary schools. His father owns an information technology company and wanted his son to become an engineer. “I didn’t know what I would do after graduating. All I knew was that I had to get into engineering,” said Mr Piriyakorn, now 20. “After all, you have to be smart to be able to study [in this field]. And I couldn’t paint a clear picture of myself after graduating. That was when I thought finance would be more useful for me,” said Mr Piriyakorn, who is now majoring in finance at Thammasat University. Mr Piriyakorn is not alone. The latest figures released by the Office of the Higher Education Commission show only 39% of high-school graduates choose to further their studies in science-related fields,.... Full story: http://goo.gl/TXIXBW

Nobel laureate Yunus Firms wary of bribery urges social business criminalisation bid development Local companies’ concerns over being

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The economist gained fame for advancing the micro-financing revolution in his native Bangladesh. For the first time credit was extended to the country’s impoverished masses. Now he wants to turn popular wisdom on its head again. This time, “the banker for the poor” aims to change the world through the proliferation of social businesses. Decrying the selfishness and excesses of profit-driven enterprises, Yunus has a new vision for conducting business. According to the website of his Dhakabased Yunus Centre, “a social business is a cause-driven business. It must be financially sustainable and mission-oriented. The company must achieve its social objective and at the same time cover... Full story: http://goo.gl/kJYAYX

placed at a disadvantage are an important factor stalling Thailand’s efforts to battle corruption, says the National AntiCorruption Commission (NACC). Thailand plans to make bribery of foreign public officials a criminal offence as a part of its anti-corruption strategy, but a preliminary NACC-funded study shows local firms believe this would affect them negatively. The study, carried out by Chulalongkorn University’s law faculty, said Thailand remained unprepared to adopt an international agreement by the Organisation for Economic Cooperation and Development (OECD) that would criminalise the bribing of foreign public officials. “Listed companies have widely embraced the best practice of corporate governance, but non-listed ones and small and medium-sized enterprises, which have lower corporate governance standards, are not ready for Thailand to join the OECD convention,” said the report. The OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions, which took effect in 1999, is similar to the US... Full story: http://goo.gl/fr3qep

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May / June 2014

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KPMG sending Thai staff to work across Asean

All companies including KPMG – one of the “Big Four” accounting firms – have come under heavy pressure from alterations in the global economic landscape and are forced to adapt to new challenges. Ahead of the AEC 2015, KPMG’s Thai unit embarked on a training scheme by sending its staff to other Asean offices. China and Japan were also included, as investors there are using Thailand as their Asean hub. “This is primarily to serve Thai companies that are looking for investment opportunities in other Asean countries,” Kaisri Nuengsigkapian, CEO of KPMG Thailand, said. “Before, we were sent to the US or Europe. The change fits our nature of business, geared towards Asean. Foreign investors don’t look at individual economies, but overall Asean.”

Global fund assets to top $100 trillion on real estate boom Global fund assets are projected to grow by 60% to $101.7 trillion by 2020, fuelled by the shift toward individual retirement plans, a surge in high-net-worth individuals in emerging markets and growth in sovereign wealth fund assets, PwC says. Rapid urbanisation and demographic changes, especially within emerging markets, will lead to substantial growth in the real estate investment industry over the next six years. This will prompt institutional investors to raise allocations in real estate more than in other asset classes, according to a report from PwC.

Since the scheme was initiated about three years ago, 20 people have served in an overseas office for a year and a half. Everyone showed better performance upon return, convincing her that they learn more from training than from a... Full story: http://goo.gl/BwifD6

As the industry’s opportunities grow, so too will assets invested in the sector. Sira Intarakumthornchai, CEO of PwC Thailand, said that the broad asset management sector globally will see assets under management grow from $63.9 trillion in 2012 to 101.7 trillion by 2020, driven by asset growth in pension funds, sovereign wealth funds and among high-net-worth customers. Pension funds will account for most of the growth in assets, rising 6.6% a year to $56.5 trillion by 2020. Sovereign wealth funds a reset to grow by more than 70% to $8.9 trillion in 2020, mainly... Full story: http://goo.gl/Q0kOpn

KBank to oversee launch of WHA Corp REIT in Q4

Does everyone really think that China is heading for crisis?

WHA Corporation has appointed Kasikornbank as the financial adviser and the underwriter for the listed warehouse company’s real estate investment trust worth Bt4.7 billion, targeted for launch in the fourth quarter of this year.

Headlines in business newspapers have never been short of bad news from China. Be it weak economic data, worrying signs of financial risks, or an unexpected fall in the renminbi, it seems there is a consensus among business journalists that China is on the verge of collapse.

Panop Ansusinha, KBank’s head of investment banking, said that in a period of stock-market volatility, REITs would be an interesting choice for institutional and individual investors who want to make capital gains and receive stable dividends. The return from investment in an REIT could be a hedge against inflation, providing good returns to long-term investors. The bank expects WHA will make an initial public offering of its REIT in the fourth quarter, and believes the IPO will received a warm welcome from investors because the REIT model is similar to that of a property fund. WHA chief executive Somyos Anantaprayoon said the REIT would be backed by rental revenue from its three warehouses and mega logistic centres in Bangkok’s Lat Krabang district and on Bang Na-Trat Highway. The three assets have total rental space of 167,000 square metres, from which WHA aims to bring Bt3billion to Bt4 billion into the REIT... Full story: http://goo.gl/ysHrqq

The market, however, disagrees. The Hang Seng China Enterprise index rallied in the latter part of March. Is this just evidence of market irrationality and that Chinese stock prices simply diverge from economic reality? Or is there a more reasonable explanation? First, does everyone really think that China is heading for crisis? It is the world’s second-largest economy and, with expectations that its gross domestic product will grow by 7-8 per cent this year, it is arguably the most important growth engine of the global economy. If everybody really thinks that China’s economic growth is bound to disappoint, why would the S&P 500 break new a high in March? Why would the gold price fall 7 per cent from the recent peak? And why would the Federal Reserve continue to reduce monetary support of the US economy and signal an interest-rate... Full story: http://goo.gl/QxX56i

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Yuan to become major currency in world trade:HSBC

HSBC foresees a sharp increase in the use of the Chinese yuan in global trading and payment, in particular in China’s trade with emerging markets. Also, in the next five years HSBC expects more than 30 per cent of China’s total global trade to be settled in yuan. Wei Wei Ng, of HSBC’s Asia-Pacific Global Trade and Receivables Finance, said that the yuan will play a more important role in global trading. Countries trading with China like Asean nations and emerging markets should prepare for more use of the yuan in international trading in order to reduce risk from exchange rate instability. From just 3 per cent in 2010, the yuan is now used to settle about 18 per cent of China’s trading... Full story: http://goo.gl/OBlYrY

Srisawad keeps NPLs low Prudent risk management and a close relationship with its borrowers has helped Srisawad Ngern Tid Lor (Money on Wheel) prevent bad loans during a tough economy, despite many borrowers living hand-to-mouth, says the company’s head. The company has managed to keep bad microcredit loans at a satisfactory level even though many borrowers do not have financial records, says CFG Services’ managing director Piyasak Ukritnukun. CFG Services, a Bank of Ayudhya subsidiary, provides microfinancing and auto title loans under Srisawad Ngern Tid Lor. Since it started operations two years ago, it has extended 270 million baht worth of credit, while its non-performing loans (NPLs) stand at a mere 0.8% of its loans outstanding as of March, well below the industry at 2%. Economists predict low-income earners to be most affected by the economic doldrums and rising indebtedness. Thailand’s household debt-to-GDP rose to... Full story: http://goo.gl/HN6TvN

Bribery won’t go away Many listed companies are not ready to stop paying “tea money” for fear of disrupting their working practices, which could lead to projects not finishing on time and losing their competitive edge, a senior SEC official says. The number of listed companies ready to commit to good corporate governance and to reject corruption has dropped as many are unwilling to stay away from bribery, said senior assistant secretarygeneral Chalee Chantanayingyong, referring to the securities watchdog’s talks on the issue with listed companies. 302 companies declared their commitment to not get involved in corruption or fraud. However, only nine have been fully certified by the Collective Action Coalition Against Corruption, which is endorsed by the Thai Institute of Directors. The nine companies are Somboon Advance Technology Plc, S&P Syndicate PLC, Siam Cement Plc, InTouch Plc, Bangchak... Full story: http://goo.gl/POkzbn

Investors need to shed perceptions of Myanmar Myanmar is a land of opportunity, but Thai investors who come here in search of a piece of the action should change their perceptions of the country, Pisanu Suvanajata, Thai ambassador to Myanmar, has suggested. In fact, this land of 53.3 million people has rapidly changed both its economic and political landscapes via a series of reform initiatives, he said, adding that such progress was sending out a good signal for those considering doing business in Myanmar. Economically, he said its GDP was projected to grow in a stable manner over the long term, with growth this year estimated at 9.1%. As to per capita income, Pisanu cited the ADB’s projection of it rising from an annual US$850 currently to $2,000-$3,000 by 2030. Its rising prosperity can be seen from the traffic congestion on its city streets, and also from the ongoing inflow of foreign... Full story: http://goo.gl/JebO3u

