Eastern seaboard report december 2014

British Chamber of Commerce Thailand, 7

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Eastern Seaboard Report

December 2014 – Prepared by Mark Bowling, Chairman ESB

SET-listed developer Quality Houses Plc (QH) plans to launch more than 30 new residential projects worth about 40 billion baht next year, aiming to reap revenue growth of 20%. President and chief executive Rutt Phanijphand said the main growth driver would be the provincial market. It expects the revenue contribution from provincial projects will rise to more than 20% from 15% this year and 9% in 2013. The company plans to enter new provinces including Ayutthaya, Phitsanulok and Chachoengsao and is studying the potential of border provinces, particularly those where the government sets up special economic zones. The developer has 23 projects in the provinces, with 10 in Chon Buri alone. It also has projects in Chiang Mai, Chiang Rai, Rayong, Nakhon Pathom, Cha-am and Hua Hin.

A group of residents from Rayong’s Muang district protested the proposed expansion of IRPC Plc facilities, claiming the company hasn’t solved current pollution problems. IRPC, the refining arm and petrochemical of national energy conglomerate PTT Plc, has planned an expansion on 1,600 rai of land covering three tambons: Tapong, Cheng Nuen and Ban Laeng. Udomdet Siriphakdi, a member of a Ban Laeng environmental-conservation group, said locals long have suffered the foul odours generated by the current IRPC operation, so the company should solve this problem first. The villagers proposed that the company clear the pollution problem, but IRPC, instead, sought an agreement from the three tambon administration organisations to swap its land with public-land plots that had no risk of flooding.

SET-listed Amata Corporation is teaming with the Justice Ministry's Corrections Department to let convicts perform maintenance work at the company's industrial estates. Ministry of Corrections is responsible for strict screening of the convicts, who will perform gardening jobs at the properties. "They must be deemed an 'excellent class' to be allowed to work here," Mr Viboon Chief Marketing Officer reported. The company has agreed to accept 200 prisoners.

Yacht owners have been told to try two new yachting and sailing routes between Pattaya and Koh Chang after facing congestion at a major yacht club and marina in the resort town. The Designated Areas for Sustainable Tourism Administration (Dasta) is making a guidebook for the two yachting and sailing routes to Koh Chang, due to be finished next year. Dasta revealed about 100 yachts were still waiting to enter the marina at Ocean Marina Yacht Club Pattaya, as the club is already full with 500 yachts. Dasta director Nalikatibhag Sangsnit is upbeat that yachting activities around Koh Chang can generate 6.5 million baht a month for yacht docking and maintenance to island communities excluding accommodations.

Japanese car maker Mazda Motor Corporation is set to deploy its Thai factory as the group's second global production base, mainly for pickup trucks and eco-cars. Hidesuke Takesue, newly appointed president of Mazda Sales (Thailand), said the comprehensive new facility, designed to make not only vehicles but also transmissions and engines, similar to the factory in Japan, is almost complete. The production facility for engines and SkyActiv transmissions in Chon Buri province with annual capacity of 200,000 and 400,000 units, respectively, is




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scheduled to start in 2015. "The parent company plans to use the Thai factory as the global blueprint, with 60% of production serving the domestic market and the rest for export," Mr Takesue said. Mazda now operates a production facility called AutoAlliance (Thailand) or AAT in Rayong's Eastern Seaboard Industrial Estate.

It used to be that “high season” - the middle of October through the end of Songkran in April - was when Pattaya’s hotels were full, the beaches packed and shopping malls bustling. But high season hasn’t resembled what people remember for years. This year marks another high season in which hotels are, if not happy, their relieved to say they are “getting by.” It seems that, in 21st century Thailand, there is always something to derail good fortune. In 2010, it was deadly riots in Bangkok. In 2011, it was calamitous nationwide flooding. In 2013, Bangkok was “shut down” by street protests. And, in 2014, it’s been more protests, a military coup and, most recently, a crashing Russian ruble. Tourists from Russia - who accounted for 6 percent of all tourists nationwide last year and a far higher percentage in Pattaya - are off 5.9 percent this year through November. With the ruble’s historic depreciation, Russian arrivals fell 21 percent in November and 19 percent in October. December has reportedly seen drops of 70% in bookings. The result has been lots of empty hotel rooms in Pattaya. Average hotel occupancy is running 60-70 percent, compared with last year’s 80-90 percent. Hotels dependent upon the Russian trade - such as the Centara Grand Mirage Beach Resort - and package tours are hurting the worst and there appears to be no end to the downturn.

