Eastern Seaboard Report September 2016

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Eastern Seaboard Report September 2016 – Prepared by Mark Bowling, Chairman BCCT Eastern Seaboard 

The government approved recently PTT Plc's purchase of 2 million tonnes of liquefied natural gas (LNG) a year for 15-20 years to secure the country's natural gas supply. Energy Minister Anantaporn Kanjanarat said the National Energy Policy Committee chaired by Prime Minister Prayut Chan-o-cha approved a long-term plan for PTT to buy an additional 1 million tonnes of LNG per year each from Shell Eastern Trading (PTE) Ltd and BP Singapore PTE Ltd. The first lot is due to be delivered by the middle of next year. The values of the long-term deals are estimated at about 115 billion baht, or 20% cheaper than the previous deals thanks to lower oil prices. The purchase plan must still receive cabinet approval. The company currently has a long-term contract to buy 2 million tonnes of LNG a year from Qatargas, while its expanded LNG receiving terminal in Map Ta Phut will soon have a storage capacity of 10 million tonnes a year, up from 5 million. The new terminal is expected to start operation by early next year.

Mazda Sales (Thailand) has set an ambitious short-term goal of increasing its market share to 8% by 2018 from 5% last year. New president Chanchai Trakarnudomsuk said the Japanese carmaker's market share is expected to rise by one percentage point each year until 2018. This year's projection is driven by a rise in vehicle sales, up 23% to 28,184 units from January to August. Mazda's year-to-date market share is 5.7% and the full-year target is 6%. "We increased our sales target this year from 42,000 to 45,000 vehicles, a 14% rise from last year," he said. The company expects sales to rise at least 10% annually from 2016 to 2018. In a related development, the Hiroshima-based Mazda Motor Corporation announced on Aug 31 it would increase the annual capacity at its engine assembly plant in Chon Buri to 122,000 units in the first half of 2018. The plant is operated by Mazda Powertrain Manufacturing (Thailand) Co (MPMT). Mazda is investing 22.1 billion yen (7.54 billion baht) for this expansion. MPMT's engine assembly plant began fullscale production in October 2015. The parent firm bought an 800-rai industrial plot in Chon Buri to operate Mazda's engine plant, which occupies 30% of the area thus far.

JTEKT Corporation, the Osaka-based auto parts maker, plans to set up its regional headquarters in Thailand, hoping to turn its Thai base into an Asean hub by 2020. The Japanese firm operates three plants making car parts such as bearings and steering in Chachoengsao. Most of the products are sold locally to support the sizeable automotive industry. In the region, JTEKT has six companies in th

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Thailand and five in Indonesia, and two each in Malaysia, Singapore and the Philippines. Revenue from Thailand is expected to rise from ¥35 billion in the last fiscal year to ¥42 billion in 2020. 

Japanese companies Kuraray Co and Sumitomo Corporation have agreed to build a production facility for engineering and thermoplastics in Thailand in a joint venture with PTT Global Chemical Plc (PTTGC), the country's largest petrochemical firm. The agreement was signed yesterday in Tokyo for front-end engineering and design for the facility to make high-heat resistant polyamide (PA9T) and hydrogenated styrenic block copolymers (HSBC). The project is expected to be located in Rayong's Hemaraj Industrial Estate, which is adjacent to its existing olefin cracker. Production capacity per year of PA9T (high-temperature nylon) is expected to be 13,000 tonnes while that of HSBC is 16,000 tonnes. PA9T has thermal and mechanical properties that are appropriate for highend engineering of plastics and could replace some metal used in the auto parts industry. HSBC is appropriate for auto parts, building material, medical equipment and consumer products such as swimming equipment and toothbrushes.

BMW Group Thailand is hopeful of a strong recovery for the rest of 2016 after a drop in sales of its cars for the first seven months. "We remain committed to single-digit growth this year from 8,768 cars sold in 2015, up 5% from the previous year," said Lars Nielsen. Management blamed the drop on a new excise tax on cars that came into force at the start of 2016. The new tax is based on carbon dioxide emissions, E85-gasohol compatibility and fuel efficiency, rather than engine size as in the past. In a related development, Mr Nielsen said the group's assembly plant run by BMW Manufacturing Thailand in Rayong began making plug-in hybrid electric vehicles last month. The parent company also set aside 488 million baht for the Rayong factory this year to strengthen local production and exports. BMW Manufacturing Thailand made its first shipment of BMW vehicles to China in April this year. The goal is to export 10,000 units of completely built-up vehicles this year and next, mostly to China.