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May / June 2014

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Thais brace for recession as crisis nears crunch time The golden Buddha statues, amulets and lucky charms that festoon Sakuntala Mettawong’s Bangkok cellphone shop are not helping business. It’s peak time, but customers are scarce at the usually bustling mobile phone bazaar in MBK Center. “Business has been very bad. Many shops have left, some moved to find cheaper spots or changed hands,” said Sakuntala, almost drowned out by the noise of bored shop owners playing games behind her. “The top phone models are more difficult to sell… more people are selling their phones back to shops, to use simple ones, or sell because they need money.” An economy known for its dynamism is ailing, headed towards recession and held hostage by another crippling bout of turmoil in an eight-year power struggle being fought in Bangkok’s commercial heart and in its... Full story: http://goo.gl/XQoc5J

What does the AEC really mean? The advent of the Asean Economic Community in late 2015 has been in the limelight in recent years, but how many people are truly aware of it or understand the effect it will have on the economy, businesses, the workforce, education or even society as a whole? The AEC is not just about setting up free trade zones within Asean. It aims to create a single market and production base in order to boost the competitiveness of Asean countries. It is expected to create free mobility of goods, services, investments, capitalisation and skilled labour. Free mobility of labour is a significant element as all businesses and economies rely on manpower. And since the agreements have been signed, the 10 Asean members — Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Vietnam and Thailand — have tried to create a single clear standard for professional qualification screening in order to help the free flow of seven key professions plus one sector within member countries and ensure standards of quality. Background: Although the AEC comprises only 10 countries, the total population stands at 600 million — a gigantic market with ample opportunities. Nevertheless each country possesses different scales.... Full story: http://goo.gl/bDpAMX

Online trading the way to go, govt agency says There have been almost 2 million visits from 31 countries to the International Trade Promotion Department’s website Thaitrade.com, as more businesses move to trading online. The success of the website has encouraged the department to launch a mobile application to facilitate more online trade. Director-general Nuntawan Sakuntanaga said, “In the digital era, Thai traders can go global easily by selling goods online. The department, which is directly responsible for promoting overseas trade, will continue to encourage more traders and buyers to go online, as this platform offers low operational costs and saves time.” Since the website was launched in July 2012, the website had drawn 1.9 million visitors worldwide. About 11,476 sellers and 56,013 buyers have registered with the site and generated Bt1.64 billion in sales. Foreign traders have included those from China, India, the United States... Full story: http://goo.gl/eMsnni

Less populist policies would cut household debt: ADB The Asian Development Bank has suggested that once Thailand has a permanent government in place, it should drop its populist policies as a way to rein in rising household debt. Luxmon Attapich, ADB senior country economist, said the high level of household debt last year had lowered people’s purchasing ability, and this situation had continued into this year at the same time as reduced income as the slump in the economy had affected consumers’ ability to repay their debts. She said a short-term solution to increase people’s ability to repay their loans was for the economy to pick up, but there were also long-term solutions such as the promotion of a money-saving culture and discouraging people from taking out superfluous loans. She also suggested that the new government adopt fewer populist policies that have the effect of eventually raising personal debt and for financial institutions to moderate the use of campaigns that lure customers into borrowing for impractical reasons. The Bank of Thailand reported that at the end of last year, household debt stood at Bt9.79 trillion, or 82 per cent of GDP. This compared with just 55.8 per cent of GDP at the end... Full story: http://goo.gl/kysJNl

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Volkswagen seeks to set up first plant in Thailand Volkswagen AG, Europe’s largest car maker, has applied to set up its first plant in Thailand to help narrow the gap with Toyota Motor Corp in Southeast Asia, people familiar with the matter said. The company, based in Wolfsburg, Germany, is seeking to participate in a government scheme offering tax exemptions for car makers investing at least 6.5 billion baht in local manufacturing, said the people, who asked not to be identified because a final decision has not been made. Annual production must reach at least 100,000 cars in the fourth year after starting operations, and manufacturing must begin by 2019, in order to receive the incentives. The Ministry of Industry scheme includes vehicle assembly, components and engine production. Car makers had until March 31 to apply, according to a ministry statement from October. ”VW has always been one of the manufacturers trying to position itself globally,” Juergen Pieper, a Frankfurt-based... Full story: http://goo.gl/lLpy18

Malaysia poaching foreign film shoots Thailand’s status as Asean’s leading movie shooting location is under threat as Malaysia ramps up special tax holidays and other incentive packages to lure foreign film crews as well as opening integrated media production studio facilities. ‘Malaysia is emerging as our strong rival. Apart from impressive rebates and other incentives, the presence of Pinewood Iskandar Malaysia Studios also boosts Malaysia’s competitiveness,” said Ubolwan Sucharitakul, director of the Thailand Film Office (TFO). Pinewood Iskandar Malaysia Studios intends to be a worldclass film and TV studio facility for AsiaPacific. It is an alliance between Britain’s Pinewood Studios Group and the Malaysian government’s investment holding arm Khazanah Nasional Bhd. Pinewood Iskandar Malaysia Studios will be completed by mid-year and offer 9,300 square metres of film stages, 2,200 sq m of TV studios, offices, workshops and post-production facilities. Ms Ubolwan said film producers in Malaysia are eligible to claim a tax rebate of up to 30% of production costs. Thailand only offers a personal income tax for foreign actors, and that is due to expire in December 2015. Ms Ubolwan said the government agreed to consider offering... Full story: http://goo.gl/pGsQA5

May / June 2014

B.Grimm plots course Retail/Services http://goo.gl/QyrTE for Asean B.Grimm, one of Thailand’s oldest con- Major Cineplex glomerates, is aggressively expanding looking at expansion its power business to Japan and across in CLMV markets Asean to raise its revenue over 100 billion through JVs baht in eight years. Chairman Harald Link said B.Grimm is considering two solar farm projects in Japan with a capacity of 40 megawatts each to further expand its fastest growing power business. B.Grimm Power has been shortlisted for a 360-megawatt gas-fired power plant in Mandalay. It is also looking for investment opportunities in the coal-fired sector in Myanmar along with Malaysia and Indonesia. In Laos, the company has studied potential investment in a hydroelectric power project under development, Mr Link said. Domestically, B.Grimm formed a 70:30 joint venture with a Scandinavian partner in developing a 45-MW wind farm in Mukdahan province. The company operates four power plants including one in Vietnam, with combined capacity of 733 MW. The group targets expanding its generating capacity to 2,000 MW by 2019 with an additional 3,000 MW based on the licences it was granted, with a combined investment outlay of over... Full story: http://goo.gl/sejZpW

Major Cineplex Group is looking at the CLMV (Cambodia, Laos, Myanmar, and Vietnam) markets for expansion of its cinema business overseas. In addition to Cambodia, where Major will open its first seven to eight-screen cinema at a cost of Bt120 million in July, at least one new CLMV country will be announced by the group for overseas expansion this year. “We are having negotiations with potential partners, in particular in CLMV markets. The expansion will be through joint venture and the ownership ratio will depend on local regulations in those markets,” Vicha Poolvaraluck, chairman of Major Cineplex Group, said. He said local consumers in those markets had shown a preference for and were already familiar with Thai movies. They were exposed to Thai films and soap opera via new media such as satellite. Many of them have an understanding of Thai culture and language. Vicha said Major Cineplex would never stop its expansion despite the economic and political difficulties... Full story: http://goo.gl/IC4UQh

Thailand close to Fico Coffee shoots achieve 3mn auto for 75 outlets production milestone in four years Thailand is on the road to hitting the target of 3 million vehicles produced annually by 2017, with automakers showing overwhelming interest in the second phase of the eco-car scheme. “The response has been better than expected, reflecting their confidence in Thailand’s potential as a global automobile manufacturing hub,” Udom Wongviwatchai, secretary-general of the Board of Investment, said. By the applications’ deadline for Phase 2 of the government’s eco-car programme, 10 car companies had committed to investing a total of Bt139 billion for the production of 1.5 million units per year, according to the BoI. Five are already participants in the first phase – Toyota, Honda, Nissan, Suzuki and Mitsubishi. The newcomers include General Motors, Ford, Mazda and Volkswagen, which will produce its Beetle locally for the first time. While the existing players plan to invest Bt86.8 billion for the production of 753,000 vehicles per year, the newcomers plan Bt52 billion for 828,000 units. The qualification report will be completed and ready for approval by the new BOI, which will be appointed as soon as... Full story: http://goo.gl/oawFIE

Fico Coffee, the franchisee of Californiabased The Coffee Bean & Tea Leaf in Thailand, aims to more than triple the number of its coffee houses to 75 within four years. After opening the first two Coffee Bean & Tea Leaf outlets in Bangkok at the same time in October 2012, the company now operates 16 coffee houses locally. Thailand is the 25th country to operate the franchise. Voravan Vanaspongse, general manager of Fico Coffee, a subsidiary of Evolution Capital, said the company planned to open between 10 and 12 new Coffee Bean & Tea Leaf outlets every year with an investment of Bt6 million to Bt8 million per store. Potential locations will be shopping centres and community malls, office buildings and hospitals. “We plan to open two new coffee houses at Chulalongkorn Hospital and Central Embassy respectively in May,” she said. Thailand is one of the fastest-expanding markets for The Coffee Bean & Tea Leaf in the world besides China and Indonesia. After 15 years of operation in Malaysia, 50-60 franchised outlets have opened so far. “We have seen great business potential in Thailand, where people have recognised and enjoyed the coffee... Full story: http://goo.gl/XZfhdq

