Eastern Seaboard Business Report June 2016 – Prepared by Mark Bowling, Chairman BCCT Eastern Seaboard
The cabinet recently approved the Eastern Economic Corridor (EEC), spanning three eastern provinces, with hopes that it will form a new engine to drive economic growth. The corridor through Chon Buri, Rayong and Chachoengsao has been designated for development as a high-tech industry cluster, with an eye towards becoming Asean's leading economic zone for industrial, infrastructure and urban development. The project is meant to accommodate the 10 targeted industries being promoted as clusters by the government. Approved by the cabinet last November, the 10 industries are next-generation cars; smart electronics; affluent, medical and wellness tourism; agriculture and biotechnology; food; robotics for industry; logistics and aviation; biofuels and biochemicals; digital; and medical services. The EEC will also rely on developments in transport infrastructure, including air, land, rail and water links, to cut logistics costs. Kasemkij Group, a leading serviced apartment and hotel owner, projects tougher competition for the top-end of the sector in Chon Buri's Si Racha district at the end of next year due to rising supply and shrinking demand. Demand began to slacken early this year, reflected in the drop in corporate bookings at four of Kasemkij's properties in Si Racha -- Cape Racha Sriracha, Kantary Bay Hotel and Serviced Apartments Sriracha, and Karavel House, said corporate director Wiwat Tangjitkobbon. The average occupancy rate is expected to be around 85% this year, down 5% from 2015 and 10% from 2014. New supply will make the situation worse. Around 2,700 rooms at fourand five-star serviced apartments will enter the Si Racha market, bringing the total to 6,700 rooms by the end of 2017. He said a heavy price war would soon ensue because the owners of the new supply need to fill their rooms to survive, while demand was falling because companies in nearby industrial estates had cut their budgets. The Thai unit of Michigan-based Dow Chemical Co plans to spend 2.3 billion baht on two major projects this year, according to its site director Tod Sutton. The first project, worth 700 million baht, is an analytical technology centre, which it claims will be the first in Asia-Pacific. It is to be located on the Map Ta Phut industrial estate in Rayong province, he said. The facility will be a world-class research and development centre to help support and develop the company's manufacturing systems to keep up with changing demand, Mr Sutton said. The second project entails increased production of rigid polyol, a new petrochemical product that could serve demand in several industries for both domestic and overseas clients, he said. "We expect to finalise the details for plans to expand the production capacity of rigid polyol by the last quarter of this year," said Mr Sutton. "After that, the construction of the project is due to start next year, while commercial operations are slated to start in 2018." In 2015, Dow Thailand had total petrochemical production capacity of 2.3 million tonnes. Capacity is set to rise over the next few years following plans to increase production of rigid polyol. SET-listed Glow Energy Plc, an independent power producer with co-generation facilities, plans a capital expenditure of 3-5 billion baht to re-power four generating units at two power plants in Rayong. The four units, which have a combined power-generating capacity of 500 megawatts, received operating licences in 1996 and were due to retire in 2017. Pajongwit Pongsivapai, Glow's chief financial officer, said the licences have been extended for 25 years. The capital expenditure is for 2017-20, a period in which the company will seek new power-generating capacity in Thailand and throughout Asean. The power generated at renewed plants will be sold to the Electricity Generating Authority of Thailand at lower tariff rates. Other power plants run by Glow are expected 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
to gradually retire over the next 10 years, including the SPP11 Phase 1 and Phase 3 in 2025. The SPP2 and SPP3 in Rayong's Map Ta Phut are due to retire in 2024 , and the Checo-one coal-fired plant is due to retire in 2026. "Over the next four years, Glow will look for new greenfield projects and mergers and acquisitions in both fossil fuel and renewable energy projects," Mr Pajongwit said. "However, we will not be involved with coal-fired power any more." "When the renewable energy business matures in Thailand, only professionals in the energy sector will be able to survive," he said. Industrial conglomerate B.Grimm Group plans to expand its power business in terms of capacity to 2,158 megawatts by 2019, up from 1,627MW this year. The group, which diversified into power generation about two decades ago, has reached a point where revenue from the sector accounted for 60% of total revenue last year and is expected to rise to 75% this year, chairman Harald Link said. Under its capital expenditure plan for the next few years, B.Grimm is preparing a budget of 18 billion baht for power generation under the small power producer (SPP) programme at Bo Win in Si Racha district of Chon Buri province and at Amata City Industrial Estate in Rayong province. The projects with a combined generating capacity of 390MW are due to start commercial operations in the second half of this year. Another 360MW of generating capacity is planned to come on stream at Amata City in 2018. B.Grimm also plans more capital expenditure for a repowering project at its existing three SPP power plants after energy policymakers