B Grimm Power Co plans to treble its power-generating capacity to 5,000 megawatts with capital expenditure of 59 billion baht within five years, up from the current 1,627MW. President Preeyanart Soontornwata said the company, the power business arm of Thailand's oldest industrial conglomerate B Grimm Group, expects growth at an average of 19% a year until 2021. The capex will be used on committed and ongoing projects, which account for 2,383MW that will be developed between this year and 2021, ranging from fossil to renewable energy, she said. Around 25 billion baht of the total capex has already been allocated to finance projects that are under development th

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


with power purchase agreements already sealed for the coming years. The projects are Amata B Grimm Power Rayong (units 3-5), Bowin power plant and Xenamnoy Xekatum hydroelectric plant in Laos. Since the establishment of B Grimm Power Co in 1992, the company has developed and operated 25 power plants with a combined power-generating capacity of almost 1,500MW. 

MQDC Magnolia Quality Development Corporation collected a total of eight awards to waltz away with the year’s highest honour for Best Developer at the 11th annual Thailand Property Awards 2016, an international event presented by Hansgrohe and organised by PropertyGuru, Asia’s leading online property group. The awards are the Kingdom’s biggest and longest-running annual real estate event, attended by more than 600 guests and leading figures including VIP guest and speaker former Deputy Prime Minister Suwat Liptapanlop. The Eastern Seaboard was represented by Winners of Best Villa development – Baan Dusit, Best Luxury Condominium - The Riviera Wongamat Beach by The Riviera Group, Best Affordable Condo Development - Dusit Grand Park by Dusit Group.

The number of Chinese tourists to Pattaya could be on the decline following a government crackdown on so-called “zero-baht” tours and the seizure of more than 13 million baht in assets from mainland-focused travel agency Fuan Travel and its bus-operating partner OA Transport. Peerapat Ingpongpan of the Department of Special Investigation said Tawan Jaemchokechai was arrested for running tours that aimed to take low-paying Chinese tourists to overpriced retail shops to earn commissions. The scams were run in tandem with OA Transport, the DSI said, and OA has agreed to refund up to 30 percent of the revenue from the commissions. Pol. Maj. Gen. Surachet Hakpal, the commander of the Tourist Police Division, said an agreement was then put in place with the Chinese Tours Association to ban zero-baht tours from Sept. 15 onward. While tour operators denied any flights were cancelled due to the ban on tours where visitors pay little or no money to arrive in Thailand, a Beach Road tourist stop in Pattaya looked virtually bereft of OA buses on Sept. 13th.

The following news items reproduced with kind permission of SATCC. 

Posco, the nation’s largest steelmaker, celebrated the completion of its first automotive steel manufacturing plant in Southeast Asia on Wednesday. The new plant in Rayong Province, Thailand, was constructed as Posco tries to strengthen its automotive steel sheet business globally. Automotive steel sheets are among the most valued and profitable steel products that only 20 out of th

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


some 800 steelmakers can produce, according to the company. Posco-TCS (Thailand Coated Steel) factory is capable of producing 450,000 tons of zinc-coated steel sheets for use in automobiles. “The Korean steel market is more than saturated and we are looking for chances in the overseas market especially in the Southeast Asian region where the market still has big growth potential,” said Posco CEO Kwon Oh-joon, at a press conference at the Conrad Hotel in Bangkok on Wednesday morning prior to the celebration ceremony. Thailand is now the 12th largest automotive producer in the world, according to the International Organization of Motor Vehicle Manufacturers. Among Southeast Asian countries, it is the biggest production base, accounting for 50 percent of car production in the region, producing 2 million cars annually. The country serves as a production base for global carmakers including Toyota, Nissan and Ford. Thailand’s role as the largest auto producing country in Southeast Asia is expected to grow. Ten countries started Asean Economic Community last year to launch a single market for trade and lower tariffs. The alliance will be supported by the Thai government, which is fostering environmentally friendly car development. To grab the massive Thailand market, the steelmaker started construction of the factory in September 2014, investing about $300 million. “Though Japanese steelmakers are already present, Thailand’s steel demand exceeds supply and we will expand our market share through building strategic partnerships with global automakers operating in the country,” the company said in a statement. 

Central has announced that from its capital-expenditure budget, Bt13.2 billion will go to the renovation of five malls over the period. The properties are CentralPlaza Pinklao, CentralPlaza Bangna, CentralPlaza Pattaya, CentralPlaza Rama III and CentralWorld.

Thai Oil PCL has let a contract to Amec Foster Wheeler PLC to provide services for a project that will expand crude oil processing capacity and improve fuel production at the 275,000-b/sd Sriracha refinery, near Laem Chabang Port in Chonburi, Thailand. Amec Foster Wheeler will deliver front-end engineering and design on Thai Oil’s proposed Clean Fuel Project (CFP), which alongside increasing crude processing capacity to 410,000 b/sd, will enable the refinery to produce transportation fuels meeting more-stringent quality specifications as well as improve its overall energy efficiency, the service provider said.