Pattaya has begun looking for private investors to build a new wastewater-treatment plant after appeals to public agencies failed to generate funding for the 30 million baht project. Deputy Mayor Verawat Khakhay chaired a Dec. 10 meeting with representatives from the water-supply industry to discuss how to get private investors to build the city a new plant. Araya Ngamwongwan, general manager of for Pattaya’s Water Supply Department, said current water supplies are sufficient to handle current demand of up to 1.8 million cu. meters of water per day. It’s five sources of water can supply up to 2.5 million cu. meters. However, if it doesn’t rain this winter and next spring, shortages will develop, he said. At the moment, Mabprachan Reservoir has 69 percent of its capacity left, Chak Nok Lake has 32 percent, Klangdong Lake 55 percent, Huay Sapan Lake 41 percent, and Huay Khunjit has 8 percent.

Not content to rest on its laurels following the pre-sales success for its latest project, The Riviera Group has continued on at full pace by holding an official ‘soft-launch’ for The Riviera Jomtien last month. A significant amount of the ground floor space at Pattaya’s Central Beach shopping mall was taken up to showcase a 1-bedroom condo known as the “Monaco” unit, along with a French styled high-tea garden party open area. Various live band acts, fortune tellers, games and general public participation drew in the crowds for what was described by developer Winston Gale as being “a sneak preview of the soon to be opened showrooms, which will be located on site on 2nd Road, Jomtien. Riviera Group’s Brand Ambassador, Metinee, Kingpayome, better known as ‘Lookked’, was joined by Pattaya Deputy Mayor Ronakit Ekasingh and Winston Gale at a ceremony to welcome in the soft opening, which was attended by many guests and potential buyers.




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Two of Pattaya’s most active property developers, Matrix Developments and Nova Group, recently announced they were joining forces for the first time to develop The Orient Jomtien Resort & Spa, a 526-unit freehold development. The project will be comprised of three luxury low-rise condominium buildings and, according to a statement issued by the companies, offer a “sensory-rich atmosphere against a backdrop of colonial-inspired design.” Project highlights will include fully furnished and fitted units, an expansive swimming pool area, comprehensive security coverage systems, and investment management services, helping investors rent out and maintain their units. Matrix Developments and Nova Group say they have also been able to arrange a 0 percent interest scheme on financing over the construction period, as well as the ability to adjust payment terms to individually suit each buyer’s needs.

Pattaya is considering turning a large section of Pratamnak Hill into an ecological tourist attraction with parks, bike routes, and scenic viewing areas. Mayor Itthiphol Kunplome presided over the first of likely many hearings on the “Thappraya Royal Park” project on Nov. 11 at the Season Hotel Pattaya. The project will be debated in a series of meetings and, if approved, would start development in 2016. Kanchit Phuboonlab, project manager for Feel Green Design Co, which has been hired by the city to write the feasibility study, said Pratamnak Hill, with its green acreage and natural viewpoints, is an ideal place to develop into a park attraction. However, he said, access to the prime areas has always been the problem. The city, he said, is a well-developed tourist resort, but has only one real green area in the entire city: Pratamnak Hill. Undeveloped land there covers both mounts in the area and over 285 rai, including the area near the Tourist Police station that has already been converted into a park. “Thappraya Royal Park” would feature tram tracks, cycling routes, walking and wheelchair paths and viewpoints to overlook the city and bay.

Mazal tov! - Luxury Pattaya property developer Tulip Group has announced it will open its fourth property with Centara Hotels & Resorts in December under the boutique brand Centra. Centra Avenue Hotel Pattaya is centrally located behind Pattaya Second Road, close to the Avenue shopping complex, and sits directly behind Tulip’s luxury condo and hotel project Centara Avenue Residence & Suites. The boutique development will offer some “firsts” not only for Pattaya but for Thailand in general. The property will be Thailand’s first ever Kosher hotel, with Kosher food being served as well as having an onsite synagogue, which will cater for the ever growing tourist market from the Jewish community holidaying in Pattaya.

The following news items reproduced with kind permission of SATCC

Hitachi, a Japan-based multinational conglomerate, is relying on Thailand as its regional hub for the development of logistics and supply-chain networks for the Greater Mekong Subregion, said president and chief operating officer Toshiaki Higashihara. Under the strategy, Hitachi will use its logistics operation in Thailand for cross-border transport of parts and components produced by the company and other Thai manufacturers to production facilities in Laos, Myanmar and Cambodia. Hitachi will next year double its manufacturing capacity for elevators and escalators at its plant in Amata Nakorn Industrial




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Estate in Chon Buri province from currently 2,500 sets per annum to about 5,000 sets. However, the firm declined to disclose how much it would spend on this capacity expansion.

The government is likely to reach an agreement with Tokyo to jointly construct one of Thailand's two proposed dual-track electric train routes, according to a highly placed source. The Government House source said he expected the agreement to be signed during Prime Minister Prayut Chan-o-cha's official visit to Japan that will come after he returns from a meeting in South Korea next month. "Basically, it is expected that the Thai government will allow Japan to operate the Tak-Mukdahan route," said the source, referring to the electric rail route designed to connect western and eastern Thailand.

