Car makers stunned by unexpected turnover at motor show

About 300 units of cars and pickups were being sold each day in the first 4 days of the Bangkok Motor Show at Bangkok International Trade and Exhibition Center. Toyota Motors (Thailand) led in the bookings with about 100 units of its cars and trucks, followed by Honda Car (Thailand) with 30-50 units.

According to the organizer of the Bangkok Motor Show, Prachin Eamlumnow, the surge in car sales astonished everyone when it tripled the 100-unit-a-day target. It is now expected that about 3,000 units of cars and trucks, worth about Baht 1.5 billion, will have been sold by the time the show ended on April 4.

Daimler-Benz (Thailand) has won 80 bookings of its new S Class models, while Jaguar had 30 since the show opened on March 27, said Mr. Prachin. An S 500 model is priced at Baht 12.86 million, while an S 320 is Baht 8.74 million and an S 280- Baht 6.48. The booked models could be obtained in the next 3-6 months.

Makers strongly believe that the local auto industry will make a turn-around this year. The bookings indicate that the well-to-do are gaining confidence that the crisis has reached the lowest point and is about to bottom out. Peugeot had 40 bookings in the first 3 days, a good start for European cars.

Thai Inchape prepared to close a century old chapter

Inchcape is to end its long history in Thailand. Inchcape Thailand and its subsidiaries’ British parent company, Inchcape Plc, has been bought by the Hong Kong-based export giant Li & Fung Co.

Inchcape has deep roots in the Kingdom, a history which dates back more than 140 years. Though Thai Inchcape was formed in modern years, its founders were formed in Borneo in 1856 and Anglo-Thai in 1884. The two later merged. No drastic change is expected until after April, after a takeover agreement was signed last week by the British Inchcape and Li & Fung.

According to Inchcape sources, the takeover move was announced to the management and all the subsidiaries have been well prepared, hoping for the best as the new parent company is among the top 3 largest trading firms in Hong Kong. Li & Fung would spend April getting to know all the Thai operations, said the sources.

Li & Fung was said to spend between Baht 5.5-6 billion in buying Inchcape in Asia and Pacific; there used to be 14-15 Inchcape operations in Thailand, many of those were closed down in recent years; Inchcape Consumer Marketing is distributor of Ovaltine, Fluocaril products; Duracell, Dial soap, K-Swiss shoes, Timex watches.

Major computer game producer allocates US$ 1 million to fight violations

Electronic Art World Inc., a leading producer of computer game disks, said it has lost Baht 500 million in the Thai market because of rights violations. The company is asking Thai authorities to beef up its suppression of software pirates. The company said unlicensed software in the market is about 60 percent of the market price.

According to Mr. Eric Lee Ting Ly, Thai manager of Electronic Art World, the US parent company has allocated US$1 million to fight copyright violations on its products in Thailand. The company would also urge the US government to use Article 301 of the Trade Act, which enforces the US Trade Representative to retaliate against Thailand for unfair trade, said Mr. Lee.

The company would soon meet with Thai authorities concerned, which include the National Police Command, to fight against the violations. It was not only the company, but also the US government, which is losing in the war against software piracy, said Mr. Lee.

Deputy Commerce Minister Pravich Rattanapien meanwhile said tough actions against software violators have been taken; about 300,000 disks of unlicensed software worth Baht 30 million were seized, 18 traders/producers arrested, in a recent raid on Phantip Plaza.

There’s been no low season in Thai tourism - airlines

Airlines have said that there has been no low season in Thailand as European tourists have been crowding into the Kingdom since late last year, a situation which is likely to last until the end of 1999. Many airlines are on the move to increase regular flights or change to larger planes to connect Thailand with major European destinations.

Thai Airways International was scheduled to increase its Bangkok-Frankfurt flights to 10 flights a week beginning April 1st. "The number German passengers to Thailand have been increasing in recent months," said Mr. Charnchai Singhtoroj, THAI’s sales director.

China Airlines said starting March 28 it would change planes used for its Bangkok-Amsterdam flights from MD-11s to the 497-seat Boeing-747 400s, to meet with increasing demand. A McDonnell Douglas’ MD-11 can carry only 304 passengers, said Mr. Poj Sakuntalak, Thailand’s sales manager for China Airline.

