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Amata Corporation Plc expects to spend four years to develop its industrial estate in Dawei, Burma, as a new investment destination for Thai industries.

Somhatai Panichewa, the company’s chief business officer, said Amata and Italian-Thai Development Plc, over the past two years had jointly conducted a feasibility study to create a 100,000-rai industrial estate, out of a total of 170,000 rai at the Dawei site, with an investment of around US$9-10 billion.

The study will be completed within six to nine months, depending on the political situation in Burma.

“The company is quite concerned over political tension on the border though the Burmese government maintains it is safe and under control,” she said, referring to skirmishes with Karen rebels last week.

However, she is optimistic that political conditions in Burma will improve after the election, while more investment is expected when the industrial estate is completed in four years.

The company is now awaiting details on criteria for the Dawei economic zone from the Rangoon government. Competitive incentives will become a significant factor to attract foreign investors to locate plants there, she said.

Ms Somhatai said Burma was the best solution for the development of heavy and upstream industries. Those projects cannot invest in Thailand anymore due to environmental concerns.

However, Thailand needs upstream industry for steel and petrochemicals because they are raw materials for the next step of industrial development.

Thailand aims to attract more investments in high-technology and light industries that need raw materials from the petrochemical industry.

Ms Somhatai said the Dawei project would meet international environmental standards and have infrastructure in place to protect against natural disasters such as a tsunami.

The company expects the first wave of Thai investments from PTT, SCG Group and other heavy industry from Japan and China.

She said the project needed support from governments in the region to persuade their investors to consider Burma as a way to eventually strengthen the region’s competitiveness.

A 160-kilometre road from Dawei to the border in Kanchanaburi is expected to open in two years. The total distance is 370 km from Dawei to Amata’s main base in Rayong.

Siam City Cement eyes Burma prospects

Posted by arnon_k On November - 15 - 2010 ADD COMMENTS

CHIANG MAI : Siam City Cement Plc (SCCC) is studying a feasibility of building a cement plant in Burma’s Dawei district as part of Italian Thai Development’s $50-billion project in the neighbouring country.

SCCC executive vice-president Chantana Sukumanont said ITD chairman Premchai Karnasutra had informed her that a licence to operate a cement plant would be available, as ITD is seeking several partners to jointly invest in the megaproject.

“I think there is a possibility that we will invest in a cement plant in Dawei as Burma is now seeing demand for cement increasing substantially,” she said.

Thailand’s second-largest cement maker currently exports cement to Burma, Cambodia, Laos, Vietnam and Bangladesh, amounting to one-third of its yearly output of 12 million tonnes, she added.

Market leader Siam Cement Group (SCG) has also stated its interest in investing in the military-ruled nation. Investors have projected a brighter economic future for Burma following the recent election, even though the widely criticised poll is not expected to result in any meaningful political change.

Ms Chantana said Chinese investors were also keen to take part in the Dawei project to create a shortcut from southern Yunnan province to the Indian Ocean. Chinese manufacturers already operate cement plants in other parts of Burma.

“One factor SCCC is concerned about is that sources of raw materials for cement production in Burma will be distant if we build a plant in Dawei,” she said.

Initially, the company might consider a small plant with a capacity of one million tonnes a year, she added.

“The investment budget would vary depending on whether we have to build a power plant on our own for the cement factory or other investors will invest in the facility under ITD’s project.”

Meanwhile, cement consumption in Thailand this year has been lower than SCCC’s earlier forecast partly due to widespread floods in the northeastern and southern regions.

SCCC now projects cement demand will grow only 8% this year from about 25 million tonnes consumed in 2009, compared with original forecast of 10%.

“Cement demand will increase after the floods abate but not until the first quarter of next year,” she noted, adding that SCCC aimed to increase its sales by the same level as market growth to maintain its market share of 28%.

In the third quarter, SCCC posted a net profit of 582 million baht compared with 742 million in the same period of 2009, as domestic cement prices eroded. Revenue rose 2.2% to 5 billion baht on higher local cement demand and exports. Nine-month profit was 2.13 billion baht compared to 2.24 billion a year earlier.

Mrs Chantana said the company planned to invest 500 million baht next year in the third production line of Conwood wood-substitute products and another 450 million for ready-mixed mortar cement. The two projects will be in operation in 2012.

The company on Friday handed over its Green School in Chiang Mai as part of SCCC’s Green Heart social responsibility campaign. Three schools including the one in Chiang Mai have been developed this year and nine more are planned for 2011.

SCCC shares closed on Friday on the Stock Exchange of Thailand at 237 baht, up one baht, in trade worth 103.6 million baht.

Thailand, Japan discuss ways to cash in on JTEPA

Posted by arnon_k On November - 13 - 2010 ADD COMMENTS

YOKOHAMA, Nov 13 – Thailand and Japan have discussed approaches to benefit from implementation of the Japan-Thailand Economic Partnership Agreement (JTEPA) for the mutual benefit of both countries, according to Deputy Commerce Minister Alongkorn Ponlaboot.

Speaking on holding a bilateral discussion with Motohisa Ikeda, Minister of Economic, Trade, and Industry (METI) during the 22nd APEC Minister Meeting held here on Wednesday (Nov 10), he said key issues raised for discussion included the planned implementation of JTEPA), investment in construction of the Ho Chi Minh-Bangkok-Tawai route, organisation of Thailand’s
International Creative Economy Forum.

