Eastern Seaboard Report April 2015 – Prepared by Mark Bowling, Chairman ESB
Hemaraj Land and Development Plc (HEMRAJ), a leading industrial estate developer, expects better performance this year with a focus on utilities and the non-automotive sector. President and chief executive David Nardone said the company's performance last year fell short of expectations because the Board of Investment failed to grant investment privileges at a time when the country's economy was ailing. He said continued growth in nonautomotive categories such as consumer goods, electronics and petrochemicals should offset falling output in heavy industry and warehousing. Last year, the non-automotive sector accounted for 75% of total income at Hemaraj's industrial estates. The company expects the proportion to be at least 50% this year. Hemaraj projects sales of 1,400 rai at industrial estates this year, compared with 665 rai in 2014. The company sold 186 rai in the first quarter. Sales are expected to increase in the coming months. The company also plans to sell non-core assets, such as the UM Tower and 253 rai of land on Koh Lan near Pattaya, to Hemaraj's real estate investment trust (REIT) this year. Farm truck maker Siam Kubota Corporation (SKC) is focusing on the construction sector, where it sees huge potential for residential development in Greater Bangkok in line with mass-transit plans. "Once the government's massive investment in infrastructure kicks off, it will drive massive demand for construction machinery, particularly excavators," Senior executive vice-president Opart Dhanvarjor said. Mr Opart expects overall sales of mini excavators weighing less than eight tonnes will grow by 20% this year from 4,500 last year. The company operates factories at Pathum Thani's Nava Nakorn Industrial Park and Chon Buri's Amata Nakorn Industrial Estate, with annual production of 240,000 and 80,000 units, respectively. The Federation of Thai Industries (FTI) is set to cut its forecast for domestic car sales after a poor first-quarter performance. Surapong Paisitpatanapong, spokesman for the FTI's automotive industry club, said the country's sales would likely drop for a third straight year — by about 10% from last year's 881,832 vehicles — as the overall economy struggled to recover. The FTI in January forecast a full-year increase in car production of 14.4% this year to 2.15 million vehicles. Of that, 1.2 million will be exported, up by 6.4% from last year, and 950,000 sold locally, up by 7.7%. The Industrial Works Department plans to develop at least 10 eco-industrial towns by 2018 as part of its goal to make Thailand a green industrial society. Director-general Pasu Loharjun said his department finished drafting master plans in fiscal 2014 for the first five, in Rayong, Samut Prakan, Samut Sakhon, Chachoengsao and Prachin Buri provinces. For fiscal 2015, additional master plans for five more eco-industrial towns are being drawn up for Chon Buri, Nakhon Pathom, Pathum Thani, Ayutthaya and Surat Thani provinces. Mr Pasu said his department would discuss the first five master plans with the relevant provincial governors and related government agencies to help implement the plans, which will cover physical, economic, social, environmental and management areas. "After the master plans are implemented, the private sector should see opportunities arising from green industrial th
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development," he said. The main objective for eco-industrial town development is urban and industrial sustainability. The Customs Department has sought 13.46 billion baht in additional tariffs and taxes from Toyota Motor Thailand Co and Isuzu Motors Co (Thailand) on parts imports for their assembly lines in Thailand. The department has sent Toyota a bill to collect 11.67 billion baht more for parts imported from Japan between 2010 and 2012 for the production of its Prius hybrid car in Thailand based on 224 invoices, said Somchai Sujjapongse, the department’s director-general. Of the amount, 7.6 billion baht was import duty, 2.02 billion baht excise taxes, 1.82 billion baht value-added tax (VAT) and 216 million baht local tax. The Toyota decision hinged mainly on an interpretation of a clause in the free trade agreement between Thailand and Japan. Under the pact, carmakers who receive approval before importing components for completely knocked-down (CKD) vehicles pay a 30% tax rate on the parts. Toyota assembles Prius cars at its factory in Chachoengsao. The long-touted automotive testing centre is poised to get off the ground with the Industry Ministry, in partnership with Thailand Automotive Industry (TAI), committing five billion baht to set up the centre in Chachoengsao province. All investment will come from the ministry's fiscal budget, according to TAI president Vichai Jirathiyut. Thailand's automotive industry has long called on the government to establish a regional testing centre aimed at promoting Thailand as an Asean production hub for innovative vehicles. Under the plan, the three proposed locations for the testing centre, which will cover at least 200 