last month approved the renewal of operating licences worth 24 billion baht. Two high-speed rail projects, the 193.5-kilometre Bangkok-Rayong route worth 153 billion baht and the 211km Bangkok-Hua Hin route worth 94.7 billion, are set to be included for fast track consideration in the public-private partnership (PPP) scheme. Transport Minister Arkhom Termpittayapaisith said the two were likely to be submitted for approval by the PPP committee by this month or next. If approved they will be the sixth and seventh such projects. Last November the government put five projects worth a combined 334 billion baht on the front burner under the PPP scheme, giving them a mandate to start in the second half this year. C. Thong Panich Group will open its second hotel in Pattaya in April next year, four months later than planned, to respond to growing demand from Chinese tourists. Called Renaissance Pattaya Hotel & Resort, the five-star hotel with 262 rooms is located on a 17-rai plot on Na Jomtien beach. "Our new hotel will make Pattaya more lively. Only a few five-star hotels have been opened in the resort town in the past several years," said Vipavan Mahadumrongkul, managing director of C. Thong Panich, , a leading watch distributor. Under the uncertain economic environment, the company will delay its plan to build more hotels. However, about 120 million baht will be spent to renovate its 200-room Swissotel Le Concorde Hotel on Bangkok's Ratchadaphisek Road this year. A long-delayed automotive testing centre is set to start construction next year after the cabinet gave the go-ahead in March for a site in Chachoengsao's Sanam Chai Khet district. Vichai Jirathiyut, president of the Thailand Automotive Institute (TAI), said the Thai Industrial Standards Institute (TISI) will reveal the terms of reference over the next few months for hiring overseas advisers to design all eight phases of the 4.54-billion-baht testing centre. The advisory team is expected to propose a complete master plan in the first quarter of next year, Mr Vichai said. Of the eight phases, the first phase is slated for a tyre testing track with quality on a par with the UN's UNR-117 standard. Construction is expected to conclude by 2018. "The government aims to support the rubber industry as the first priority and promote local tyre manufacturers to utilise the testing centre as their research and development (R&D) unit," Mr Vichai said. Last month saw The Riviera Group bring to a conclusion the signing of the construction loan worth THB 920 million for The Riviera, Wongamat Beach. Sommai Ungsrithong, FS.V.P at SCB said, “It is 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
good to be working again with Winston Gale and his team. Since The Palm in 2012, we have had a positive working relationship together”. Attending the signing for SCB was Sommai Ungsrithong, FS.V.P, Bangkok, Chonburi Regional Manager Anol Eaksil and Khomsai Sangratsamee, relationship manager. Attending for The Riviera Group was owner and founder Winston Gale and Projects Director Sukanya Gale. Winston stated, “We are pleased to have concluded this loan with SCB, this will help assist us in the completion of The Riviera,Wongamat. It’s great we have a longterm working relationship with SCB and it also shows to the market the confidence they have in us. Construction progress is on schedule and as a team we are working very hard to maintain this position.” The following news reproduced with kind permission of S.A.T.C.C
• The Port Authority of Thailand (PAT) is planning the development of a rail transfer terminal at Laem Chabang Port. Once finished the throughput is expected to be around 2 million TEU per annum • The development of Coastal Terminal A at Laem Chabang Port one 3,000 DWT and one 1,000 DWT vessel at the same time whilst the container yard will be able to cope with over 300,000 TEU of containers per annum •
PAT is also looking to develop dry-dock facilities at Laem Chabang
• Agribusiness agro - industrial conglomerate Charoen Pokphand Group (CP Group) is interested in jointly developing the 194-kilometre Bangkok-Rayong high-speed rail route worth 153 billion baht. Chairman and chief executive Dhanin Chearavanont said the company is ready to join the route development as requested by Prime Minister Prayut Chan-o-cha. "There are just a handful of companies that want to invest in such a huge project that has high investment costs and a longerterm returnon investment," he said • Masahiro Okafuji, Itochu Corporation's president and chief executive, informed Deputy Prime Minister Somkid Jatusripitak in Tokyo that the company would team up with potential Thai partners including CP Group, Amata Group and Saha Group to jointly build a high-speed rail network linking Bangkok and Rayong • To cut logistics costs, the Eastern Economic Corridor (EEC) will also rely on developments in transport infrastructure, including air, land, rail and water links. Mr Dhanin said he fully supports the government's EEC development plan as he believes it will play a significant role in enhancing Thailand's competitiveness and future potential growth. • U-tapao airport in Rayong needs to be upgraded to decentralise development to the Eastern Seaboard, while a high-speed rail network is needed to facilitate travel and support business activities, he said. 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
