Thailand gains an edge
in the world bioplastics industry

The technologies that humans have developed over the last century have the potential to destroy the earth. That much is clear.

What new environmentally-friendly technologies will arise to replace them is not entirely clear yet.

Bioplastics looks like one such promising technology.

Thailand is well-endowed to take advantage of new bioplastics opportunities as they arise.

Thailand has relatively liberal foreign investment laws and incentives to draw foreign firms with the necessary technologies into joint ventures.

Thailand is also well-endowed with the raw materials, such as cassava, necessary to manufacture bioplastics.

The development of new industries like bioplastics creates new jobs that require a natural science or engineering education. This in turn could lead to more Thai chemists, scientists, and engineers over the long-run.

The image on the right represents the chemical formula of Polylactic Acid (PLA), one of the important components of bioplastics.

A Bangkok Post article this week has looked at recent developments in Thailand's emerging bioplastics industry. Here is the article in full:

Regional bioplastics role pursued

Its natural resources could enable Thailand to attract overseas investment to become a regional bioplastics hub, says the Thai Bioplastic Industry Association.

In the Asia-Pacific region, Thailand's bioplastics industry is currently behind only Japan and China - ranked first and second respectively - said association president Somsak Borrisuttanakul.

"Thailand has plenty of raw material supplies, especially cassava," said Mr Somsak. "With an annual production of 20 million tonnes, Thailand is the world's top exporter of cassava."

In addition, Thailand has a large lactic acid (LA) manufacturing base. Made from cassava and sugarcane, LA can be processed to become an ingredient in bioplastics production.

In April Netherlands-based Purac started operations in Thailand at its largest LA manufacturing facility in the world. The plant can currently produce 50,000 tonnes of LA a year and plans to double its output, said Mr Somsak.

He added that Purac has also been working with potential strategic partners to develop small-scale production plants for polylactic acid (PLA), which Thai compounders must currently import.

"The only missing piece in the jigsaw for Thailand's bioplastics industry is local manufacturing of PLA, which requires a substantial investment of billions of baht for an economy-of-scale production of at least 30,000 tonnes a year," he said.

But Mr Somsak said that to develop an integrated industry, the government should stimulate demand by raising awareness of bioplastics' ability to compete on price with conventional plastic.

Biodegradable plastics now account for only 30% of annual packaging consumption of 500,000 tonnes. However, while two to four times more expensive than conventional plastics, bioplastics become competitive when waste management costs are taken into account.

With the goal of making Thailand a regional bioplastics hub, the government has initiated a 1.8-billion-baht five-year action plan. It aims to increase cassava yield from three to 10 kilogrammes per rai - in part, to ensure production meets demand for human consumption as well as for industrial use.

At the same time, bioplastics exports have begun to markets such as the European Union, the United States and Japan. The EU has an especially promising outlook as it plans for 100% bioplastics use from 2010 onward, said Mr Somsak.

(Source: Bangkok Post, business, 18-08-08, NAREERAT WIRIYAPONG, temp-link)

Vocabulary:

Plastics Vocabulary

bioplastics - a non-petroleum replacement for traditional plastics, "a form of plastics derived from renewable biomass sources, such as vegetable oil, corn starch, pea starch, rather than traditional plastics which are derived from petroleum" (See Wikipedia)

Purac Biomaterials (the Netherlands) - a company that manufactures biodegradable plastics, "used commercially for over thirty-five years in applications as diverse as resorbable surgical sutures, orthopedic implant devices, cosmetic surgery products and drug delivery systems" (See website and Wikipedia)

a chemical compound - a chemical substance consisting of two or more different elements chemically bonded together in a fixed proportion by mass (See Wikipedia)

compounders, chemical compounders - companies that manufacture more complicated chemicals from simpler chemicals

lactic acid (LA) - an important chemical compound that plays a role in several biochemical processes (See Wikipedia)

polylactic acid (PLA) - an important component of biodegradable plastic, "a biodegradable, thermoplastic, aliphatic polyester derived from renewable resources, such as corn starch (in the U.S.) or sugarcanes (rest of world). Although PLA has been known for more than a century, it has only been of commercial interest in recent years, in light of its biodegradability" (See Wikipedia)

cassava - a crop grown in tropical and subtropical regions for its edible starchy root, a major source of carbohydrates, gives the highest yield of food energy per cultivated area per day among crop plants, except possibly for sugarcane (See Wikipedia)

Other Vocabulary

an edge - an advantage

have an edge over Y - already have an advantage compared to Y

gain an edge over Y - gain an advantage over Y

well-endowed with Y - has a lot of Y to begin with

take advantage of Y - use and gain from Y

relatively liberal foreign investment laws and incentives -

a hub - a center for some activity

regional bioplastics hub - a center in the Southeast Asian region for bioplastics