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Thailand ranked 6th in top 10 target Asian markets for 2014 Asia-Pacific retailers are focused on expanding in the region, according to a recent global report by CBRE Research. The survey found that Asia-Pacific-based retailers saw significant potential in their own region, and that all of their top 10 target destinations for expansion this year are within it. Thailand is ranked sixth as a target for 29% of Asia-Pacific-based retailers, while China is the most soughtafter market (58%), followed by Vietnam (48%), Malaysia (42%), Indonesia (39%), and Singapore (35%). “The relatively lower levels of interest by Asia-Pacific retailers in expanding in American and European markets reflect a cautious attitude to expanding out of their core markets, but that said, we are beginning to see a number of Asia-based brands working on strategies for global markets. For example, Chinese brand Bosideng opening on Oxford Street in London and a number of other Chinese brands looking to launch [in] New York and Australia,” said Sebastian Skiff, executive director of CBRE Retail. Around 14 million square metres of new retail space is currently under... Full story: http://goo.gl/DWRF41

Big C eyes 30% boost in online shopping Big C Supercenter aims to grow its online business by 20-30 per cent this year. Sarintip Satitsatian, vice president for new business and innovation, said Big C’s online business had grown strongly every year since 2010. “Our positioning is as a ‘click-and-mortar’ company. We utilise our existing resources, especially the offline infrastructure, including warehouses, to provide e-commerce services to people nationwide,” she said. Big C offers online shopping via its website and a mobile application, now available on iOS and Android, making available more than 25,000 stock-keeping units. Offline, it has between 80,000 and 120,000 SKUs per outlet, depending on the size of the store. “Currently, customers can enjoy shopping at Big C’s online store more easily via mobile devices. More than 25,000 SKUs across a wide range of products, including fashion and kids’ [clothes], food and beverages, health, beauty and personal care, household items, IT and electronics, and home and office decoration, are available now,” Sarintip said.” She added that this year, Big C would increase the number of product items available from... Full story: http://goo.gl/zRwPKU

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Are you a virtual racer? Check this out Nissan, in collaboration with Sony Thai, has introduced the Nissan GT Academy in Thailand to encourage virtual racers to win the opportunity of gaining motorsport experience at an international level. “Since its conception, Nissan GT Academy has been defying both common sense and motorsport tradition,” said Nissan Motor (Thailand) president Hiroyuki Yoshimoto. “The programme takes gamers who excel at PlayStation 3 Gran Turismo 6 and turns them into professional drivers in a matter of months. With the launch of GT Academy in Thailand, Nissan encourages Thais to unlock their potential and achieve more by joining this exciting and innovative programme.” Nissan GT Academy will have a road show in Bangkok, Khon Kaen, Surat Thani and Chiang Mai from April 24 to June 15. The top 14 contestants who clock the fastest lap times in these four cities will be eligible to... Full story: http://goo.gl/pNdmTp

Mobile advertising thrives: BuzzCity Mobile advertising in Thailand grew 42 per cent in the first quarter as value added services began the year aggressively promoting videos, news and premium content across operator networks, according to the latest quarterly report on the mobile internet by BuzzCity. Thailand’s first quarter mobile advertising surge mirrors a global trend that saw internet ad spending beat broadcast television for the first time last year, said Wararin PhoonuchAphai, BuzzCity’s Country Manager for Thailand. With Thai consumers, she added, spending more time on their mobile devices for communication, entertainment and shopping, many companies including retailers, banks, and hotels are increasing mobile advertising budgets to maximise opportunities today and in the future. The BuzzCity report includes a spotlight on mobile banking adoption and reveals mobile users’ attitudes towards mobile banking. The report features results of a survey on mobile banking. Results suggest that security fears seem to be decreasing gradually, with 36 per cent of those surveyed this quarter saying they won’t mobile bank because of security fears compared to 41 per cent last year. Not surprisingly, more people are... Full story: http://goo.gl/2EZAw2

Google tries to persuade Thai firms Google (Thailand) urges local companies to pay attention to online marketing to optimise business globally. It wants to persuade them to change their ways of doing marketing from only focusing on traditional platforms, especially TV, to becoming active on the online platform. Business manager Ariya Banomyong said that the Internet was the game changer for the way of doing business. Almost all people are always online, via any device. That’s a big opportunity for marketers. Personal-computer Internet penetration is 36 per cent, while more mobile Internet users are becoming increasingly active. Internet penetration across devices is expected to pass 50 per cent next year. “According to Nielsen, on average in a week, time spent on the Internet is 23 hours. That is more than time spent on TV, which is 17 hours. That is what marketers should be aware of, and they should prepare to catch up with consumers wherever they are. Online marketing is not a technical issue. It’s a business... Full story: http://goo.gl/x3GdBZ

ReadyPlanet targets Myanmar for web services ReadyPlanet, a large Thai readymade Web-service provider, aims to grow 50 per cent this year by expanding in emerging services and markets, especially Myanmar. CEO Songyot Kanthamanon said that the company will launch two services this year – Baidu’s online ads and Facebook’s ads – while increasing services for its readymade website to help its customers design responsive websites. The company will take its readymade website to Myanmar, where the online business is expected to grow rapidly. It is forming a team to oversee ReadyMyanmar.com. ReadyPlanet’s core services are readymade websites, online ads, training and online marketing. Readymade websites and online ads will contribute 40 per cent each to total revenue this year, while online marketing and training will contribute 15 per cent and 5 per cent. This year, it will continue to sign up new customers with the aim to have more than 4,000 new websites. The new service called responsive Web design will help customers develop their websites to provide an optimal viewing experience with easy reading and... Full story: http://goo.gl/uuayLA

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Briefs

May / June 2014

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Tourism

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Asia changes travel landscape The global travel industry is poised to grow by 5.4% per year over the next decade, outpacing world GDP growth, driven partly by globetrotting Chinese tourists. International travel is increasing at a significantly faster rate than during the last financial crisis when growth was just 4.1% per year, according to a study released yesterday by Amadeus, a global travel technology service provider based in Bangkok.

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The increasing popularity of Koh Tachai, situated between the Similan and Surin islands in the Andaman Sea, as a tourist destination has prompted the tourism sector to ask the authorities to ensure it is not spoiled and polluted.

“The findings underscore what most of us already intuitively know — we have now truly arrived in the Asian century,” said Amadeus Asia Pacific president Angel Gallego.

Chotechuang Sooranguara, assistant Managing Director of NS Travel and Tours, said that more tourists wanted to go to Koh Tachai thanks to the push given by the internet and social media. “Many famous people went to Koh Tachai and took photos there. Tourists become interested in the small island after learning it has few visitors. “However, the tour packages are expensive because tourists have to travel by plane and boat and their is only limited accommodation,” Mr Chotechuang said.

China’s growth in outbound travel, which as recently as 2005 stood at just 1%, will propel it to overtake the US to become the world’s largest outbound travel market this year, with the number of Chinese households able to afford overseas... Full story: http://goo.gl/KvBPOa

He said the popularity of Koh Tachai, known for its beautiful beaches and dive sites, had already exceeded Samui, Phuket and Lipe islands. Tourists who want to relax in a peaceful setting rather than be entertained see Koh Tachai as... Full story: http://goo.gl/Vok00G

Erawan plans 25 lower-priced Hop Inn openings

Four Seasons luxury hotel operator looks for property in Phuket

The Erawan Group, one of the country’s leading hotel developers, has budgeted Bt1.5 billion to open 25 Hop Inn hotels across the Kingdom through next year, a strategic move to put more focus on the fast-growing lower-priced segment.

Home is where the heart is

Keep Koh Tachai from ‘exploitation’

It claims Hop Inn will be Thailand’s first budget hotel brand offering high service standards. The firm will open 10 Hop Inns this year, the first two in Mukdahan and Nong Khai this month during the Songkran Festival. The other eight openings will be in Kanchanaburi, Udon Thani, Ubon Ratchathani, Tak (Mae Sot), Nakhon Ratchasima, Lampang, Sa Kaew and Khon Kaen provinces. Next year, 10 will be opened across the country, especially in the Southern region, said Kamonwan Wipulakorn, president of the Erawan Group. In general, the Hop Inn concept is a sixfloor hotel with 79 rooms. Its room prices range from Bt550 to Bt650, depending on the province. The company projects an average occupancy rate of 80 per cent. Its clients will be businesspeople moving from province to province. Corporate and state agencies are considered as potential sources of clients looking for places to... Full story: http://goo.gl/uNgSV5

Four Seasons Hotels and Resorts, a Canadian-based management operator of luxury hotels, is looking to penetrate the Phuket market to tap Thailand’s growing tourism industry better. The company is looking for a location on the island and is in talks with a qualified investor. If the negotiations pan out, the new hotel is expected to open in three to five years, making it the company’s fifth hotel in Thailand. It currently operates in Bangkok, Koh Samui, Chiang Mai, and the Golden Triangle in Chiang Rai. Vincent Hoogewijs, Four Seasons’ regional vice president and general manager, acknowledged that hotel competition in Phuket was high, with a large number of international chains. But he believes there is more room for growth and is confident the Phuket property will be successful, thanks to Four Seasons’ internationally recognised luxury brand image. Hoogewijs said his goal was to maintain service quality and offer new experiences to guests. He began his current position in December – not long after political unrest began in Thailand. He said the... Full story: http://goo.gl/E69ZWc

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Samui hotels cash in on tourism boom While the political turmoil has damaged the Bangkok hotel market, Koh Samui hotels have suffered only minimal impact and continue to enjoy strong occupancy rates, according to the latest research by JLL’s Hotels & Hospitality Group. “Koh Samui’s hotel market has remained relatively robust compared with Bangkok where demonstrations concentrate. The average hotel occupancy rate in Samui reached a record of 73% last year, growing by around 5% from 2012,” said executive vice-president Andrew Langdon. The growing prominence of Surat Thani airport as a secondary gateway to Samui has helped fuel demand for hotels. Visitor arrivals to Samui airport last year grew by 14.5% from 2012 to 1.5 million. However, the average length of stay on the island has been declining as a result of the growth of short-stay visitors from the region. Hotels’ average daily rate (ADR) recorded growth of 1% to 3,940 baht last year after declining from 2008-12. Largely driven by strong occupancy, revenue per available room grew by 8.9% to 2,870 baht... Full story: http://goo.gl/fs1PDi

May / June 2014

Free breakfast tops choice for hotel guests, survey finds

DASTA programmes to prepare hotels for survival within AEC

Complimentary breakfasts seem to come first when global travellers choose their ideal hotel amenities today. Respondents to a survey by Hotels.com pushed the morning meal past last year’s No. 1, free WiFi. The survey was conducted among 1,000 travellers who were planning trips in the first half of 2014, but it was released only this week. Last year’s victor, free WiFi, was knocked to third position, the hotel room booking website said.