If the EEC is implemented as planned, it will become a new destination for foreign investments, generating income for Thais and creating jobs for the younger generation, said Mr Dhanin. • The Bangkok-Rayong route is one of two high-speed rail projects the government is including in its fast-track public-private partnership (PPP) scheme. The other is the 211km Bangkok-Hua Hin rail route worth 94.7 billion. If approved by the PPP committee, the two high-speed projects will be the sixth and seventh such projects • Prime Minister Prayut Chan-o-cha endorsed plans to develop U-Tapao-Rayong-¬Pattaya Airport into a commercial aviation hub during a visit to the Eastern Seaboard, joining a long list of prime ministers who have done the same over the past few decades. The general, joined by the interior and industry ministers as well as Deputy Prime Minister Somkid Jatusripitak, who heads the economic team, arrived at the Royal Thai Navy-administered airport from Bangkok on June 22 to review ongoing redevelopment work as well as ink the agreement for formation of a new Eastern Special Economic Zone encompassing Chonburi, Rayong and Cha¬choengsao provinces. U-Tapao airport long has had minimal commercial air service, but mostly has handled charter flights and served as the base for the navy’s 9th Air Wing. It’s U.S.-built, 3.5-kilometer-long runway also allowed U-Tapao to be a training base for Thai Airways International’s Airbus A380 crews. A new passenger terminal is under construction to offer 22,000 sq. meters able to support 1,500 passengers daily. Improvements to the runway will allow U-Tapao to serve four large planes concurrently. A budget of 239 million baht calls for not only the new terminal and runway upgrades, but an aviation fuel station, jet bridges, navigation lights for parking and two cargo terminals with loading equipment and ground-support equipment. The budget also funds training for the Airport Authority of Thailand and airport staffers • Chewathai has ten factories at Amata City Rayong with an average size of 2,500 square metres each. They will look to expand there further when there is a recovery in foreign direct investment. • The Chon Buri-Bangkok-Phetchaburi ferry project and wants it to be completed by 2018. The fact is that the above rail projects being built in cooperation with both China and Japan are unlikely to get off the ground as quickly as expected while the commercial seaports could happen in two or three years as the feasibility study is already complete. • SAIC Motor-CP Co has announced the construction of a second assembly facility at Hemaraj Eastern Seaboard Industrial Estate 2 in Chon Buri province. Investment cost of the new plant is estimated at 30-40 billion baht. • The National Energy Policy Council (NEPC), chaired by Prime Minister Prayut Chan-o-cha, decided to open new bids for the two gas blocks. Currently PTT, the country's oil and gas conglomerate, operates the LNG receiving terminal located in Map Ta Phut with a capacity of 5 million tonnes per annum (MTPA) and is constructing the second phase, which will help increase storing capacity by 5 MTPA in 2017. It also plans to build a new terminal with a capacity of 1.5 MTPA in 2019 in order to tackle the problem of limited storing capacity. Mr Prasert said the NEPC also approved the construction of a second LNG terminal in Rayong with a capacity of 5-7.5 MTPA, which is expected to start operation in 2022.
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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
• Zhongce Rubber (Thailand) Co. Ltd. continues to ramp up production of car and truck tires at its year-old factory in Rayong toward the plant’s designated capacities, the company’s top executives told visitors attending the plant’s first anniversary celebration. • SET-listed property and retail developer Central Pattana Plc (CPN) plans to use land plots close to its shopping malls nationwide to develop residential projects, aiming for annual revenue growth of 15% from the housing business from 2018 onwards. The three projects, located in Chiang Mai, Khon Kaen and Rayong, are worth 925 million, 900 million and 910 million baht, respectively. They are located in or close to CentralPlaza shopping centres in those provinces. The Chiang Mai site will be a 26-storey building with 400 units, now sold out. The Khon Kaen and Rayong projects will have 408 and 419 units and their sales rate now exceeds 85%. • The sea water along the busy central Pattaya beaches is of poor quality and could endanger human and marine life, Regional Environmental Office has said. • BOSCH, a German-based multinational engineering company, plans to set up a research and development facility in Thailand to enhance automotive and mobility solutions for gasoline systems. Located at the Hemaraj Industrial Estate in Rayong where it has a fuel-injection plant, the R&D facility is scheduled to open by the middle of next year and is expected to attract 50 engineers by the end of this year. • During the 12 months ending in the first quarter of this year, on average, the booking window of international travellers to Thailand stretched over a month, online travel company Expedia group. Year-onyear growth shows top destinations in Thailand are Pattaya , Bangkok and Chiang Mai , Phuket and Koh Samui • Sattahip gave area youth a language camp offering English and Chinese lessons to prepare for the ASEAN Economic Community. Khet Udomsak Mayor Pairoj Malakul Na Ayutthaya opened June 2-6 course at Singsamut School in Sattahip June 2 with more than 100 government officials and students in attendance. • With the rainy season kicking in, Pattaya has so much water, it actually can send about 30,000 cu. meters a day to help out thirsty residents of Laem Chabang, water authorities told city business leaders
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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