Eastern seaboard report may 2017

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Eastern Seaboard Report May 2017 – Prepared by Mark Bowling, Chairman BCCT Eastern Seaboard •

B.Grimm Power opens co-generation power plant in Chon Buri B.Grimm Power Pcl, a leading private power producer, yesterday officially opened its latest co-generation power plant, B.Grimm Power WHA1 (BPWHA1), at Hemaraj Industrial Estate in Chon Buri province. The company expects the plant to strengthen its leading position in the Southeast Asian market. The move also strengthens investors‘ confidence in its initial public offering (IPO) tentatively scheduled for the third quarter of this year. General Paibul Koomchaya, a member of the Privy Council, presided over the plant‘s opening ceremony. KNM Group Bhd has bagged a RM159 million contract to undertake engineering, procurement, construction and commissioning (EPCC) works for the 300,000-litre per day Impress ethanol plant — expansion (IEL Phase 2) project in Chachaengsao Province, Thailand. In a filing with Bursa Malaysia today, KNM said its wholly-owned subsidiary KNM Process Systems Sdn Bhd (KNMPS) and its 74%-owned subsidiary KNM Projects (Thailand) Co Ltd (KNMPT) have collectively secured the contract from Thailand’s Impress Ethanol Co Ltd (IEL). IEL is a manufacturer and distributor of alcohol/ethanol or fuel from agricultural products and it is effectively a 72%-owned subsidiary of KNM. The construction duration of the IEL Phase 2 project is about 18 months. Ticon Logistics Park (TPark), a developer of logistics parks and ready-built warehouses, expects the government's ambitious Eastern Economic Corridor (EEC) project to spur massive demand for warehouses in Chon Buri, Rayong and Chachoengsao provinces. General manager Tan Jitapuntkul said EEC development is a vital strategy to boost the country's industrial sector, which was cloudy during 2014-2016 because of poor economic sentiment. "While the three provinces are already an industrial area, they are being affected by the country's overall poor economy," he said. "Once the EEC law comes into force and the new related infrastructure projects get off the ground, I forecast the EEC will draw more investment and logistics flows into them." The EEC development plan was approved by the cabinet last June. The corridor is intended to be a special zone accommodating investment in 10 targeted industries promoted as clusters by the government. The government aims to attract investment worth 1.5 trillion baht a year during the first five years of the EEC, for which 100 billion is slated for the 10 targeted industries. The double-track rail project worth 64.3 billion baht linking Laem Chabang, Map Ta Phut and Sattahip ports to the Eastern Economic Corridor (EEC) is scheduled to go before the EEC Policy Committee for approval this month. According to Kanit Sangsubhan, director of the Eastern Economic Corridor Office, the double-track British Chamber of Commerce Thailand, 7th Floor 208 Wireless Road, Lumpini, Pathumwan, Bangkok 10330, Thailand Tel: 085 2828 120 Email: mwbowling1970@gmail.com www.bccthai.com