rai, are Gateway City, Amata City and Hemaraj industrial estates on the Eastern Seaboard, as they are close to car assembly plants. Charoen Pokphand Group has told the government that is interested in building a highspeed train route from Bangkok to Rayong on the country's Eastern Seaboard. Executives of Thailand's largest agro business conglomerate met Transport Minister Prajin Juntong on Thursday to lobby for the construction and operation of the 194 kilometre train line, which will cost an estimated 150 billion baht. They said the project would be a joint venture with Citic Construction based in Beijing and HNA Group of Hainan. ACM Prajin said CP was given permission to study the line but said the project remained open for other competitors. Thai Beverage Plc (ThaiBev) has shown interest in another high-speed line from Bangkok to Hua Hin, he added. Danieli Co, an Italy-based supplier of plants and equipment to the metals industry, plans to invest €10 million (348 million baht) in Thailand to capitalise on growing demand in the region. Thailand is a production base supplying products to other Asean members including Myanmar, Malaysia, Vietnam, Indonesia and Cambodia, said chief executive Giacomo Mareschi Danieli. "We use our facility in Rayong as a production base since it is a good location being in the centre of the region. It also has sophisticated logistics," he said. "The planned investment this year will go on new equipment and machinery to serve growing demand from customers wishing to expand their businesses and plants," he said. Thailand’s Eastern Seaboard area is gearing up for 91 development projects worth an estimated total of more than THB100 billion (more than USD3 billion). The Eastern Seaboard Development Committee, which focuses on the country’s prime industrial area, is headed by the Transport Minister Prajin Juntong. It was formed by the Thai junta in order to deal with th
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the extensive environmental problems in the area whilst integrating transport and logistic systems to serve the rising demand on the area from the ASEAN Economic Community, noted Deal Street Asia. According to a source within the Transport Ministry, the approval of the development plans will serve to strengthen and integrate the currently entangled logistical system of the area. Prachya Samalapa, Thai Chamber of Commerce Chairman in the Eastern Seaboard Development Committee, agrees that, ‘we need to lift up the standard of living and reduce the pollution from factories as soon as possible. Meanwhile we have to improve the infrastructure to serve the increasing number of people who move to live and work there too’, according to Deal Street Asia. Of the 91 projects approved, 18 are related to water transportation (in particular to connect the two ports of Laem Chabang in Chonburi and Map Ta Phut in Rayong), eight concern train logistics and 65 relate to developing the network of land logistics. One such project is a proposal to build a motorway between Pattaya and Map Ta Phut, according to the Transport Ministry source, which will complete in 2018 and require THB20.2 billion (USD619 million) of investment. SET-listed WHA Corporation (WHA) has bought 92.88% of Hemaraj Land and Development Plc (HEMRAJ), aiming to expand its logistics and utilities businesses, says the company's chief executive. The takeover is expected to support WHA becoming the biggest build-tosuit warehouse operator in the region, said analysts. WHA's president and chief executive Somyos Anantaprayoon said it spent 9 billion baht, or around 4.50 baht per share, to obtain a majority stake in Hemaraj. The company also targets becoming the leading provider of logistics, industrial park development and utilities services for the entire region. "The move should help our company effectively earn more revenue as well as provide better services to our customers," he said. Love it or loathe it Songkran revellers found themselves in gridlocked traffic and relentless heat, but it didn’t dampen the enthusiasm of Pattaya-area residents and tourists as they splashed their way to the end of another well-attended Songkran festival. The “wan lai” water-throwing finales in Naklua April 18, and Pattaya April 19, saw streets mobbed with soggy, powder-covered revelers interspersed with music and a smattering of religious rites. On April 18th was the official wan lai in Naklua and North Pattaya area where a religious “rod nam dam hua” ceremony was held, chaired by former Culture Minister Sonthaya Kunplome and top area officials. Thirty seniors, including deputy mayors and city council members, were invited to join the ceremony which saw scented water gently poured over palms in exchange for New Year’s blessings at Lan Po Public Park. Thousands of residents participated in the traditional water pouring ceremony while they asked the leaders of the city for blessings. Modern Songkran tradition - complete with drenching by water guns and buckets - followed in Naklua and, the next day, on Beach Road in Pattaya. Water trucks were provided by the Provincial Waterworks Authority.