China Airline said Hollanders turned to the airline after THAI stop flying direct flights to Amsterdam last year; about 70 percent of CAL have been tourists from Europe; Taiwanese prefer Thailand for vacations; the airline flies 7 flights from Taipei to Phuket each week, with another 3-weekly Kaochong-Phuket flights; THAI increase day-flights from Europe to cater to demands by business flyers.

Over Baht 100 billion in loans left unused by government agencies

Winning a foreign loan package is very difficult but, for the Thai government, it being proven that using the loans is much more difficult. Up to now, there is about Baht 140 billion in loans borrowed from international institutions since last year left to be disbursed, according to an academic advisor to the House Fiscal Budget Committee.

The government had received a total of Baht 210 billion in foreign loans to fund the ambitious Social Investment Programs, to help relieve pain caused by the economic crisis. The SIP funds have been kept by government agencies appointed to lead in development projects.

The foreign loans, mainly from the World Bank, the Asian Development Bank and Overseas Economic Cooperation Fund, have been paid out in a snarling pace, which would affect the government’s spending target and likely impede the recovery, said Dr Runrueng Pittayasiri of Mahidol University.

Until early this month, the government spent about 11% of the Baht 45 billion loan to help small and medium-sized enterprises to survive the crisis; now there will be Baht 53 billion more to spend, under the Miyazawa loan scheme.

More Thais go abroad to beat summer heat

Outbound tourism was caught by surprise, finding that summertime programs have interested more Thais this year in spite of the fact that there is still no sign of economic recovery. Why are more Thais going abroad in the economic crisis? One reason is the fact that holidays in the Kingdom are more costly.

Managing Director of Weekend Tour, Mr. Somchai Chomraka, said each outbound route has been booked 80% to 90% since February. To be more exact, Weekend Tour has had 200 Thai customers since last month, 150 of whom are heading abroad during the Songkran traditional new year holiday in the middle of April.

Tour operators have reported the same trend. The number of outbound Thai tourists has risen nearly 2 fold at some travel agencies, compared to late last year. But, according Mr. Somchai, the number of Thais who are going abroad during this summer holiday has reached 1995 and 1996 levels, years which saw outbound tourism boom.

A two-night, three-day package to Singapore by Swiss Air costs only Baht 7,800, while one to Hong Kong by Cathay Pacific starts at Baht 8,300, compared to a trip to Phuket which would cost over Baht 10,000. Government campaigns urging the public to help save hard currencies have ended because of a lack of budget funds; industry sources said it would be worse when THAI hikes domestic fees starting May 1.

French Casino reportedly buying into Big C Supercenter

Central Group has been in advance talks with France’s retail giant Casino about investment in Central Retail Corp’s Big C, Thailand’s largest superstore chain and the country’s last to fall to hands of foreigners. CRC sources said due diligent process has been already on the way for sometime.

Casino is to buy 68% of Big C’s 250 million shares at Baht 15 each, said industry sources, as CRC agrees to reduce its share from 32% to 20% in the new holding. Old share holders will all reduce their respective share portions, said the sources. The sell off will help CRC solve liquidity problems and much of the new capital would be spent in expansion plans this year.

Central sources, however, said the share price would be between Baht 20-Baht 25 each, according Big C’s current book value, while due diligent talks will still continue. Top executives of Central Group have planned to announce talks with Casino in a press meeting sometime next month, said Central sources.

The disclosure ends rumors that the US Wal-Mart is coming in; Big C earned Baht 22 billion in sales last year, or about 40 percent of Central’s corporate earnings; CRC has sold all its shares in Carrefour Hypermarket to France’s Carrefour SA; the company is also a minority owner of Tops Supermarket chain; Big C has 22 branches, while Lotus Supercenter under the UK Tesco has 14 and Carrefour 7.

Thousands in auto parts industry feared to lose jobs

The Federation of Thai Vehicle and Parts Industry said about 30,000 workers in the auto parts industry may lose their jobs after the local contents rule is revoked on January 1, 2000. Without such a rule, the parts industry will not be under protection anymore, while local manufacturers are still too weak to compete with stronger competitors from the US and Europe.