The Designated Areas for Sustainable Tourism Administration (DASTA) is putting a big effort into strengthening hotel operators’ ability to survive in the highly competitive industry after the opening of the Asean Economic Community (AEC) in 2015.

When customers were asked to rank 33 different amenities, a free breakfast was the first choice among travellers, followed by an accessible restaurant. Next in the top-10 amenities for the ideal hotel were parking, smoke-free areas and coffee and tea available in the lobby upon arrival. At the other end of the scale, the least important for travellers included childfriendly amenities, pet-friendly services and hair salons. Conference centres and meeting rooms were also deemed to be one of the leastimportant amenities even though more than a third of respondents (35%) were business travellers. When asked for the most important amenity found inside... Full story: http://goo.gl/PpZ659

In one of the schemes, DASTA intends to encourage the hotels to reduce carbon emissions. It will define a standardised framework with four criteria for them to follow, and those that qualify will be certified by the Green Leaf Foundation. The areas in which they will have to make progress are |wastewater treatment and |water recycling, garbage disposal, and efficient use of water and energy. Nalikatibhag Sangsnit, DASTA’s directorgeneral, said this was aimed not only at promoting competitiveness by local hotel operators, but also strengthening their brand image. Furthermore, the scheme will help reduce operating costs and increase income. For example, garbage can be turned into fertiliser and cooking gas, while leftover food and dead leaves are turned... Full story: http://goo.gl/Uj4Cd1

BANGKOK BUSINESS BRIEF

Niche focus keeps Thai Rung Union Car rolling ahead of its competitors

Thai Rung Union Car Plc, a Thai-owned company established in 1967 and listed on the SET in 1994, is a leading automotive industry operator that offers fully integrated services from product design and development to production of various kinds of vehicles, including its own niche specialty vehicles, and after-sales service. Its customers are leading US and Japanese automotive, industrial machinery and motorcycle manufacturers. MD Sompong Phaoenchoke discusses the company’s strategy and outlook. What is your business model? TRU has always focused on product design and development through the production of dies and jigs and the manufacturing of metal and plastic automotive parts, seats, and modification of multipurpose and specialty vehicles. In recent years we have adapted our strategy to focus more on OEM parts making, contract assembly and painting, which now represent 80% of our total business. However, we are now looking to use our capabilities because of our uniqueness, integrated systems and R&D in vehicle... Full story: http://goo.gl/90kylm

BANGKOK BUSINESS BRIEF

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Real Estate

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Six new projects transform skyline Despite scarce plots of land available for new property development, prime riverfront locations along the Chao Phraya River await six new projects worth a combined 50 billion baht to change its skyline. The river’s prime locations covering both Bangkok proper on the east side and Thon Buri on the west start from the River City shopping complex near Si Phraya pier in the north to the Anantara Bangkok Riverside Resort and Spa on Charoen Nakhon Road in the south. This coverage area, extending four or five kilometres along the river, is where 15 existing properties of luxury residential towers, five-star hotels and high-end shopping malls are currently located. “To do a luxury development, there are two key elements. One is a view. Another is no risk of losing that view,” said Simon Derville, deputy vice-president for business development at SET-listed developer Raimon Land Plc (RML). “[You] need to... Full story: http://goo.gl/U94FdT

Foreigners back in the property hunt www.juslaws.com

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May / June 2014

Foreign investors, mostly from East and Southeast Asian markets, are resuming investment in Thai property. Nukarn Suwatikul, associate director for investment services at the property consultant Colliers International Thailand, said eight foreign investor groups have approached the company about investment opportunities. “After learning that Thai political tensions have relaxed to a certain level after the revocation of the emergency decree and no more Bangkok shutdown, these investors asked us to find potential Thai partners to have a joint venture with,” Ms Nukarn said. Three of the groups were Japanese interested in industrial estates, hotels and residential development along the Eastern Seaboard. Two were from South Korea and sought to invest in factories and hotels. One each came from Hong Kong and Singapore to see existing Grade A office buildings and hotels in Bangkok that can generate income immediately. Their targeted return is 5-7% a year, against 1-3% in their home countries. Another potential investor was a large Chinese property developer looking for plots in northern... Full story: http://goo.gl/CCjqNx

New takeoffs Pruksa Real Estate introduces its latest three-storey and three-and-a-half story townhomes, Pruksa Lite Rama 9-Srinakarin, with prices starting at Bt4.59 million per unit. The townhomes are designed in modern contemporary style, using space between 175 square metres and 200 square metres per unit. The design is meets demands of families with three bedrooms, three bathrooms, a living room, a kitchen, dining room and parking for two cars. The project also provides a fitness centre, swimming pool, kid zone, and a park suited for families. The project is located close to a motorway, and the airport link Tab Chang Station. Quality Houses has launched special promotion campaigns for this summer, offering a free condominium unit worth about Bt1 million to single detachedhouse buyers. This campaign is for buyers of its three luxury single detached-house projects on Watcharapol-Kaset Nawamin Road. They include the Laddarom Watcharapol-Rattanakosin, Casa... Full story: http://goo.gl/Uwceqv

The merits of owning a leasehold condominium From my experience in selling Bangkok condominiums, 70 per cent of buyers will turn down a leasehold condominium without even looking into the details of the property. Most of them hold the belief that a leasehold condominium is a depreciating asset and, therefore, they would rather buy a perpetual freehold title. By definition, a condominium is “a strata title property within a juristic development where the owner has a perpetual freehold title and the common property is managed through a juristic management committee and subject to the Condominium Act”. Based on this definition, there should be no leasehold condominiums, but the term was commonly used in the market as referring to a long-term lease apartment with the rent being paid up front. In Thailand, the maximum leasehold period that can be registered is only 30 years. Even if the developer or landlord wishes to grant a series of extensions up to 90 or 120 years, no leasehold term can go beyond the 30-year cap. The only option is to renew the lease by following the legal process of registration for the renewals, which can only be done at the end of each 30-year period. Despite the... Full story: http://goo.gl/vALKjI

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May / June 2014

Singha expands property arm via share-swap deal

Resale prices of Bangkok riverside condos soar

Singha Corporation and its major shareholder Santi Bhirombhakdi are undertaking a back-door listing in the Stock Exchange of Thailand by acquiring Rasa Property Development. Singha’s business diversification into the property sector is in line with the policy set by Santi, who is also the group CEO, to double the sales contribution from its non-alcohol businesses to 30 per cent by the end of this year, from only 15 per cent in 2011. It is also in line with the company’s business direction set to diversify into two new business pillars – real estate and energy. Entering new businesses with good potential will allow the group to offset a domestic decline in beer sales due to government restrictions, including those on advertising of alcoholic beverages.

Resale prices of riverside condominiums in the Rama III-Ratchaburana area have more than doubled in recent years, thanks to rising demand for homes located close to the Chao Phraya. A survey carried out by The Nation found that resale prices in riverside condominium projects launched over the past five years now averaged Bt90,000 per square metre, against an average of Bt40,000 at the time of presales. The sharp rise is due to the limited number of new residential projects being launched close to the capital’s river.

