Foreigners owning land closer to becoming reality

It is almost a reality. It appears that, before long, foreign investors with Baht 25 million of investment will be able to own a 1-rai plot of land in the Kingdom. The chances are good that the draft bill to amend land laws will be approved by the House of Senators this week. Once passed, the bill would be promulgated into law this month with an immediate effect.

According to Atthaporn Thongprapai, deputy chief of the Department of Land, the bill sailed through the House of Representatives last week and will be back in the Senate this week, while other related bills - to let aliens own 100 percent in condominiums and a have 100 year terms on land leases - were pending in the lower house.

Meanwhile, ministries are considering necessary measures to prevent foreigners from establishing ‘kingdoms’ in Thailand; ownership rights over a piece of land will be conferred on individual investors only, said sources in the Ministry of Interior. The new laws will directly benefit the slumping property industry, they said.

A 40 percent ownership in living estates by foreigners proposed to government; developers in upscale market will highly benefit from European and Western investors while those in lower segments expected to tap from Taiwanese, Chinese and investors from Hong Kong; new buyers believed to bring in between Baht 1-10 billion this year.

Seized properties to be sold on the Net

The Legal Execution Department will this year put seized properties on the Internet for sales. The move is among new activities in the action plan to speed up sales of properties in custody under the foreclosure law. The department had a most difficult time selling those properties last year when sales fell sharply.

According to the department’s inspector-general, Sansern Palvatvichai, a number of legal hurdles - difficulty in forcing foreclosure on assets, setting median prices and protests by asset owners - have been obstacles when auctioning seized assets. The economic crisis made the situation worse, he said.

Selling of undeveloped land has been worst hit. The department could sell only 5 percent of seized land in Bangkok, and another 11 percent in the provinces, a sharp drop compared with the booming years of 1992 and 1993, said Mr. Sansern.

There have been nearly 40,000 cases concerning undeveloped land; a piece of land in Chiang Mai was still left unsold after 57 announcements and invitations for bids; more direct selling activities with department stores planned this year; the Net could be fruitful in public relations.

Boon Rawd to launch ‘super premium beer’

Thailand’s beer giant Boon Rawd Brewery is to launch a new beer in April to penetrate the premium beer market now reigned over by locally brewed Heineken beer, in the belief that the over all industry will attain 5-6 percent growth this year, the same level as last year.

According to industry sources, the new move by Boon Rawd Brewery, brewer of Thailand’s Singha beer and Leo beer, was directed at Heineken by Thai whisky tycoon Mr. Charoen Siriwattanapakdi, who also brews Singha’s main rival Chang (elephant) beer.

Boon Rawd’s Leo beer has successfully contained the aggressive growth of Chang beer in the lower market, according to sources. It was late last year when sales of Chang beer exceeded those of Singha beer for the first time, a trend which forced Boon Rawd to launch Leo beer, followed by fire sales campaigns.

Name of new premium beer yet to be disclosed; long-necked, light brown bottle design to attract yuppie drinkers; new premium beer a strategic move to cover all market segments; Boon Rawd says there was a gap in the market between former leader Kloster beer and newcomer Heineken.

GHB to further cut interest rates

The Government Housing Bank is set to reduce mortgage interest rates by another 0.5 percentage point this March, bringing the rates down to the lowest level in 4-years. GHB also plans to provide loans to home owners to refinance their debts with other financial institutions.

The cut would lower interest for a Baht 300,000 loan, currently at 9.25 percent, to 8.75 percent, said the bank’s managing director Siriwat Promburi. The new low interest rate scheme is aimed at reducing the bank’s overwhelming liquidity. About Baht 8 billion in loans are available, he said.

Home owners who have mortgages with other financial institutions could join GHB’s refinancing program starting February 1. Under the program, GHB would help ease customers’ interest burdens by 1-percent for 1 year before those customers pay GHB’s general rates. A refinance package is limited to Baht 5 million loans, said Mr. Siriwat.

GHB’s 1998 share of the home buying market was 46 percent, yet could exceed 50 percent, or Baht 50-60 billion this year; the 3-month level for NPLs is 21 percent, or Baht 16 billion; the March rate cut to be the final one.

Thousands to be laid off from banks this year

The prolonged economic crisis will lead to about 5,000 redundancies in the banking sector this year, with the government-owned Krung Thai Bank leading in the new round of layoffs. KTB currently shoulders as many as 18,000 employees after merging with Bangkok First City Bank and absorbing many former employees of the Bangkok Commercial Bank.

According to banking sources, KTB now has about 6,000 ‘too many’ employees and is planning an early retirement program in a redundancy plan scheduled later this year. KTB management has found in surveys that 1,000 employees will voluntarily join such a retirement if the compensation package is attractive enough.