Ticon Industrial Connection Pcl, a Thailand based factory and warehouse developer, plans to sell factories and warehouses worth more than 1.47 billion baht ($42.6 million) to Ticon Freehold and Leasehold Real Estate Investment Trust (TREIT). This second sale transaction will take place th

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


before the end of this year, said managing director Virapan Pulges. The assets include land and 15 warehouses- in various locations including Lam Chabang, Sriracha, Ayutthaya, Bangpli, Rayong and Prachinburi – which are currently with its subsidiary TPARK’s. A total of 42 new customers have rented its factories and warehouses in the first half, resulting in a total of 325 customers of Ticon and TPARK. The company is accelerating the development of its factories and warehouses in Thailand to meet an additional space target of 280,000 square metres or 10 per cent by the end of this year. 

PP Siam Latex has opened ‘Rubberland’ which is an edutainment museum in Pattaya.

Tritecha Tangmatitham, managing director of SET-listed developer Supalai Plc, said the company will launch eight new projects worth 17 billion baht in the fourth quarter, comprising six low-rise sites worth 6 billion baht and two condo projects worth 11 billion. Supalai maintained presales and revenue target at 24.5 billion baht and 22 billion baht respectively. Good presales of low-rise projects in Chon Buri, Rayong and Phuket are likely to outperform low-rise presales target by 500 million baht.

The Department of National Parks, Wildlife and Plant Conservation is aiming to demolish illegal buildings belonging to 49 resorts that have encroached on the Khao Laem Ya-Moo Koh Samet in Rayong province. Sumet Saithong, director of the National Parks Division's 2nd Protected Area Management Office based in Sri Racha, Chon Buri province, said the special committee on forest encroachment on Koh Samet has come up with a decision to deal with the case.

THAI AIRWAYS International expects to finalise a joint investment in an aircraft-maintenance project in Rayong province in the next few months, with the goal being to make the new facility a regional maintenance hub. "The company has hired a team of consultants to work on budget assessment for the project, which is expected to be finalised within two to three months," Areepong Bhoocha-oom, chairman of the national carrier's board of directors, said on Thursday. THAI will then form a joint venture with partners to build a new aircraft-maintenance centre at U-tapao Rayong Pattaya International Airport in Rayong's Ban Chang district, he said. The airline will seek qualified partners that are eager to participate in aviation and aircraft maintenance, he added. "THAI aims to build a maintenance centre that means customer airlines [in Thailand] will not have to fly a long distance to get their aircraft maintained. The centre will also serve clients throughout the region," he explained

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


The 64-year-old Piampongsan Bridge across the Rayong River in Muang district will be closed from Oct 10 for renovation, Rayong Municipality mayor Voravit Supachokchai said. Mr Voravit said the bridge was buit in 1952 and is now in disrepair.

UK-based electronics manufacturer Exception EMS has been acquired by Fabrinet, the global EMS company with headquarters in Thailand. The $13.5m cash deal will be Fabrinet’s first move into the European electronics manufacturing services market. Exception EMS, which is based in Wiltshire, designs and manufactures printed circuit board assemblies. With approximately 80% of its revenue derived from customers in Europe, it operates in the energy, aerospace and defence markets. Tom Mitchell, chairman and CEO of Fabrinet, writes: “Fabrinet has enjoyed exceptional growth over the past several years, primarily with customers in the U.S. and Japan, and there are tremendous opportunities for growing our business in Europe. With this acquisition, we are establishing a strong foothold in Europe.” The company intends to offer European customers low-cost manufacturing services in Thailand, and it has recently opened a new facility in Chonburi that is coming on-line and ramping in the next several months. Fabrinet last year established a product introduction centre in Santa Clara, California, and through Exception EMS, Fabrinet said it will provide the same new product introduction services to European customers, along with the low-volume manufacturing services Exception EMS provided historically.

Qing Dao-based Techen Technologies (Thailand) Co announced yesterday that its new Thai factory slated to make solar panels will start operations next month. The solar panels produced at the factory in Chonburi will help generate up to 300 megawatts of power per year. Managing director Zeng Anson said the new production facility, worth about UScopy00 million, is the company's fourth, with the other three in China, Brazil and Peru. He said around 60% of the panels produced at the factory will be sold in Asean countries, including Thailand, while the remaining 40% will be sold in Europe and the United States. The facility in Thailand will help increase Techen's global power generating capacity to 1,000MW.

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


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


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