Corbion Purac will accelerate its thrust into the biotechnology arena, making the next step in the bioplastics value chain by becoming a polylactic acid (PLA) producer. With entry into PLA, Corbion Purac intends to bring new biodegradable solutions to the plastics industry, and increase global PLA production capacity by a further 75,000 tons per year. This announcement forms a part of Corbion’s updated strategic direction for 2015-2018. Tjerk de Ruiter, CEO of Corbion, said, “As part of our strategic review we confirmed there is an attractive demand outlook for PLA, albeit at a lower growth pace than previously assumed. Given our strong position in lactic acid, our unique high heat technology and the market need for a second PLA producer, we plan to forward integrate in the bioplastics value chain, from being a lactide provider to a PLA producer.” Corbion intends to invest in a 75,000 ton per year PLA plant, estimated €60 million ($74.91 million) capex, in Thailand. The Eastern Seaboard is under serious consideration for the plant site.

Industrial and Commercial Bank of China (Thai) expects to participate in financial support of the new railway upgrades while helping Thai corporates in the construction sector raise funds in offshore markets. Last week, Thailand and China signed an agreement to build new railways. China will build two routes, the first from Nong Khai province to the Map Ta Phut deep-sea port in Rayong province via Nakhon Ratchasima and Saraburi's Kaeng Khoi district, totalling 734 kilometres. A second 133km line will run from Kaeng Khoi to Bangkok. This project is expected to lure Chinese investment into the Kingdom, while Thai construction companies will also benefit. This is an opportunity for ICBC (Thai) to help those companies raise funds in both the Chinese and US currencies, said Zhigang Li, the bank's chief executive officer.

Japan, South Korea and European countries still have an opportunity to invest in Thailand's railway systems - despite the pending 867-kilometre double-track project being allocated to China, Transport Minister Prajin Juntong said recently. Besides the recently approved Nong Khai-Nakhon Ratchasima-Kaeng Khoi-Map Ta Phut (734km) and Kaeng Khoi-Bangkok (133km) routes, which China will be involved in, Prajin says the government plans to construct three more rail routes that offer investment opportunities to other countries. He said the first line would be built along the East-West Economic Corridor - Mae Sot-Phitsanulok-Phetchabun-Khon Kaen-Mukdahan - and the second route was Phu Nam Ron-Kanchanaburi-Bangkok-Rayong. Japanese investors may be interested in the third route, from Bangkok to Chiang Mai, he said.

General Motors' truck-assembly plant in Rayong province is among 14 GM plants around the world to be recognised under the US Environmental Protection Agency's Energy Star




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Challenge for Industry, thanks to its policy to reduce energy consumption. The plant reduced its energy consumption by 20 per cent, amounting to an avoidance of 7,983 tonnes of carbon-dioxide emissions in total. To meet the challenge, industrial sites must reduce energy intensity by 10 per cent in five years or less. Rayong has met the challenge two years in a row, according to a statement. The Rayong plant manufactures the Chevrolet Colorado pickup truck and Trailblazer sport-utility vehicle.

Nusasiri is seeking a partner for sustainable growth. Investors from China, Singapore and Japan have shown interest in acquiring a stake in Nusasiri Plc with a view to the Asean Economic Community next year. "We will consider who will be our partner as we need the technology and marketing skills to drive sustainable growth," CEO Visanu Thepcharoen said recently. The company is studying moving into the CLMV countries - Cambodia, Laos, Myanmar and Vietnam - by negotiating with a local partner. The investment in CLMV countries will be revealed next quarter. In the coming year, the company plans to launch four residential projects worth Bt23 billion - two condos in Chon Buri's Sriracha district worth Bt13 billion, one in Pattaya worth Bt9 billion and one in Phuket worth Bt1 billion.

Cabinet has approved the Provincial Electricity Authority's (PEA) proposal for a billion-baht computerised "smart grid" power supply for Pattaya resort city of Chon Buri province. Deputy government spokesman Sansern Kaewkamnerd said the cabinet agreed to the Interior Ministry’s proposal for a smart grid costed at 1.069 billion baht, with Pattaya being chosen for the pilot project. Under the proposal, the PEA will borrow 800 million baht from domestic sources and set aside 269 million baht of revenue for the project, Maj Gen Sansern said. The project, to be implemented over three years from 2015 to 2017, is aimed at studying new electricity technology and testing the design and operation of the project, with the intention of later developing smart grid networks in other areas. A smart grid is a modern electrical network that utilises computer software programs in the management, production and distribution of electricity. It can link with other electricity networks and clean energy sources. It ensures power resources are used to the maximum benefit for consumers, efficiently and reliably.

Eastern seaboard report december 2014

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