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The following news items kindly provided by SATCC
Declining demand for watches is pushing C. Thong Panich Co to expand further into the hotel business. The authorised distributor of Citizen watches will spend 1.5 billion baht to build a hotel in Pattaya this year. Managing director Vipavan Mahadumrongkul said the five-star Renaissance Pattaya Hotel & Resort is now under construction on a 17-rai plot on Na Jomtien beach in Pattaya. The low-rise hotel will have 252 rooms and be managed by the Marriott chain. The company plans to open the hotel on December 15, 2016. Zhongli Talesun Solar (Changshu, China) has begun construction on a new factory for the manufacture of solar cells and PV modules in Thailand. The production plant is being built at the Thai-China Industrial Park in Rayong. The city lies some 200 kilometers from Bangkok, on the Gulf of Thailand. The annual production capacity of the new plant is an initial 500 megawatt for both solar cells and modules. The Department of Highways will sell terms for the bidding contest of the Pattaya-Map Ta Phut motorway construction and the new route should be completed in four years. The Department of Highways will sell bidding-contest terms for the Pattaya-Map Ta Phut motorway this month with hopes of having the new route open in four years. Chusak Gaywee, director-general of the department, said on Tuesday that the electronic auction should happen either in April or May, and construction should start in the fourth quarter of this year. Completion likely would take two-and-a-half years. “The construction of this motorway will be paid with the Motorway Fund raised from collected tolls, so there will not be a budgetary problem and project implementation can start at once,” he said. He estimated the cost of the 32-kilometre-long motorway at 14 billion baht, including 1.4 billion baht for land expropriation. The four-lane highway will stretch from the Chon Buri-Pattaya motorway at its intersection with Highway 36, the Pattaya-Rayong Highway. Then it will pass Bang Lamung and Sattahip districts and reach Ban Chang district of Rayong where it will adjoin Highway 3, Sukhumvit Road. Mr Chusak also said his department was improving the 51km Chon Buri-Pattaya motorway. The work is set for completion this year and the department will then collect tolls there. The Chon Buri-Pattaya motorway is part of the Bangkok-Map Ta Phut motorway. CPN has eight new projects which have been revealed and are now in the process of construction; four of which will be opened in 2015 (Central Rayong, Central Westgate Bang Yai, Central East Ville, and CentralFestival Phuket 1), two will be opened in 2016 (Central Nakhonratchasima and Central Nakhon Si Thammarat More than half the units in condominium projects launched in Chon Buri province since the beginning of 2012 are still waiting to be sold, following a sharp demand drop-off in 2014 and so far this year, particularly on the part of Russian buyers. Russians are the province's main customer segment, especially in Pattaya district, but more than half of those previously committed to buying have decided over the past 20 months to delay or cancel their purchases following the ruble's massive devaluation from 30 per US dollar to 60. A survey carried out by The Nation early found there were 87 condominium launches worth over Bt200 billion combined and comprising 48,683 unit in Chon Buri province since the start of 2012 through to the end of March this year, with some 65 per cent or 31,914 of the units located in Pattaya
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BoI sees strong interest in Korea roadshow South Koreans are keen to invest in this country's information and communications technology, alternative energy, and railway network, according to the Board of Investment of Thailand. A BOI team led by Industry Minister Chakramon Phasukavanich held a roadshow in South Korea from Wednesday to Friday last week. BOI acting secretary-general Hirunya Suchinai said more than 250 Korean investors attended a BOI seminar. They inquired about details of tax privileges in ICT investment and special economic zones. They are particularly interested in Thailand's railway projects, environment-friendly industries, auto parts, and entertainment content. Chakramon said Korean steel and railway-stock companies were keen to take part in either the BangkokPattaya rail project or the Bangkok-Hua Hin route. CENTRAL RESTAURANTS GROUP (CRG) will focus on expanding its franchised casual dining Japanese rice bowl restaurant Yoshinoya in Thailand over the next three years, before exploring opportunities in other Asean markets, particularly Laos. The company expects to increase significantly the number of Yoshinoya restaurants in the Kingdom from 18 currently to 30 within the next three years. Three new Yoshinoya restaurants will be opened in Bangkok and neighbouring cities this year. CRG currently has 12 franchised restaurant brands in its portfolio, including Yoshinoya. The company has operated Yoshinoya restaurants in Thailand for more than three years. Thailand now has 18 Yoshinoya restaurants, 14 of which are in Bangkok, and the remainder in Chiang Mai, Chon Buri and