Rasa’s board reported to the SET last Friday that Singha Property Management and Santi would buy 4,162,352,331 new shares at Bt1.87 each, totalling Bt7.78 billion, in Rasa via a share swap. The board approved the deal, which was set up last December. Rasa will ask its shareholders to approve the plan on June 9 for subscription to Singha Corp the following day. After Singha Corp acquires the... Full story: http://goo.gl/pdDeMX

Department to set standards for property The Business Development Department will cooperate with condominium, officebuilding, and detached-home enterprises to set up standards for operating building assets in order to ensure fair treatment and living standards for residents. The move is part of the preparations for the seamless market under the AEC, which is expected to see more foreigners coming to live and work in Bangkok. Also, the plan will ensure good living standards for Thais, as many of them live in condominiums. Pongpun Gearaviriyapun, director-general of the department, said he would soon call a meeting with involved enterprises such as condominium and detachedhome firms to discuss plans on setting up standards for operating the assets of condominium owners and houses. The plan is expected to be finalised in a year and implemented in 2015. The department will spend about Bt4 million to Bt5 million on the project. It will use models from the United States, Hong Kong and Australia. Pongpun said the project would help increase the standards of Thai enterprises and ensure quality living for condominium and other home-buyers. Also, it will help increase the competitiveness of Thai enterprises under the AEC, as... Full story: http://goo.gl/EQ2X7C

Popular residential locations close to the Chao Phraya include Charoen Krung, Rama III, Ratchaburana and Charoen Nakorn. At present, these areas have just 10 new condominium projects for sale, which has resulted in strong resale demand in mature projects. According to the survey, condominiums on Rama III have resale prices of between Bt75,000 and Bt190,000 per square metre this year, compared with their presale prices of Bt60,000- Bt70,000 per square metre three years ago. The River condominium project by Raimon Land currently offers a price of Bt140,000 per square metre, versus a presale price... Full story: http://goo.gl/evV78C

lion this year to build more local logistical facilities and warehouses for lease to cash in on the growing outsourcing trend. Tpark is also studying the feasibility of operating warehouses in foreign markets like Myanmar and Vietnam. Managing director Patan Somburanasin said last week that the company plans to build warehouses at two new upcountry locations – Khon Kaen in the Northeast and Surat Thani in the South – with total space of 200 rai and 70 rai. The sites were purchased last year. The buildings will be completed by the end of this year and ready for leasing by the beginning of next year. The company is studying another strategic location in the North for a logistics park. Tpark was established in August 2005 by Ticon Industrial Connection Plc, the leading provider of serviced rental factories, and currently has paid-up capital of Bt2.5 billion. Tpark is the first to receive BoI approval for full-scale logistics park development. Tpark’s leases ready-built and builtto-suit logistics warehouses. Site facilities include high-standard infrastructure... Full story: http://goo.gl/P7Ugfv

First-half presales could slump by 40%

Minor International will invest Bt5 billion to develop 15 ultra-luxury villas in Phuket this year while avoiding the Bangkok political crisis. Tagged as The Residences by Anantara Layan, the villas range from four to eight bedrooms with commanding ocean views of Bang Tao Bay. Jaya Ibrahim, a designer who has won global acclaim with headline projects branded as Aman, Park Hyatt, Setai, Capella and Chedi, is bringing his cultured touch to the development.

The residential property market in greater Bangkok could drop by up to 40 per cent in terms of presales in the first half of the year, following a first-quarter fall of 42 per cent. The significant market slowdown in the first three months was due in large part to reduced purchasing power, as many home-buyers faced a high debt burden arising from the first-car scheme and other forms of personal debt.

Minor’s Bill Heinecke has been a lead proponent of luxury hotel-branded residences, with highly successful offerings at the St Regis Bangkok and Four Seasons Koh Samui. In 2012 the group purchased the Bundarika Resort at the northern end of Bang Tao, along with an adjunct vacant parcel. The hotel received a major upgrade and was recently relaunched under the Anantara flag. The Residences has... Full story: http://goo.gl/N3XdJf

Ticon Logistics Park Banks tighten project to spend Bt6 billion financing, mortgage on warehouses, other lending amid slowdown Ticon Logistics Park will invest Bt6 bil-

MINT joins luxury trend in Phuket

Size certainly is the new lead indicator, with built-up villa areas ranging from 1,500-2,000 square metres and averaging in the range of Bt300 million in price. As a sign of market confidence, Minor has elected to construct all of the units fully, with work already under way and project completion expected by the middle of next year.

BANGKOK BUSINESS BRIEF

A survey carried out by The Nation among the leading listed property companies found their first-quarter presales were sharply lower than in the same period last year, as many home-buyers had delayed their decision to purchase a home out of concern over their debt burden and future earnings – amid the country’s sluggish economic growth and the prolonged political turmoil. Pruksa Real Estate reported presales worth Bt8.19 billion in the first quarter, a drop of 34 per cent from the same period last year, while Sansiri posted presales of Bt4 billion - some 80 per cent down, year on year. AP (Thailand) reported presales of Bt2.16 billion, 31 per cent down on the first quarter of 2013, while LPN Development announced presales worth Bt3.2 billion for a 53-per-cent fall. Quality Houses recorded presales worth Bt1.2... Full story: http://goo.gl/taVRfN

Commercial banks are restricting the provision of both project financing and mortgage lending, as they guard against business risk in the residential property sector at a time when the country’s economy is expected to expand by less than 3 per cent this year. Newcomers in the residential sector will find it particularly hard to raise funds from the banks to support their project construction, a survey by The Nation found. “We have been rejecting between 20 per cent and 35 per cent of new mortgage applications since early this year, as more customers have substandard credit scores,” Kasikornbank executive VP Chatchai Payuhanaveechai said. Customers having their loan applications turned down have average earnings of Bt30,000 per month per family, he said. They have built up such a debt burden from personal loans and/or credit cards – many of them also via hire-purchase lending in connection with the first-car scheme – that they do not have sufficient purchasing power to get a mortgage , he explained. The executive added that the bank had also reduced its loan-to-value ratio, from the... Full story: http://goo.gl/i58MMr

Stumbling blocks Amid Thailand’s mushrooming condominium development, notably in Bangkok, a growing number of condo projects already launched for sale have failed to gain environmental impact assessment (EIA) approval. The problem, which causes projects to be delayed or even scrapped entirely, has been widespread over the past few years, forcing developers to return booking money and revise project designs. This also causes lost business opportunities, wastes time and has a negative impact on revenue targets. The latest case is The Tempo Grand Sathon-Wutthakat, a new project by Built Land Co, a property development subsidiary of SET-listed contractor Pre-Built Plc. The company sent a letter and an email to notify customers who booked a unit on the 25th to 41st floors of Building A that the project has EIA-related troubles. The developer said in the letter that it needed to reduce the number of floors at Building A from 41 to 24. Customers booking a unit on those floors are required to either choose a new unit on the 6th to 24th floors available for sale or cancel the booking for a full refund. Pre-launched in mid-September last year, the project will be located on a plot of five rai on Ratchapruek Road, 30 metres from Wutthakat BTS Skytrain Station. Under the former design, it would comprise two... Full story: http://goo.gl/F42EWS

BANGKOK BUSINESS BRIEF

May / June 2014

Not all roads should lead to Bangkok Story continued from Page 1.

part reflects other factors such as the Chinese crackdown on cheap tours, it inevitably reflects the effects of the announcement of the emergency decree and political turmoil. The number rebounded slightly in March when the cabinet decided not to renew the decree; then again, the number also shot up in March during the past two years on seasonal factors. But look elsewhere, and you will see the figures continuing to rise. In Chiang Mai, international tourists arriving by plane almost doubled since the fourth quarter last year, and the trend is persisting. At Phuket – the largest airport by traffic outside of Bangkok – the latest number is broadly in line with last year. But it saw a boost of almost 20% above its peak year-end tourist season.

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But again, because Bangkok accounts for at least 70% of Thailand’s international aircraft movements, such increments elsewhere cannot fully compensate for the much larger reduction in the capital. To a portfolio manager and financiers, this is known as concentration risk. This simple observation points to the great benefits of geographical diversification that could lie ahead for the Thai economy if new attitudes are embraced. Even the slightest degree of diversification pays. Tourists who wish to visit Thailand can still come; they just need to change their itinerary – and hence income is received elsewhere. This is the redistribution of income, away from lustrous Bangkok, without the mess of taxes and transfers that typically breed so much corruption and pork-barrel spending.

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In some sense, diversifying business across different parts of the country provides a backup, and it keeps the economy rolling when some part becomes dysfunctional. Vietnam’s stock exchange now has a presence in two places: Ho Chi Minh City and Hanoi. Not only does this support increasing demand in the financial industry, it also means that the secondary market wouldn’t shut down completely if something went wrong in one city. Looking outside Thailand, we see a plethora of examples. While we rely on the metropolis of Bangkok alone to generate 30% of our national economic activity, Tokyo contributes around 20% to Japan’s annual GDP. Yet Tokyo is ranked second worldwide in terms of total output and economic activity, behind only New York City. The next-largest province by contribution to GDP in Thailand is Rayong, at 7%, roughly the same as second-ranked Osaka in Japan. Hence, Japan is better diversified geographically than Thailand. London also accounts for around 22% of England’s GDP, while the identity of the second city is subject to debate.

Pavinee Chaymanee • 084-147-5550 thailandmagazine@gmail.com

All in all, Thailand’s economic activities are too concentrated around Bangkok, so we bear a high economic concentration risk.

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Economic development policies should look beyond so-called backward linkage theories. An unbalanced growth strategy works for a low-income country starting to open its economy to the rest of the world. The basic theory is that a poor country, having constraints on its resources, should focus its energy on a few industries with the longest backward supply chain. Because once these industries start to grow, they will draw investment into the backward linkages, distributing that wealth to other parts of the economy.