Currently, he said, the government had been shifting a task to supervise and carry out JTEPA from the Foreign Ministry to the Commerce Ministry. It had to take time to ensure a function to control and supervise the agreement is complete.

Upon completion of the transfer of the task, Thailand and Japan are able to discuss various issues to accelerate cashing in on the JTEPA implementation.

He said the move would benefit the economy and trade ties of both countries. In particular, the Commerce Ministry is able to carry out the international trade policy efficiently

Mr Alongkorn said Thailand and Japan had also discussed a possibility of trade liberation of the automobiles with engine of more than 3,000cc, cooperation in establishing the institute for human resources development in the auto industry.

Thai-Japanese trade has expanded continuously. From January through September, the bilateral trade during 2010 has so far been valued at Bt1.38 trillion, up 41.79 per cent from the same period last year.

Thailand’s exports to Japan totalled Bt478.29 billion or 23.60 per cent of the country’s total shipments. (MCOT online news)

Central bank moves to cool property loans

Posted by arnon_k On November - 13 - 2010 ADD COMMENTS

Measure a pre-emptive action to preven bubbles; sector unlikely to be hit badly
The Bank of Thailand yesterday imposed what it called a preventive measure to rein in aggressive mortgage lending by commercial banks, with strong support from the Finance Ministry and bankers, who expect impact on the property-development industry to be slight.

TMB Bank chief risk officer Bart FM Hellemans was not surprised by the measure.

“This kind of decision is not new. This is to calm down the market before it’s too hot. It’s like a conservative, risk-averse move. [It’s better] too early than too late,” Hellemans said.

TMB Bank has to be more careful with new applications for home loans and project financing, bank vice president Naris Sathapholdeja said.

Hellemans said TMB had tightened its rules for project financing more than for a year and a half ago when the bank started to see signs of overpriced condominiums.

Bank of Ayudhya senior vice president Takorn Piyaphand conceded that the measure would prompt financial institutions to be more prudent on risk assessment for loans, as extending more loans would increase reserves, driving costs up.

This measure serves as a warning on property expansion and financial institutions’ loan extensions and is unlikely to deter property loans, Kasikornbank first senior vice president Chatchai Payuhanaveechai said. Most property developers are listed on the stock market and can mobilise funds from other sources, including debt instruments, he said.

“This gives a clearer picture to the market, reflecting on the property sector’s higher share prices,” Chatchai said. “And commercial banks do not lose any advantage to state banks due to their different targets. Commercial banks extend home loans of at least Bt2 million, while state banks provide an average of Bt700,000 to Bt1 million.”

Finance Minister Korn Chatikavanij cautiously backed the central bank’s move.

“The Bank of Thailand is independent and it can set requirements on bank loans. The BOT also has a duty to monitor economic risks,” Korn said in response to complaints by property developers about the central bank’s move to step up measures to prevent a real-estate bubble.

Korn noted that if developers had different assumptions or information than the BOT, they could consult with him, and he would then take it up with the central bank on their behalf. “Or they could directly talk with central bank Governor Prasarn Trairatvorakul.”

Several central banks in Asia have started to put in place more stringent rules as they spot potential real-estate price bubbles. In Thailand, huge capital inflows threaten to push up asset prices and inflation. China is reportedly preparing new curbs on property lending, as it is expected to overshoot its inflation target this year amid a continuing surge in property prices.

Under the BOT’s new rules, for properties priced below Bt10 million per unit, from January 1 financial institutions will be required to cap mortgages at 90 per cent of condominium prices. The loan-to-value (LTV) ratio for low-rise housing will be capped at 95 per cent from January 1, 2012.

For condominiums on which the down payment is less than 10 per cent of value, the risk-weighted assets must be at least 35 per cent of the value. For units with down payments lower than 10 per cent, the risk-weighted assets must be 75 per cent.

The risk-weighted assets for low-rise developments are set at 35 per cent if the down payment is 5 per cent of value or more. With lower down payments, the risk-weighted assets will be 75 per cent.

“The Financial Institutions Policy Committee is of the opinion that the BOT should cap the LTV ratio, with consideration of impacts on all parties including buyers, developers and commercial banks,” BOT Deputy Governor Krirk Vanikkul said in a statement.

“This preventive action will mitigate future risks. The problem might get out of hand if we wait until there is a clear sign of risks or when problems emerge.”

But the rules will not be imposed on lending to civil servants and state-enterprise employees, who carry less credit risk.

Krirk acknowledged that there was no sign of a bubble yet, but this move would prevent future risks induced by rising competition. At present, because of fierce competition, banks offer generous lending schemes and demand down payments of less than 10 per cent.

According to the Bank of Thailand, property loans have shown a sharp increase, particularly for purchases of residential units priced below Bt10 million. These loans accounted for 93 per cent of mortgages, and they were mostly concentrated in units priced between Bt1 million and Bt3 million.

However, the non-performing-loan level in this sector remains as low as 0.1-0.2 per cent, compared with the banking system’s combined NPL level of 4 per cent.