Burma opening up to more Thai investment

Heavy emphasis on infrastructure projects 

Burma hopes to lure Thai investment this year, particularly in infrastructure projects, after many years of low cooperation with the exception of PTT, says the Neighbouring Countries Economic Development Cooperation Agency (NEDA).

President Acksiri Buranasiri said the agency's executives held discussions with Burmese ministry officials during a state visit last October, focusing on assistance Thailand could provide to Burma.
The Burmese officials asked Thailand to assist in developing a road to complete a transport network called the East-West economic corridor. They also want Thailand to invest in developing its Bagan airport, where it plans to allow direct flights of mid-sized airplanes.
Bagan airport is a part of Burma's "Emerald Triangle" national development plan, which is aimed at bridging cultural and tourist destinations including Bagan - the so-called land of a thousand pagodas - to Pakse in Laos, Cambodia's Siem Reap and Thailand's Sukhothai.
"This plan is aimed at building up regional cultural tourist attractions instead of each place alone, so that it is convenient to visit several locations across borders during a single trip, similar to travel in Europe," said Mr Acksiri.
Providing financial assistance to neighbouring countries is expected to benefit Thailand as well. For example, around 70% of travellers to Laos transit through Suvarnabhumi airport. Once the new airport in Laos has been built, it will attract more visitors through Thailand.
Burmese projects are expected to stimulate the Thai construction business as NEDA's contract offers a low interest rate of 1.5% on loans provided the lender agrees to hire only Thai contractors and use at least 50% Thai raw materials.
NEDA is waiting for the Burmese government to set up after its recent election before it signs an agreement.
In the past, most projects in Burma earned financial and development assistance from China. An exception is the 30-kilometre road from Myawaddy to Tanaosri, which used a 4-billion-baht loan from the Export-Import Bank of Thailand.
In the past, NEDA provided a 1-billion-baht soft loan to Cambodia for the route from Chong Jom in Surin province to Siem Reap, but it was revoked due to tensions between the two countries, so financing fell to the Chinese government.
Since the agency began in 2005, NEDA has provided soft loans for 12 projects worth 5 billion baht and given an additional 2.5 billion baht in financial grants. There are eight projects in Laos, two in Cambodia, and one each in Burma and Vietnam.NEDA is expanding external economic development by focusing on smaller economies as Thailand is still a developing country.
It plans to seek cabinet approval to extend its coverage to East Timor, Sri Lanka and Bhutan, where it foresees great potential for infrastructure development in the future.
Laos still requires development projects that will cost around 180 million baht, such as the second phase of Pakse airport, as that city tries to become the second largest behind Vientiane.
"Laos asked us if we can help finance development projects in six or seven cities, but we might limit it to a few major cities first. Each city requires only slightly over 100 million baht, but it helps strengthen the relationship of Thais with Laotians as the development improves their quality of living," said Mr Acksiri.
This development aids Thailand, he noted, as the branch with the highest sales earned for Tesco Lotus in Thailand is Nong Khai, which is on the border with Laos.
In the near future, NEDA will focus on paving ways for Thai companies to be priority investors in these neighbour countries by setting conditions on soft loan agreements.
"For instance, if we provide soft loans to some country to build roads, railways or container yards, Thai private firms should have priority to invest in related projects such as hotels," said Mr Acksiri.

 

Thailand lures more US investors

The recent road show to the US held by Thailand Board of Investment (BOI) showed the country received confirmation from giant American investors of their investment expansion projects, according to Minister of Industry Chaiwuti Bannawat who led the road show.

Dow Chemicals has confirmed its plan to increase investment in Thailand by Bt2 billion while Guardian Industries, a leading glass producer, moved on with its plan to upgrade its steel furnace project, which required another Bt1.5 billion. GM has also expressed interest in producing cars that use renewable energy in the country.

The Minister of Industry said that the recent investment road show from 12-20 December 2010 was highly successful, as the BOI received confirmation from a number of leading companies.

Dow Chemical, one of the world’s leading chemical producers, confirmed its investment expansion plan in Thailand. Under this Bt2 billion plan, the company will expand its propylene glycol production facility in Thailand. During the road show, the BOI also had a chance to discuss with Dow Chemical’s management the possibility for future investment expansion.

Dow Chemical’s new production facility will have a total production capacity of 150,000 tonnes per year. Located in the Asia Industrial Estate in Rayong province, the facility will use environmentally friendly technology to produce propylene glycol which is a raw material for many consumer and industrial goods, such as pharmaceutical products, foods, health and hygiene products.

At present, Dow Chemical has five propylene glycol production bases worldwide – two in the United States, and one each in Germany, Brazil and Australia. In Thailand, Dow Chemical has operated business in Thailand since 1967 through a joint venture with the Siam Cement Group and its own investment. Its total investment in Thailand is Bt142.4 billion.

Also during the road show, the BOI met with the management of Guardian Industries, a major glass producer in the United States. The company has just invested another Bt1.5 billion in its existing facility in Saraburi province to upgrade its glass furnace to reduce energy consumption. A new control system for better efficiency and a mirror production line were invested under this plan. In the future, the company plans to invest in a sun guard glass manufacturing facility and screens for electronics products, such as LCD TV and mobile phone screens and displays.

The road show also met with General Motors (GM) and Ford Motors to discuss the future growth and potential of the Thai automotive industry. The Minister of Industry presented the BOI’s investment policy for sustainable development and invited GM and Ford to invest under this policy.

This policy grants maximum incentives to manufacturers of auto parts for renewable energy vehicles or those using advanced technology and environmentally friendly technology, this policy that conform to the technological development plans of both companies.

In addition, the BOI had a chance to visit General Motors’ Research and Development Center, one of the world’s advanced technology development center. They learned more about new technologies for producing renewable energy vehicles, such as electric-powered and hydrogen-powered vehicles, and the US’s ethanol promotion policy, which is similar to Thailand’s E85 energy policy. GM also shared its plan to produce renewable energy vehicles in Thailand.

The meeting with Ford Motors included a presentation on an environmentally friendly vehicle development plan and engine efficiency development projects. Ford Motors has a joint venture with Mazda in Thailand, called AutoAlliance (Thailand) Company Limited. The Ford-Mazda joint venture has made investments of more than Bt50 billion in their facilities for the production of pickup trucks and body parts, passenger car assembly and the stamping of metal parts.

The company has also invested in the establishment of its regional office overseeing the marketing operations of all its subsidiaries in this region and has invested Bt20 billion in a new passenger car production project to produce a new vehicle model that has never before been made in Thailand. The facility will use new and advanced technology and will have a production capacity of 200,000 vehicles a year.