Reid Nixon • 080-246-9000 reid@bbbrief.com

Business Development Manager (English sales) Andy Hyde • 080-814-9080 andy@bbbrief.com

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Thailand is far beyond that point. Our Eastern Seaboard industrial area has achieved its potential, and the size of Bangkok has reached its limit. We are at a crossroads, and the choice we have to make is clear. Bangkok has reached its limit, and it’s time to refocus our energy on reducing our economic concentration risk. If diversification is a smart financial portfolio recommendation, let’s make it a smart economic one as well. TMB Analytics is the economic analysis unit of TMB Bank. The authors of this story can be reached at tmbanalytics@tmbbank.com

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May / June 2014

The Calendar Sunday

For event details, enter the short code below the event into your browser:

May

AMCHAM: Adopt-a-School Dedication for Capital Relocations http://goo.gl/NP19g0

19 AMCHAM: Adopt-a-School Dedication for JBT http://goo.gl/77DU04 Bangkok Entrepreneurs http://goo.gl/JihG3

AMCHAM: Adopt-a-School Dedication for FedEx Express http://goo.gl/ruO7GV

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Tuesday

Monday

AMCHAM: Adopt-a-School Dedication for Rajas Fashions http://goo.gl/CjpuC5

Mango Metro Networking Party http://goo.gl/6ngBg

AMCHAM: Adopt-a-School Dedication for 180 Years Project – Chiang Mai http://goo.gl/iScZTK

BCCT: Boardroom Briefing http://goo.gl/meLB4F AMCHAM: Board of Governors Meeting http://goo.gl/xy6h59 AMCHAM: Monthly Membership Luncheon http://goo.gl/dVJyUI

BCCT: Evening Presentation (Arbitration Talk) http://goo.gl/gCpWEx AMCHAM: Business Economics Cmte http://goo.gl/88vCtn

3 AMCHAM: Board of Governors Meeting http://goo.gl/3bjiUP

AMCHAM: Legal Cmte – Planning Meeting http://goo.gl/f25fSx

AMCHAM: USA Fair 2014 http://goo.gl/A2NekJ

AMCHAM: Adopt-a-School Dedication for P&G http://goo.gl/dXB3yD

June

TEIS: How to Protect Your Wealth http://goo.gl/EZCHYn

BCCT: Boardroom Briefing http://goo.gl/vOCnrj

AMCHAM: ICT Cmte http://goo.gl/wEQlqK

AMCHAM: Legal Cmte http://goo.gl/mV8YRx

AMCHAM: Tax Cmte http://goo.gl/n8V4EA

24 BCCT: UK Event – Thailand BOI in Coventry http://goo.gl/f5Vj20 AMCHAM: Business Economics Cmte http://goo.gl/GIjmBR

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May / June 2014

BANGKOK BUSINESS BRIEF

Send us your event details for the June issue by June 6th to reid@bbbrief.com Wednesday

Thursday

21 REDEV: President’s Breakfast Briefing http://goo.gl/V12G5o

BCCT: Board of Directors http://goo.gl/20hfPZ

BCCT: Events Group Meeting http://goo.gl/lbxSVe BCCT: Boardroom Briefing (Intellectual Property) http://goo.gl/0VTRny

BCCT: Overseas Business Network http://goo.gl/BzyoPu

Friday

AMCHAM: Monthly Luncheon http://goo.gl/WkQkoH WebMob Thailand http://goo.gl/dEu8F

29 AMCHAM: CSR Cmte http://goo.gl/4gYt0e AMCHAM: YPC Networking Night http://goo.gl/YIRjef

11 AMCHAM: SME Cmte http://goo.gl/PJL3NZ AMCHAM: Social Networking http://goo.gl/D90Rxj

18 BCCT: Two Day Workshop http://goo.gl/W73Ukg BCCT: Events Group Meeting http://goo.gl/mKgpBU AMCHAM: Energy Cmte http://goo.gl/yqN1fN

BCCT: UK Event – Thailand BOI in Leeds http://goo.gl/y8dEHH BCCT: Boardroom Briefing http://goo.gl/fLKuQL

AMCHAM: Monthly Luncheon http://goo.gl/v3E6lt AMCHAM: Stetson University http://goo.gl/pAoehw

AMCHAM: Independence Day Picnic Cmte http://goo.gl/lY54qJ

BCCT: Bangkok Masters Football Tournament http://goo.gl/5Zo0m1

AMCHAM: USA Fair 2014 http://goo.gl/A2NekJ

AustCham: 13th Volvo Truck and Bus Thailand Convoy for Kids Charity Golf Event http://goo.gl/TeukGK

BCCT: Film Night http://goo.gl/BEiewN

AMCHAM: Food & Agri Business Cmte http://goo.gl/eZAYR2 BCCT/AMCHAM: Evening Presentation on AEC http://goo.gl/V6DL2D

BCCT: Overseas Business Network http://goo.gl/zJUf1 BCCT: Board of Directors Meeting http://goo.gl/fcqUdF BCCT: Third Thursday Networking Evening http://goo.gl/rkwVjA

BCCT: UK Event http://goo.gl/lQdHJO

24 AustCham: Voluntary English Teaching http://goo.gl/6BUEZD

AustCham: Commonwealth Sundowners http://goo.gl/FFD9Qz AMCHAM: Transportation & Logistics Cmte http://goo.gl/QNgPGv

23 AMCHAM: Memorial ChariTEE Golf Tournament 2014 http://goo.gl/zK97zI

BCCT: Life & Style Garden http://goo.gl/Mr9Gnb

Saturday

BCCT: Scottish Business Group http://goo.gl/zUxvqZ

Joint: Eastern Seaboard Sundowners http://goo.gl/zX1Oae http://goo.gl/2Fyi1b http://goo.gl/E1hUyS

AMCHAM: CSR Cmte http://goo.gl/NcS3S AMCHAM: YPC Networking Night http://goo.gl/MN0dIB

AMCHAM: Independence Day Picnic

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News from the World’s Leading Industrial City Developer Q2 / 2014

AMATA GROUP OF COMPANIES marketing@amata.com Sales Mr. Viboon Kromadit Director & Chief Marketing Officer Tel +66 (0)38 939 007 ext. 300 Fax +66 (0)38 938 001 viboon@amata.com Investor Relations Mr. Steven Siew Senior Vice President Finance, Investor Relations & IT Tel +66 (0)2 792 0000 ext. 155 Fax +66 (0)2 318 1096 steven.siew@amata.com Corporate Office Amata Corporation PCL. 2126 Kromadit Building New Petchaburi Road Bangkapi, Huay Kwang Bangkok 10310 Tel +66 (0)2 792 0000 Fax +66 (0)2 318 1096 Amata Nakorn Industrial Estate Amata Corporation PCL. 700 Moo 1, Klong Tamru Muang, Chonburi 20000 Tel +66 (0)38 939 007 Fax +66 (0)38 939 001 Amata City Industrial Estate Amata City Co., Ltd. 7 Moo 3, Bowin Sriracha, Chonburi 20230 Tel +66 (0)38 497 007 Fax +66 (0)38 497 000 Amata Vietnam (Joint Stock Company) Long Binh Ward Binh Hoa City Dong Nai Province Tel +84 61 3991 007 Fax +84 61 3891 251 Copyright © 2014 Amata Corporation PCL

Joint Ventures: A path to business prosperity Joint ventures with local firms are a preferred route for business entry, adopted by international companies throughout the ASEAN region. In some cases and in some countries, foreign investors are obliged to take minority equity positions in locally incorporated ventures. This can be either because the overall foreign investment law requires majority local control, or because the particular industry is considered strategic, and needs to be controlled by local interests. Ownership of land by an operating company is also a frequent reason why a foreign entity needs to take a minority stake in such a locally incorporated venture. However there are good commercial reasons why a foreign entity may seek and choose a local partner rather than entering a market alone, especially in the case of a market or operational sector in which the investor is not already familiar. Some foreign companies seek an initial minority stake, whether in an existing entity or Amata Summit Ready Built Factory a newly constituted venture, in order to test the market and learn from the experience of the local partner. Subsequently, as the busi- generation, may not always have the same degree of entrepreneurial ness grows successfully, the foreign partner may acquire majority capability as the founding generation, but will hold their positions control through capital infusion or else buy out the local partner. because of their family membership. A similar situation may also apply in the case of two local companies, where the one has capital or other assets, and the other has technical expertise or market experience. The hope in such a case would be that the respective benefits that the two parties bring to the joint venture will be long-lasting, since they are complementary rather than competitive in their contributions. There are often challenges in the formation and operation of joint ventures, because of the very different cultural backgrounds and management styles of the prospective partners. Many of the major companies of the ASEAN region, even if listed on the local stock exchange, are family-dominated companies. The founding “patriarch” may still be active in decision-making, while the next generation may provide the operating management. The second, or third Foreign 100%-Owned Ventures (Bt. 1,128.5 bn) (30.2%)

Thai 100%-Owned Ventures (Bt. 1,093.7 bn) (29.3%)

Thai Investment (Bt. 1,654.6 bn) (44.3%)

in 100%-Owned & Joint Ventures: 2008-2013 (total investment: Bt. 3,733.3 billion)

Thai Joint Ventures (Bt. 560.9 bn) (15.0%)

Foreign Investment (Bt. 2,078.7 bn) (55.7%)

Foreign Joint Ventures (Bt. 950.2 bn) (25.5%)