About 200 companies may shut down their operations after the industry is liberalized under obligations to the World Trade Organization. 700-1,000 others will be adversely affected as they sell fewer products, said Professor Kitti Limskul of Chulalongkorn University, advisor to FTVPI.

Moreover, the industry will be more affected when tariffs on auto parts will be brought down to 0-5%, under the ASEAN free trade area agreement starting next year, said Dr Kitti. The Thai market will be overwhelmed by cheaper parts from Indonesia, Malaysia and the Philippines, said Dr Kitti.

European car makers are likely to manufacture their own parts instead of buying from local companies. Even Japanese parts makers would not be able to compete with stronger European makers.

Thai government shoots down airlines’ fare hike plan

The plan by about 60 airlines flying from Thailand to hike airfares by 13% starting this April 1 was shunned by the Transport and Communications Ministry. The ministry is yet to explain why, said David Sae Siew, manager for Southeast Asia, India and the Middle East for Cathay Pacific Airlines.

The reaction of the Thai government has disappointed the airlines, which were trying to cover rising costs this summer as most airports have already increased fees and fares for ground services, David said. The move will affect the airlines’ net profit this year, he said.

Thai Airways International, which led the fare hike move, was the only airline that was granted permission to increase fares on international routes, said Mr David. The airlines will try again in another joint effort to increase airfares for winter flights between October and December this year, he said.

Airlines were allowed to increase airfares twice in 1998, 3% each time; it was necessary to increase fares by at least 5% this summer. 5 airlines - American Airlines, British Airways, Canadian Airlines, Cathay Pacific and Qantas - form the OneWorld alliance to compete in the highly competitive market.

Golden award hielps boost Chang beer sales

Sales of Chang beer instantly increased after launching their new packaging, which boasts the AIBA Gold Medal Award on its cans and bottles. The low-price Thai-brewed beer now aims at five-star hotels, top restaurants and foreign tourists as new targets.

Thai Beer (1999) Co., distributor of Chang Beer, said besides the 330-centiliter cans, the beer will be available in 330-centiliter bottles. The small bottles will fit well into the company’s policy to expand its consumer base to foreign tourists, which recognize quality of Chang beer by the award, won in Australia two years ago.

Chang beer, arch rival of Singha beer, has had more market shares in recent months with sales twice or three times bigger than those of Singha and Heineken beers, said Thanit Thammasukhati, public relations advisor to Thai Beer (1999). Chang beer hopes to have more shares in the country’s nocturnal life businesses, said Mr Thanit.

Chang beer will continue to sponsor major sport events with its own sports teams; to launch more sales promotion, activities to compete with Singha’s Leo beer - the fighting brand; a new TV commercial on the gold medal will appear soon.

Private sector, ministers to find ways in ‘Exports Summit’ next week

Hundreds of exporters, key economic ministers and top officials will spend half a day to discuss measures to boost exports in one of the largest economic gatherings next week, dubbed as ‘Exports Summit’. Participants will address questions of liquidity, tax and tariff structures and the baht value, which are regarded as main obstacles to accelerating exports.

According to Deputy Commerce Minister Pravich Rattanapien, besides his ministry, the Minister of Finance, Minister of Industry and Minister of Agriculture and Agricultural Cooperatives, and the Governor of the Bank of Thailand are yet to confirm participation in the event at the Department of Exports Promotion on Ratchada Pisek Road.

"It’s time to stop talking about problems in the industries and find a way to solve them," Dr Pravich said. Exporters are hoping that the Ministry of Finance and the Export and Import Bank of Thailand declare a debt moratorium so that exporters, which were hit hard in the financial crisis, could access new exports credits.

The discussion will pave way to changes in the tax structure scheduled next June; leaders from chambers of commerce and industry associations will all take part in the meeting; chairmen and CEOs from top exporting companies will voice their concerns to ministers and officials.

Copyright 1998 Pattaya Mail Publishing Co.Ltd.
370/7-8 Pattaya Second Road, Pattaya City, Chonburi 20260, Thailand 
Tel.66-38 411 240-1, 413 240-1, Fax:66-38 427 596; e-mail: [email protected]
Created by Andy Gombaz, assisted by Chinnaporn Sangwanlek.