Posts tagged Thailand

Could Indonesia overtake Thailand as an auto manufacturer?

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Will Indonesia overtake Thailand as the automotive manufacturing center of Southeast Asia? Thanks to increased investment from overseas carmakers, government incentives and a growing domestic demand for vehicles, many think so.

Thailand has traditionally been the country of choice for international manufacturers. Despite its own large middle-class customer base and strong production figures (1.64 million vehicles in 2010) it faces new pressure from rising costs and a new government-set minimum $10 daily wage for workers. Companies produced a total 650,000 vehicles in Indonesia and sold 764,000, but forecasts predict both numbers could top a million by 2013.

The Jakarta Globe reports:

Indonesia is already expecting more than $1 billion in investment in the automotive sector starting this year. Nissan recently announced a $250 million expansion plan; Suzuki has announced an $800 million expansion; Chrysler a $100 million expansion; Daihatsu just carried out a $246 million expansion; and BMW a $12 million expansion. India’s Tata also expressed interest in building a production base in Indonesia.

 

Peugeot and General Motors have also announced plans to assemble vehicles in Indonesia. The government also intends to provide tax breaks for investments over Rp1 trillion (US$117 million), though no formal arrangement has been made yet.

Indonesia’s auto manufacturing base is in Bekasi and Karawang, near Jakarta and the government-set minimum wage of $8 may see Thailand-based companies chase lower costs. As always, Indonesia’s infrastructure inadequacies will be an issue and the country would need to address them before it could become a serious global export leader, an analyst said.

source & article: The Jakarta Globe

 

Infrastructure, construction boom in Southeast Asia: Reuters

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News of a boom in Southeast Asian infrastructure spending is creating excitement, according to this piece in Reuters. New government initiatives to attract investment and stimulate economic growth, along with added interest from Chinese investors, will see about US$20 billion worth of new construction projects due to begin across the region this year.

The article is most confident about projects in Thailand and Malaysia, which is about to start its $11.5 billion, three-line Klang Valley MRT railway network around Kuala Lumpur. It says the two countries are “believed to be in the early stages of a new infrastructure investment cycle,” with construction companies posting record orders.

Thailand wants to spend $62 billion in the next two decades to expand its electric rail network to 391km and start building a 23km new line on its metro system, both moves intended to increase traffic on its relatively under-utilized public transit system.

Singapore, with more modest construction projections, is also planning to expand its rail network to 280km from 138km by 2020.

Risks to investors are potential land acquisition issues in Malaysia, Thailand’s politics, a land reform bill in Indonesia and funding problems in the Philippines. Malaysia’s land laws were relatively clear compared to others, but projects with such ambitious land acquisition plans were susceptible to delays.

Analysts in the article were most optimistic about Malaysia’s IJM Corp Bhd and Gamuda Bhd, and Thailand’s Sino-Thai Engineering and Construction Pcl.

source & article: Reuters

Australian companies urged to bid for Asian transport projects

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Australia’s international trade development agency Austrade is encouraging local firms to get involved in a series of major transport proposals across Asia. The region’s emerging big hitters have realized the importance of solid infrastructure to support their booming economies and logistical needs, especially airport expansion and roadway construction.

Among the projects Austrade has flagged for attention are Indonesia’s US$255 million Ngurah Rai Denpasar Bali International Airport expansion and accompanying expressway, due to open before the 2013 APEC Summit, new expressway and metro line projects in Vietnam, and development of numerous transport plans and policies for the Philippines. There’s also the $2.3 billion Phase 2 of Thailand’s Suvarnabhumi Airport improvement involving a third runway and new passenger terminals. As well as the Southeast Asian projects, giants China and India are also active in the infrastructure boom, with Beijing planning a second airport and India investigating dedicated freight rail corridors (DFCs) and over 70,000km of proposed new roadways.

Austrade’s Senior Export Adviser Stan Roche said Australian companies could offer their expertise in several areas, not only in design and engineering but also in finance advisory and expertise in dealing with public-private partnerships (PPP). There were also other opportunities in related fields like security systems and technology.

source: Austrade

Maybank’s next move is Thailand: analysts

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Maybank won’t stop with its intended acquisition of broker Kim Eng, according to analysts, and will likely continue its march into Southeast Asia by buying a Thai bank sometime soon.

Analysts from HwangDBS Vickers Research and RHB Research said a commercial bank in Thailand would be the next “obvious move” for Maybank since it has no current presence there, but the company will need to spend some time looking for potential targets. Although Maybank’s management have denied any further M&A plans in the next 12 months, it has commercial operations in all surrounding countries and Thailand’s huge market represents a glaring gap in its plans to spread throughout Southeast Asia.