Source: Board of Investment, Thailand

Learn more about Amata at www.amata.com

Such situations may create difficulties for an entering joint venture partner. The latter will most probably be a large, institutionalized and professionally managed company, with board members and assigned managers who are career specialists. The prospective market entrant will approach a joint venture with caution, insist on decision-making and management authority, and be cautious about who is appointed by the local partner to represent them in the joint venture. The “patriarch” may in many cases actually welcome the professional approach of the foreign partner. In the best interests of sustainability and profitability, it may be desired to find an excuse to remove family members or old retainers from sinecure jobs. Negotiating the deal may be tough, but the outcome may turn out to satisfy the aspirations of both sides. Limitations of foreign ownership Many of the jurisdictions of ASEAN place limits on foreign ownership, in many cases, depending on the type of business undertaken. Thus in Thailand, the Foreign Business Act identifies different types of business, with some sectors freely open to foreign control, some open dispending on specific permits, and some entirely forbidden for foreign control. However there are various devices for exemption, such as registration with the Board of Investment, or use of special treaty privileges. The trend throughout ASEAN is towards liberalisation, especially with the proliferation of trade agreements providing for reciprocal privileges. These are now becoming increasingly important to Thai firms as they mature towards external investment around the world. However many firms do still use the device of 51 per cent Thai, 49 per cent foreign joint ventures, with some or all of the 51 per cent Thai in the form of nominee status. Nominee share ownership is See Joint Ventures Page 2

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Amata Times

Q2 2014

Reaching the Summit with Amata

OTA Techno Park

They are attractive; come in a variety of shapes and sizes; and are ready for immediate occupancy. Amata Corporation and the Summit Group, a large Thai company, have created a joint venture, Amata Summit Ready Built Co., Ltd. (ASRB), wherein they have created Summit Ready Built Factories for potential Amata clients. At the present time, Amata Corporation clients occupy more than one hundred Ready Built factory buildings. Although most are Japanese companies, they come from countries around the globe. Bosch, a German multinational engineering and electronics company, has a subsidiary, Robert Bosch Thailand, located in a Ready Built factory at Amata Nakorn. The United States is represented by BorgWarner Thailand, a Thai subsidiary of a global company known primarily for its automotive powertrain products. The development, manufacture, and delivery of reusable transport containers and for folding or

day’s market minimizing risk is Amata Summit Ready Built ofan important consideration for fers facilities in several different many companies.” sizes. Initially, they even had duplex units with factories as small When asked what types of com- as 850 square meters. “These panies take the Ready Built ap- weren’t very popular,” Yamyim proach, she is quick to respond. explains, “so we quit offering “Many companies want to test them. Recently, there has been the market here in Thailand. an increase in the number of We are good for them because people asking for smaller facilithey can set up operations with ties, so we might have to reintroa minimum of hassle and a small duce the smaller units.” capital investment. If things go well for them, they can rent or “Our facilities range in size from rolling bulk storage containers is lease larger Ready Built facilities, 1,000 to 5,000 square meters, the business of Milford IBC, an or if they choose, purchase land but factories in the 1,000 to 2,000 square meter range are the Australian company. Magna Au- and build a factory.” most popular. But we are flextomotive Thailand, a subsidiary of a large Canadian automotive “We also have companies,” she ible,” she continues, “and we are part supplier and Ohlins Asia, a continues, “whose customers thinking of offering more prodleading manufacturer of parts for here in Thailand want them to ucts to our clients. We have a motorbikes, both occupy Ready have a presence in the country. client, for example, who would Built factories at Amata Nakorn. We are a perfect solution. They like to lease a Ready Built faccan easily set up office and a re- tory of 10,000 square meters, Janjira Yamyim, Managing Di- pair station in one of our Ready but we don’t have anything that rector of Amata Summit Ready Built facilities. If their customers large. He has agreed, however, to Built, is enthusiastic about what leave, they can easily and quickly using two 5,000-square-meter units that are adjacent to one the company has to offer. “We close down operations.” another. In the future, we anticiare often the best solution,” she says, “for companies that want “We also have a group of clients pate opening facilities as large as to move to Thailand. Using who simply don’t want to own 10,000 square meters, as that is a one of our factories saves time assets outside of their own coun- market into which we would like and minimizes investment, two try. Our Ready Built option is to expand.” important factors for many ideal for them as they can either Amata’s flexibility is also demcompanies. Let’s face it, in to- rent or lease the factory.” onstrated by OTA Techno Park, where one building hosts several small Japanese companies, with shared facilities like product display areas, meeting rooms, training rooms, and even a help desk with Japanese-speaking staff. Nearby are Ready Build facilities with manufacturing spaces as small as 320 square meters. OTA central shared facility ‘Display Area’ OTA represents small Japanese

companies in the Tokyo area, and Amata would like to create similar facilities for other regions of Japan.

Ms. Janjira Yamyim

As Managing Director of Amata Summit Ready Built, Janjira Yamyim is obviously enthusiastic about the company she heads. But her enthusiasm appears justified. With Thailand’s current political malaise and a slowing worldwide economy – especially in Japan, Amata’s largest source of clients – many companies are taking a slower and more conservative approach to expansion. Using the Ready Built factories created by Amata Summit Ready Built is an appealing option that makes good business sense. For more information, please contact Janjira Yamyim, MD of Amata Summit Ready Built Company, by email to janjira@amata.com or at the offices at Amata Nakorn in Chonburi, Tel. +66-(0)38-939-007.

Joint Ventures: A path to business prosperity From Page 1

technically illegal, but there are various ways in which the law may be bent but not broken. For U.S. entities, access to the U.S.Thailand Treaty of Amity allows majority foreign operators in most sectors. However, where land is to be acquired, under most circumstances, a majority Thai entity will be required, including for U.S. entities. Minority rights Joint venture partners will usually need more than simple reassurances that their rights will be protected, and some jurisdictions do provide general legal protection for minority rights.

In the case of Thailand, minority shareholder rights are somewhat more limited, but there are various provisions under the Civil and Commercial Code and under the Public Limited Companies Act for minority shareholder rights to be protected. Companies forming joint ventures do also usually have recourse to a detailed shareholder agreement specifying respective rights and liabilities of partners. However, this would constitute a contract between the parties. In the case of a dispute, it would require litigation to enforce partner rights. Any joint venture that has reached that point

of dissention is already on the rocks, and this rarely happens in practice except as a device to encourage one party to sell out to the other governance. Foreign companies joining together with local companies in joint ventures are increasingly at risk regarding compliance with the U.S. Foreign Corrupt Practices Act (1979) and, recently, the UK Bribery Act (2010). Despite all the assertions of ASEAN governments proclaiming their determination to eradicate all forms of corruption, and the efforts of various private organisations, such as Thailand’s

Institute of Directors, to form coalitions against corruption, good governance is not yet a dominant feature of ASEAN corporate practice. A local partner may therefore have to recognise that a foreign joint venture partner will require full observance of foreign legal standards. This may significantly inhibit business opportunities, especially regarding government-related contracts. A workable solution may be to provide for the joint venture to undertake business only on the basis of international governance standards, while leaving the local partner to undertake more entrepreneurial

activities independently. Financing Joint ventures need to plan their financial requirements well in advance. Requirements for finance, whether through capital or bank or inter-company loans, can become a point of contention for joint ventures. Sooner or later, joint ventures will probably need to increase capital, calling on the financial resources of the respective parties. In a situation where a 51/49 per cent equity is required, a 49 per cent foreign investor may be limited See Business prosperity Page 4

Amata Times

www.amata.com

Support services: Key to Amata’s success According to Aukkares Choochouy, Managing Director of Amata Facility Services Co., Ltd. (AFS), one of the keys to Amata Corporation’s success is the support it provides to companies with facilities at its industrial estates. “Some industrial estate operators,” he says, “simply sell land in Thailand’s government-established industrial zones. They act primarily as real estate agents and often don’t even have offices at the industrial estate. Other companies, like Amata, take a different approach.” At Amata, the reason for the difference is found in the vision Amata has of itself as a company. “Our mission is to build, maintain, and operate industrial estates,” Choochouy explains. “This is very different from simply providing a place for a company to build a factory. It means that we not only take steps to make life easier for our clients, we also provides support and services for about 1,000 companies from 27 different countries. Our purpose is to insure that they achieve success here in Thailand.”

is a big step for a company,” Choochouy continues. “There are not only technical, legal, and financial issues, there is also the human element of the impact the move has on managers and other expatriate employees. At Amata, we strive to minimize these impacts.” Much of the support comes from Amata subsidiaries, joint ventures, and nonprofit organizations that Amata has invited to operate on its estates. These include banks, restaurants, schools, housing, shopping centers, medical facilities, entertainment venues, and the like. These ventures operate independently of AFS, while AFS is a direct subsidiary that is 91% owned by Amata Corp.

“Our primary function,” Choochouy adds, “is to supply the maintenance services provided by Amata that are supported by an obligatory maintenance fee Amata charges its clients. We operate,” he continues, “primarily ‘outside the fence’ surrounding client companies. We do things like insuring roads within the estate are maintained; arranging for the “Creating a factory and offices overseas collection of garbage and trash; providing

Mr. Aukkares Choochouy

An invitation for ideas At Amata, we are building the future and continually searching for new ways to improve our existing sites. For most of the over 200,000 people working on our estates, the experience is much like working at any other place. There are morning rush hours and crowded buses trundling people to and from work. Children with laughing, well-scrubbed faces are being taken to and from school.