Meanwhile, Thai Bank will reduce the size of its workforce from 4,500 to 2,000. A management consultant is working on the cut. Thai Dhanu Bank, restructured soon after its deal with a Singaporean partner, said to further cut its staff after a new managing technology is introduced. There will be only 10 personnel working in each TDB branch, said TDB sources.

Bangkok Metropolitan Bank offers a compensation worth 20 months of salary to early retirees; BMB said employees face an uncertain future after foreign investors step in; BMB, put on sale by the Bank of Thailand, was courted by a number of foreign banks.

Harrods quietly takes over Texaco’s exploration field

The UK Harrods, with their subsidiary Harrods Energy (Thailand), has been in talks to take over three off-shore gas and oil exploration fields from the US based Texaco. The move signifies strong interest from the owner of Harrods, Mohammed al Fayed, father of Dodi al Fayed, the fiancée of the late Princess of Wales.

Last August, Harrods Energy was granted exploration rights over two on-shore fields covering 5,800 square kilometers in Prachuab Kirikhan; the takeover of the three Texaco fields in the Gulf of Thailand will make Harrods Energy among the largest explorers after the US UNOCAL and the Petroleum Authority of Thailand.

According to the leader of Thai-Rak-Thai Party, Dr. Thaksin Shinawatra, Harrods investments in Thailand came after months of efforts spent during his trips last year to the US and Europe to persuade investors to come in. Dr. Thaksin said he had only acted as a coordinator and has no shares in the company.

US group, led by former Kansas Senator Bob Dole, in negotiations with Srivikorn family for deals in the Royal Meridien President and with Preecha group for the Emerald Hotel; Carlyle group of former secretary of state James Burger allocated Baht 5000 million for investment projects in Thailand.

Honda boss: 1998 most difficult year in decades

1998 was the most difficult year in 3 decades for the auto industry, as combined sales plunged by 60 percent with only 140,000 units sold. Family cars suffered the most, falling 65 percent, said Satoshi Toshida, chairman and CEO of Honda Cars (Thailand).

According to Mr. Satoshi, the wide-spreading draught caused by water shortages might slow down Thailand’s economic growth this year because of falls in agricultural outputs. In that respect, the local car industry would face another year of difficulty and combined sales figures could be around those of last year, he said.

Honda Cars last week introduced the new low emission Honda Accord and Honda Civic to the Thai market for the first time. Prices for LEV Civics range from Baht 663,000 to Baht 805,000. Prices of the new Honda Accord sedans range from Baht 1.075 million to Baht 1.65 million.

The company has a policy to maintain prices by cutting costs at assembly lines; the claimed market leader Toyota remained skeptical as Honda took the lead in the 11th month; new models with low emission engines will constitute 60 percent of Honda’s vehicle sales this year; the introduction was just 1 day before Toyota unveiled its new Corolla compact sedans.

Industries stunned as BBL reveals NPL amount

The non-performing loan (NPL) level revealed by the Bangkok Bank PLC this week has stunned the industrial sector of Thailand, especially the banking industry, as BBL needs to raise Baht 13.4 billion in new capital. The bank’s NPL level reached 48 percent, or more than Baht 400 billion, at the end of 1998, according to a report filed with the Stock Exchange of Thailand.

The bank’s major debtors have been slow in repayment, said BBL’s president Chatsiri Sophonpanich in the report. The bank was, however, confident that it will sort out the NPL problem, as interest rates are lowered and debt restructuring talks with major debtors have been in progress.

BBL extended Baht 850 billion in loans to industries in 1998, down from Baht 1.1 trillion in the previous year, said Mr. Chatsiri. The bank last week announced a capital gain of Baht 3.8 billion made from adjusting the terms of its subordinated convertible bonds worth US$400 million in foreign markets.

BBL is to raise another Baht 40 billion in a plan to increase registered capital; NPLs raised concerns among investors, share price fell to Baht 62.5 on Tuesday, from Baht 68.5 a share last Friday; managers said they could not believe their eyes in seeing such a figure provided by the blue chip bank.

Fewer companies closed in January

Fewer companies closed down in January, an indication that, according to the Trade Mark Department, signifies a stabilizing economy. Only 731 companies, with nearly Baht 1.85 billion in registered capital closed, a 28.26 percent decline compared with the same month last year.

According to the department’s chief, Norawat Suwan, only 1,024 companies registered in January this year, a 38 percent slide from January 1998. Those new companies registered with just over Baht 3.5 billion capital, 24.18 percent down from the Baht 4.61 billion of those opened in the same month last year.

A total of 12,201 companies and legal entities in businesses closed in 1998, the worst year for the country’s business sector, Mr. Norawat said. He said that it was very likely that there would be fewer companies closing this month as the macro economy was stabilizing.

Most of those closed down were small and medium-sized businesses left in a liquidity crunch; leading in the closure were those in food, restaurant and service, followed by those in construction; no new companies registered with more than Baht 499 million capital.

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Created by Andy Gombaz, assisted by Chinnaporn Sangwanlek.