Kim Eng is Thailand’s number one broker, with 41 branches. Maybank’s ability to acquire 100% of the company as planned is still uncertain, but it would be a big step towards establishing itself as an investment bank and equities trader in the region. Reactions to the news have been positive so far, with Kim Eng’s shares hitting a record high of S$3.04, just below Maybank’s offer of S$3.10.

source & article: Business Times

Cross-border trading on ASEAN markets to begin in 2011

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ASEAN economic integration takes another step with plans for cross-border trading on member countries’ exchanges. The first link, between Thailand and Malaysia, could appear by the end of 2011. Regulators agreed at a regional meeting last year to create a road map for full integration of ASEAN’s major markets, and the very first step will take place with the Stock Exchange of Thailand (SET) launching an information board of the top 30 equities in Singapore, Malaysia and Thailand to generate interest among investors.

Bursa Malaysia and SET will start building infrastructure for a pan-ASEAN e-trading link immediately, allowing about 12 months to get everything up and running smoothly. The Singapore exchange is expected to join shortly after with Indonesia, Philippines and Vietnam to come onboard at an unspecified future date. Demand for cross-border trading is said to be strong, with investors across Southeast Asia looking forward to enjoying a more diverse range of options.

source & full article: Channel NewsAsia

Thai & Tiger to form new low-cost airline

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Another airline will soon jump into the Asian budget flight market, with Thai Airways and Singapore’s Tiger Airways teaming up to form a new low cost service. The new airline, Thai Tiger Airways, will begin flying out of Bangkok’s Suvarnabhumi International Airport in Q1 2011. Thai Airways and another Thai entity will hold a 51% share, while the remaining 49% will belong to Tiger.

The move is yet another sign that both the Asian airline and travel industries are set for a tumultuous time as passenger numbers increase and more companies compete for their business. Analysts at the Centre for Asia Pacific Aviation (CAPA) say it could also lead to entry barriers falling in some countries where smaller airlines have traditionally been locked out.

Tiger Airways, based in Singapore and part-owned by national carrier Singapore Airlines, began flying in 2005 and is modeled on RyanAir, the successful European budget carrier. It flies to 37 destinations in 11 countries and also operates Tiger Airways Australia, a domestic airline.

source & article: Yahoo! Singapore

Indonesian auto sales growth is region’s strongest

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Car sales in Indonesia have jumped by 76% in the first half of 2010 to and are expected to reach 700,000 units by the end of the year, the market outgrowing Southeast Asia’s usual auto powerhouse Thailand.

Just how good this news is depends on where you sit. All auto brands have been trying to increase production capacity at their Indonesian plants to meet demand, thrilling automakers. Nissan plans to double capacity at its local factory to 100,000 units and invest another US$20 million in the country. Increased auto sales are obviously a sign of growing wealth and economic activity, especially since a significant portion of that increase is minivans and multi-purpose vehicles.

Others say Indonesia needs major improvements to its road and highway infrastructure to accommodate large numbers of extra vehicles. After all, spending hours in traffic jams doesn’t increase economic activity and is likely to worsen pollution. Auto industry figures say even 700,000 sales represents a shadow of Indonesia’s potential, given its population of 230 million.

New vehicle sales in 2010 have reached 1.18 million already across the region (Indonesia, Thailand, Malaysia, Philippines, Vietnam & Singapore). This should please Japanese automakers, whose brands make up 80% of that total.

source & article: The Jakarta Globe

Summary of upcoming sukuk offerings

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We continue our unusual fascination with the growth in popularity of Islamic bonds, or sukuk, here with Bloomberg’s roundup of current opportunties. Despite a fall in sales this year, they continue to attract more attention across Southeast Asia with various public and private offerings in Malaysia, Indonesia and Thailand. This list notes that even tiny European nation Luxembourg may jump on the bandwagon with its own sale.

The diverse list includes sales by (among others) Lafarge Malayan Cement Bhd (US$108 million), mobile communications giant Axiata Group Bhd ($315 million +), Kencana Petroleum Bhd ($78 million), Malaysian Airport Holdings Bhd, the Governments of Indonesia ($650 million) and Thailand ($1.5 billion).

ASEAN’s Free Trade Area: 2015 a ‘stretch goal’?

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A compromise by Thailand and the Philippines over rice tariffs has led to new optimism that ASEAN can indeed establish a regional Free Trade Area by 2015. But domestic interests, development gaps and the Myanmar issue still present obstacles.

Larger economies such as the USA and European Union now prefer to negotiate trade agreements with individual countries, rather than the bloc as a whole. A region-wide Free Trade Agreement with China came into effect on 1 January 2010, but is now being renegotiated with ASEAN’s largest economy Indonesia, after pressure from domestic industries.

Economic gaps are obvious between member states such as Singapore and Laos. A successful Free Trade Area would also necessitate improvements in transport and financial infrastructure across borders, to ensure the free movement of capital, goods and people.

article & source: Business World

Lexus wants 10% of Thai luxury auto market

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Lexus, Toyota’s luxury brand, aims to increase its share of the luxury auto market in Thailand to 10% over the next five years.

Despite the economic downturn, Thai luxury sales grew 5% last year with a total of 7,700 vehicles sold. Projections indicate this trend should continue in 2011-12. Currently, Mercedes-Benz dominates the market (as it tends to do across Asia) with a 50% share.

Lexus sales increased by 6% last year, but its share of the Thai luxury market is still only 3.6%.

article & source: Bangkok Post

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