A closer look reveals that it is indeed an industrial park, but there is greenery and the dull gray monotony of most such places is absent. There are even shop-

AFS Security and Fire Department standby 24 hours a day

and maintaining green spaces; supplying The optional services primarily involve a fire department; and providing a secu- Amata moving ‘inside the fence’ to prority system for the entire estate.” vide support services. A good example is utilizing firefighters at its Amata Nakorn In the world outside of Amata’s indus- estate to train company employees to trial estates, much of what AFS does is fight and help prevent fires. “Thai law,” performed by government entities. “The Choochouy explains, ‘requires that forty reason we provide these services ourselves percent of a company’s staff be trained is connected with reliability and the annually to help combat fires and 100 quality of service,” Choochouy explains. percent are trained for basic fire evacu“Our clients demand reliability, so AFS ation. We have taught our on-site fireprovides these services for them. Unlike fighters to do this important training. It government-provided services, Amata makes them feel more important, prohas a vested interested in seeing that ser- vides them with more to do than simply vices are dependable and of high quality.” wait for a fire, and helps our clients meet requirements established by the Thai Although the maintenance fee consti- government. It is a win-win situation for tutes only a part of Amata’s support everyone.” operations income, it is the source of the budget for AFS. “We would like to Another example of AFS moving inside enlarge our budget and the scope of our the fence is taking care of green areas operations,” Choochouy continues, “but within or immediately surrounding a we really can’t increase our maintenance factory. AFS is currently responsible for fees, as it wouldn’t be acceptable to our maintaining gardens and green areas clients. What we would like to do is to within the public spaces of Amata’s esdevelop AFS activities that are optional. tates. Choochouy has now developed a We believe these additional services are program where AFS contractors will do appealing to many of our clients and make Amata a more attractive option” See Key to success Page 4

complete. We actively search for ideas and for new business partners to add color and additional options to our existing communities. These new initiatives can involve anything found in a typical thriving town: sports, recreation, shopping, educational opportunities, technological innovations – you name it.

ping malls and other places of business. At lunch hour people can be seen rushing to the bank or getting a quick bite to eat at a cozy restaurant. Busy moms can be seen shopping at the supermarket and chatting with one another over a cup of coffee. Those with time to spare might even fit in a round of golf at the Amata Let us know what you think; inspire us Spring Country Club. with your ideas. The task of Business Development Team is to find the right This is the environment we at Amata partners so that we can share ideas and have created. We have developed the visions. If you think that you have somefoundation, but our Business Develop- thing: a product, a service a technological ment Team is always looking for new innovation, or something completely difways to make the picture better and more ferent and original, talk with us.

Our Business Development Team can be reached by contacting Vatana Supornbaibul, Chief Business Officer, vatana@amata.com.

Amata Times

Q2 2014

Support Services: Key to Amata’s success From Page 3

the same at the factories and offices of client companies. Many clients find using AFS contractors easier than doing it themselves and better than hiring a company with which they are not familiar. The clients are acquainted with AFS, and the company is located right on the Amata Nakorn estate.

cover industrial waste, we being an array of support services lieve there would be a signifi- designed to meet the needs of cant increase in the amount and client companies. scope of what we could recycle.” For more information, please As can be seen, Amata Corpora- contact Aukkares Choochouy, tion does more than rent, lease, MD of Amata Facility Serand sell property for the crevices Company, by email to ation of factories and offices. It aukkares@amata.com or call to creates, maintains, and operates the offices at Amata Nakorn in industrial estates – an on-going Chonburi, Tel. +66-(0)38-939One of the key services provided endeavor that requires provid- 007. by AFS is arranging for the collection of garbage and trash at Amata’s estates. At the present time, this involves only collecting trash from offices. Choochouy is eager to expand this service to include industrial waste from factory operations. “We believe this would be appealing to our clients because it would insure that collection services were dependable and respectful of the environment. We currently recycle plastics, paper, and other products from office waste. If this were enlarged to Waste recycling at AFS waste transfer station

Joint Ventures: A path to business prosperity From Page 2

to a proportionate capital increase. If the local party is unable to fund a capital increase, then that party would face a diminution of equity proportion, and this would mean inhibiting the development of the joint venture. The alternative of a shareholder loan or bank borrowing may require guarantees, for which, prior understandings are necessary to define the obligations of the partners. Management Foreign shareholders usually require prior understanding regarding management responsibilities, including director representation, and veto rights. In Vietnam, protection of minority Vietnamese joint venture partner rights, along with powers of veto have caused many management problems in the past, although in Thailand, such disputes have been less prevalent, partly because Thai investors have greater financial strength and less need for legal protection. Joint Ventures in Thailand Over the six-year period from 2008 to 2013, nearly 10,000 projects were approved by the Board of Investment,

with over 3,700 billion baht in investment. Nearly 60 per cent of projects included foreign investment. On the foreign investment side, over 3,700 projects were 100 per cent foreign invested with nearly 1,130 billion baht in capital, equal to 54 per cent of foreign capital. The remaining 950 billion baht of foreign capital was invested in joint ventures, altogether some 2,500 projects.

equally divided between Thai and foreign (1,100 billion baht or 49 per cent Thai, 1,130 billion baht or 51 per cent foreign). For joint ventures, foreign investment is significantly higher (560 billion baht or 37 per cent Thai, and 950 billion baht or 63 per cent foreign).

Therefore, although both Thai and foreign investors prefer to invest in 100 per cent ventures rather than joint ventures, foreigners are more inclined toThai investors contributed over wards joint ventures. 1,650 billion baht to Board of Investment promoted ventures Conclusion: the case for joint during 2008 to 2013. That rep- ventures in Thailand resented 44 per cent of total in- As Thailand increasingly envestment. Of Thai investment, ters trade agreements and other nearly 1,100 billion baht was multi-lateral and bi-lateral pacts, invested in 100 per cent Thai- the barriers against whollyowned projects. This was equal owned foreign ventures are to 66 per cent of Thai invest- coming down, and it is becomment, in over 3,500 projects. ing easier for foreign investors to acquire total ownership if they Accordingly, in terms of the so desire. overall foreign and local Thai investment situation, over 2,200 However the attractions of joint billion baht was invested into ventures remain strong. On the wholly owned investments (60 foreign side, market entry and per cent of total investment) and marketing skills are best ob1,500 billion baht was invested tained from Thai practitioners, into joint ventures (40 per cent and such practitioners often preof investment). The 100 per fer to work with joint ventures cent investments are almost where the corporate culture is

Amata Services Amata Water Management – Amata Water Company is a fullyowned subsidiary of Amata Corp. that provides quality industrial water supplies and wastewater management. Amata Nakorn is home to a 16-million-cubic-meter reservoir, while Amata City has a 6-million-cubic-meter reservoir. In Vietnam, the Dong Nai Water Supply Company has a capacity of 30,000 cubic meters per day, while wastewater treatment can be done at a capacity of 10,000 cubic meters per day. Amata Facility Service – This service is responsible for security traffic, road safety, road- and green-area maintenance and upkeep, as well as support services. Amata Summit Ready Built – Amata Summit Ready Built was established in 2004 to provide functional, state-of-the-art, readybuilt factories for lease or sale. The buildings range from 850 to 5,000 square meters. Amata B.Grimm Power – Founded in 1995, Amata B.Grimm Power Limited companies are joint-venture power development and holding companies that provide reliable, stable, clean, and competitively priced electricity (and steam) to the Electricity Generating Authority of Thailand (EGAT) under the Small Power Producer (SPP) program. Amata B.Grimm Power has investments in all three Amata Industrial Estates in both Thailand and Vietnam, and all excess power supplies, including 30 tons/hour of steam, are sold to companies within the industrial parks. With a recent US$1.6 billion investment, Amata has completed two new 130-MW plants that are now operational, and it plans to build and operate eight more 125-to-130-MW plants by 2020. Amata Natural Gas Distribution – This is a joint venture with PTT NGD that provides a steady supply of natural gas to factories in Amata Nakorn and Amata City. VIA Logistics – VIA Logistics is a joint venture among Vantec Corporation, Itochu Management, and Amata that provides warehousing, transportation, delivery, and customs-clearance services. Vibharam (Amata Nakorn) Hospital – Currently under construction next to the Bangna-Trad highway entrance at the Amata Nakorn Estate, this healthcare facility will provide general treatment of injuries and illness, physical checkup services, and consultation; health and safety training on occupational health; and specialist services. The nine-story, 130-bed hospital is scheduled to open in 2014. Thai-Chinese Rayong Industrial Realty Development – Established in 2012, this new venture develops industrial estates, land sales and leases, and ready-built factories for investors from mainland China. Strategic Engineering and Advance Logistics Services – Amata’s newest joint venture provides engineering and logistics services to Amata’s clients in our Industrial Estates. These services include the design and installation of production processes in factories; the design, installation, repair, and maintenance of machines, engines, tools, and equipment; the packaging and manufacturing of all types of products; and the management of all inbound and outbound freight, containers, and packages via ground, sea, and air. Amata Mansion and Service – Established in 1991, Amata Mansion operates short-term and long-term serviced apartments in Amata Nakorn and operates the ‘Green Grass’ Thai restaurant and catering service at Amata Nakorn. Other Strategic Partnerships – Amata continues to look for new ways to enhance our facilities and our services, so we are always open to new ideas that could develop into partnerships or joint ventures. more familiar than in totally foreign companies. There can also be government relations and cost advantages in having Thai partners. For the Thai side of joint ventures, foreign joint ventures offer significant advantages: notably the acquisition of management skills, technology transfer, access to capital and brands and, for export companies, overseas market access. It is also usually easier to recruit and retain skilled

local staff if a foreign entity is involved. There is certainly a need for cultural flexibility. Traditional family-style managements have to make way for international management styles. However this is inevitable, whether for 100 per cent or for joint ventures. As Thai companies move overseas, likewise the joint venture is likely to be the best way to proceed, and for much the same reasons.