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rail network linking the three key ports with industrial clusters is one of four urgent EEC infrastructure projects that the government is eager to open bids within this year. Other urgent projects include the 158-billion-baht high-speed train from Bangkok to Rayong, linking Don Mueang, Suvarnabhumi and U-tapao airports, another double-track railway in the area, and the third phase of the Laem Chabang deep-sea port. A feasibility study on the Bangkok-Rayong high-speed rail project is expected to be completed in August, and will be developed under the public-private partnership (PPP) programme. Japan and China are keen to bid for the Bangkok-Rayong high-speed development project. The investment includes 8 billion baht worth to build the second runway of U-tapao airport, expected to be completed in three years. The government's bold plans for the Eastern Economic Corridor have opened up opportunities for property developers and investors, with Sri Racha in Chon Buri province being the brightest spot. Japanese nationals are the largest group of expatriates in Thailand with a population of 36,000. Apart from Bangkok, where half of all Japanese expatriates are living, Sri Racha in Chon Buri province is the second capital for them. The industrial development centre in the Eastern Seaboard has created many blue- and white-collar jobs for workers, and many expatriates who are employed in the Japanese manufacturing plants in the region. Sri Racha has grown to become a preferred area for many Japanese expatriates, mainly because it offers convenient access to their workplace while not being far from Bangkok or Pattaya. The established Japanese community in Sri Racha is similar to the Japanese community in the Sukhumvit-Thong Lor area because Sri Racha is equipped with Japanese-style supermarkets and community malls like Aeon and J-Park and it serves as the second location of the Thai-Japanese Association School. Unlike other groups of foreign executives, the Japanese expatriates in Thailand prefer to live in serviced apartments where facilities and hotel-like services are provided rather than rent condominium units and manage household chores on their own. This is partly because most Japanese expats stay for less than five years and want a hassle-free, fully serviced living experience during their time in Thailand. The surge in industrial land sales and the new factories that have opened as a result have driven demand for serviced apartments. Developers have responded by building more supply and, as a result, the Sri Racha market has witnessed a rapid growth of serviced apartment supply -- most of which was completed by the end of 2013. The supply surged by almost 80% to more than 3,600 units. Continental Tyres Thailand, the local unit of the German tyre maker, has set a new milestone to become one of the top three international tyre brands in the Thai market by 2025, boosted by a new plant in Rayong. General manager Sirivan Koo-amphorn said the Rayong plant is set to begin operations in early 2019. According to the Thai Automobile Tyre Manufacturers Association, international tyre brands in Thailand include Bridgestone and Yokohama of Japan, Michelin of France, Goodyear from the US and Dunlop, owned by Japan's Sumitomo Rubber. All brands operate their own local manufacturing facilities. "Continental has only a 3% market share," Ms Sirivan said. "I'm drawing the company's future footprint in Thailand in line with the global company's Vision 2025, aimed at expanding and balancing the global manufacturing footprint to better serve customers in all regions." Continental AG announced earlier this year that it had chosen Rayong to build a British Chamber of Commerce Thailand, 7th Floor 208 Wireless Road, Lumpini, Pathumwan, Bangkok 10330, Thailand Tel: 085 2828 120 Email: mwbowling1970@gmail.com www.bccthai.com


greenfield tyre plant for passenger cars, pledging a €250 million (9.46 billion baht) investment and 900 new jobs. In the first phase, investment in the new Rayong plant will amount to €250 million, with planned production of 4 million tyres for passenger cars and light trucks. The site for Continental's tyre plant in Rayong province meets all of the company's requirements: it is close to targeted markets and customers, offers good infrastructure and is only 140 kilometres from Bangkok. The location offers access to the deep-sea port in Laem Chabang, which is 60km away, and proximity to technical universities. The site is 750,000 square metres, potentially allowing capacity expansion of up to 25 million tyres a year. German automaker Daimler Commercial Vehicles Thailand is set to invest in a truck assembly facility in Chon Buri after ending a seven-year-long manufacturing relationship with Hong Kong-listed Tan Chong International Ltd. Chief executive Sascha Ricanek said yesterday the company will invest in production infrastructure while hiring subcontractors to assemble Fuso trucks at the facility in Laem Chabang district. Production is expected to start by November with an annual capacity of 3,000 trucks. The new production line will focus only on the Thai market. Fuso was owned by Japan's Mitsubishi Fuso Truck and Bus Corporation (MFTBC). Stuttgart-based Daimler AG acquired 89.3% of MFTBC in 2005, while Mitsubishi group companies own 10.7%. Japan has pledged to help restructure Thailand's industries and upgrade both large and small-scale enterprises to meet the "Thailand 4.0" initiative, which focuses on innovation and technology to foster a more value-based economy. Industry Minister Uttama Savanayana signed a memorandum of understanding with Japan's Ministry of Economy, Trade and Industry (Meti) yesterday on cooperation in restructuring Thai industry. Under the MoU, Japan will focus on helping to upgrade 10 targeted industries the government is promoting as clusters in the Eastern Economic Corridor (EEC) outside Bangkok. The two countries will also work together to promote "global sourcing" in a bid to ease production costs for both Thai and Japanese companies, Mr Uttama said. Japan and Thailand are set to revise a free-trade pact under the Japan-Thailand Economic Partnership Agreement (JTEPA) to cover cooperation on innovation, artificial intelligence and the Internet of Things (IoT). According to Deputy Prime Minister Somkid Jatusripitak, who met Japan's highranking officials led by Yoshihide Suga, chief cabinet secretary, and Nobuo Kishi, State Minister for Foreign Affairs, the 10-year-old trade pact needs to be revised. Since the government unveiled its investment privileges for electric vehicles in late March, several carmakers are keen to invest a combined 20 billion baht in making EVs in Thailand, according to the Thailand Automotive Institute. Acting president Nattapol Rangsitpol said both existing manufacturers and newcomers are interested in the government's EV promotional privileges, which will be open for applications during 2017-18. He declined to disclose potential manufacturers' names or the type of EVs, saying only that each maker may unveil its own production plan while applying for Board of Investment (BoI) privileges. The BoI in March approved promotional privileges for EVs, including tax holidays of five to eight years. The privileges focus on production of hybrid electric vehicles (HEVs), plug-in hybrid electric vehicles (PHEVs) and battery electric vehicles (BEVs). The promotions include passenger cars, pickups and buses, with different privileges based on production British Chamber of Commerce Thailand, 7th Floor 208 Wireless Road, Lumpini, Pathumwan, Bangkok 10330, Thailand Tel: 085 2828 120 Email: mwbowling1970@gmail.com www.bccthai.com