Sriracha. Pattaya-Cha-am-Hua Hin ferry project revived. Transport Minister Prajin Juntong said a ferry service would stimulate tourism, the economy and trade between the east and west coasts of the Gulf of Thailand, shortening travel time to about three hours from the current six to seven hours. He said the project had been under study since 2012 and was stalled. Mineral exploration to begin on military land. The Primary Industries and Mines Department will next month begin exploring mineral resources locked up on military land, with early assessments indicating promising quartz and iron ore reserves. Department director-general Surapong Chiangthong said the Defence Ministry is cooperating with the exploration. It is believed expected there is more than one million tonnes of quartz in military land in Kanchanaburi. There are also minerals in army land in Ratchaburi, Phetchaburi and Suphan Buri. Quartz mining offers the prospect of large value added revenue, he said. Raw quartz is priced around 1,500 baht a tonne, but metal grade quartz commands about 50,000 baht a tonne. The value would increase to about 900,000 baht a tonne if it were processed into solar grade, although 80% of the mass would be lost in the process. There are two metal grade quartz facilities in Thailand. One foreign firm has invested more than 50 billion baht in developing a solar grade quartz plant in Chon Buri, with production scheduled in the next two years. The factory would produce sufficient solar cells for the production of 500 megawatts of electricity each year, at a price competitive with solar cells imported from China.Mr Surapong said if cooperation with the army leads to new quartz mining it will boost foreign firms' confidence in the supply of raw material and encourage them to invest in solar cell factories in Thailand. In its search for iron, the department is concentrating on military land on Thub Khwai mountain in Lop Buri, where high quality iron ore reserves are believed to total 60-80 million
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tonnes. The price of iron ore is currently at a low level, about 1,200 baht a tonne, but when demand picks up it could rise to 2,500-3,000 baht a tonne, he said. Deputy Transport Minister Arkhom Termpittayapaisith on Wednesday unveiled the proposal after he attended a meeting on Thai-Japanese rail system development cooperation in Japan. Mr Arkhom said he had held talks with Hiroshi Muto, Japan's Vice-Minister of Land, Infrastructure and Tourism. Mr Arkhom said he had asked Japan to conduct a feasibility study on the rail route linking the west with the east of Thailand.He said the State Railway of Thailand (SRT) had conducted a study of part of the route, from Mae Sot in Tak to Phitsanulok. He said Thailand also asked Japan to send experts who can give advice on the rail network system to ensure the new route will not overlap with the existing one covering the eastern part of Thailand. Now, there are several routes covering Kaeng Khoi in Saraburi to the Laem Chabang port in Chon Buri, to Map Ta Phut in Rayong. Mr Arkhom said Thailand and Japan have agreed on a joint development for two rail projects comprising a high-speed train link and a double-track rail link. Memoranda of understanding for the investment projects are expected to be signed by both countries next month. Japan had decided to invest with the government in two rail projects: a high-speed train project linking Bangkok to Chiang Mai, covering a total distance of 670km; and a double track rail link on the Kanchanaburi-Bangkok-AranyaprathetLaem Chabang route, covering a total distance of 574km, Mr Arkhom said. The high-speed train will run at a speed of 300km an hour, he added. The Transport Ministry is expected to sign a cooperation agreement with the Royal Thai Navy later this month to jointly develop the navy's U-Tapao airport in Rayong province for commercial use. Transport Minister Prajin Juntong said two panels, chaired by transport permanent secretary Soithip Traisuth, will be set up to oversee the development process as soon as the memorandum of cooperation is signed. The Dow Chemical Company yesterday officially inaugurated its new state-of-the-art polyether polyols plant at Asia Industrial Estate, Rayong, as part of its strategy of continued growth in Asia-Pacific. The plant, which recently started operation, has a production capacity of up to 200,000 tonnes per year, adding to the 25,000 tonnes at Dow's facility in Map Ta Phut Industrial Estate, also in Rayong. Also, The Thai unit of Michigan-based Dow Chemical Co plans to start its new polyester polyol plant in the eastern province of Rayong next year. Caterpillar will move part of its operation to Thailand which will result in a reduction of its Burnie operation. "After completing a strategic review of its underground manufacturing operations Caterpillar Inc informed employees today that it will transition its hard rock vehicle operations from Burnie, Australia to Rayong.
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British Chamber of Commerce Thailand, 7 Floor 208 Wireless Road, Lumpini, Pathumwan, Bangkok 10330, Thailand Tel: 038 427 771 Fax: 038 427 772 Email: mark.bowling@colliers.com www.bccthai.com