technology. HEVs are entitled to a tariff exemption for imported machinery, while PHEV investment is eligible for a corporate income tax exemption for three years and import tariff exemptions on machinery. The automotive industry is one of the 10 targeted industries the government is ambitiously promoting as clusters at the much-touted Eastern Economic Corridor (EEC) which spans Chon Buri, Rayong and Chachoengsao provinces.

Final testing is underway on the 837-million-baht Central Road bypass tunnel, but when it will open remains anyone’s guess. Somchai Panpao, an architect on the Sukhumvit Road project, said June 2 that construction is complete, but security, lighting and drainage systems are still being tested. Deputy Mayor Bandit Khunajak said May 30 that the decision on when the tunnel will open is up to the contractors and the Department of Rural Roads. Once they are certain all systems are working perfectly, they will give the green light. The tunnel is 470 meters wide and 1.9 kilometers long and is Thailand’s longest underpass. Fully packed with technology, closed-circuit cameras are installed throughout to prevent crime, and to provide aid during emergencies. There are two smart CCTV cameras that will send an emergency signal if they detect any collisions. Security staff will be on standby around the clock.

Large sections of Bali Hai Pier will be closed for construction July 10, with speedboat operators and even scuba diving boats relocated to the beach. Maj. Gen. Popanan Lueng-panuwat, head of the National Council for Peace and Order in Banglamung District, told a June 7 meeting that 26 companies will be affected by the development of the pier, which is aimed at upgrading it for the military’s planned International Fleet Show this Autumn. The first areas to be closed will be the parking lot, drop-off area and main pavilion. Officials plan to announce alternative locations for parking and passenger pickups before construction begins. Popanan acknowledged the work will have an adverse impact on traffic and private companies, who will be directed to operate off Pattaya Beach opposite the AOne Royal Cruise and Hard Rock hotels, and Royal Garden Plaza.He said the relocations will be temporary and full access to the pier will be restored once the first phase of renovation is complete. He did not disclose a date when it will be done. The Marine Department was directed to propose alternative sites for ferry trips and others. The announcement had to sound ironic to speedboat operators, as the military only recently forced them off the beach and required them to operate from the pier. Dive shops, meanwhile, will likely protest the relocation, as their large boats cannot reach shore and they must ferry large amounts of air tanks and other equipment to and from those boats daily. British Chamber of Commerce Thailand, 7th Floor 208 Wireless Road, Lumpini, Pathumwan, Bangkok 10330, Thailand Tel: 085 2828 120 Email: mwbowling1970@gmail.com www.bccthai.com


British Chamber of Commerce Thailand, 7th Floor 208 Wireless Road, Lumpini, Pathumwan, Bangkok 10330, Thailand Tel: 085 2828 120 Email: mwbowling1970@gmail.com www.bccthai.com


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