X and Y ranked first and second respectively - x is ranked first and Y is ranked second

raw material - a material that is used to manufacture more complex products, for example steel is a raw material used in the manufacturing of automobiles

a manufacturing base for Y - a central place to manufacture large amounts of Y and send them to nearby regions and countries

potential X - can possibly become X in the future

strategy - a plan for winning a competition

business strategy - a plan for running a profitable and successful business

potential strategic partners - other companies that a company might work with on a project

a jigsaw puzzle - a picture cut and broken into small pieces which must be fit back together again (See Wikipedia)

the missing piece in the jigsaw - just one missing to make it complete (the picture of the puzzle has been put together except for one missing piece)

economy-of-scale production - producing large amounts reduces the costs of production greatly

an integrated industry - an industry in which the different stages of production are included together (from raw material to finished product sold in stores)

conventional plastic - the normal plastic we now use in everyday life

biodegradable plastics - plastics which break up and disappear quickly and naturally like paper or old food does (See Wikipedia)

waste management costs - the cost of disposing and recycling (quite high if there are laws that require this, as there in the European Union)

X taken into account - use X too in the solution of the problem

initiated - started

especially promising outlook - people expect it to do well in the future

Channel nine shifts to more entertainment,
but retains "knowledge-based" news focus

Channel nine is Thailand's third most popular TV station.

The audience shares for the top three channels are: Channel 7 (44.7%), Channel 3 (25.4%), and Channel 9 (10.6%) (AGB Nielsen's ratings as of June)

The 2008 Broadcasting Act that recently came into effect provides new opportunities for TV advertising revenue.

Content mix move towards entertainment

MCOT, the operator of channel nine, is changing its content mix towards more entertainment content to draw more viewers.

The plan is to move from 24% entertainment content to 32% starting this quarter, the third quarter. The third quarter has a reputation for being the low season.

Entertainment content, by drawing more viewers will win the station higher ratings and increase demand for commercial airtime on the channel. This will allow the channel to charge more for its airtime which should increase revenue and the channel's profit margin.

Channel nine's content has always been more knowledge-based than other channels. In the future, the context mix will likely remain more knowledge-based than other channels to maintain brand consistency. This would mean talk shows and variety shows instead of the typical entertainment content such as soap operas offered on Channel 3.

Academy Fantasia is a good example of more knowledge-based entertainment content.
The show has generated revenue of about 50 million baht for two years straight.

The new law allows a maximum of 70% entertainment content. This means channel nine has a lot of room to maneuvre in content mix unlike airtime utilization which already stood at a very high 93% in the second quarter, up from 73% the previous quarter.

With this new content mix channel nine aims to "expand its viewer base from children and adults to teenagers, entry-level workers and women."

News remains core business

News, currently 40% of all content, will remain channel nine's core content. News contenthas been driving the channel's revenue growth recently.
The evening news "generated nearly 200 million baht in the first half of the year, up 80% year-on-year." Revenue from news is projected to "double to 800 million baht by the end this year from last year."

The upcoming Bangkok governor election campaign is expected to be a major news revenue generator.

Profitable TV business in Thailand

The TV business in Thailand has been very profitable recently and MCOT has shared in these profits:

MCOT this week reported a better-than-expected performance in the second quarter. Its total revenue rose by 29% year-on-year to 1.19 billion baht, with net profit surging by 68% to 406 million baht due largely to 45% revenue growth in the TV business.

In the first half, it reported 20% growth in total revenue to 2.1 billion baht, and net profit rose by 36% to 641 million baht.

Other businesses

The radio business has been less profitable for MCOT. The company missed its second quarter income targets and the 53 upcountry stations and seven Bangkok stations are currently being restructured.

MCOT will get a 6.5% share of total ad revenue, if MCOT allows revenue generating TV commercials by TrueVisions (formerly UBC) which holds a concession for pay-TV with MCOT.

Read more articles on the media and telecommunications in Thailand.

(Source: Bangkok Post, business, 15-08-08, temp-link)

Vocabulary:

TV Vocabulary

an audience share - the percentage of the audience that a TV show gets

AGB Nielsen's - provider of the "Nielsen Ratings" in the US, the first and most famous TV ratings system (See Wikipedia on Nielsen Ratings and Nielsen Media Research)

ratings, audience measurement system - a system for measuring how many people watch a television show, advertisers use this information to choose shows to advertise their products one, ratings determine the popularity and price of advertising on a show (See Wikipedia)

content - what a media company presents to the public (the shows a TV station broadcasts, the articles a newspaper or magazine publishes)

the content mix of a TV channel - the percentages of different kinds of content shown on a TV channel (entertainment, news)

core content - the most important kind of content shown on the channel

the low season - the time of year with the lowest number of customers

draw more viewers - get more people to watch the channel's shows

commercial airtime - television time used for advertising

knowledge-based content - content that provides knowledge or makes people actively think (instead of just passively watching without gain)

consistency - when the parts of the whole all fit together and do not conflict or contradict each other

talk shows - shows where a host invites celebrities and interesting people to come and talk about their lives

variety shows - entertainment shows with variety of different activities: singing, acting, comedy,...

airtime utilization - the percentage of the 24 hours of the day in which shows and programmes are broadcast on the channel

viewer base - the channel's audience

holds a concession - pays the government money for the rights to do a business or use a resource

pay-TV - TV that people pay a monthly subscription fee to watch

General Vocabulary

came into effect - when a law becomes active and can be enforced

X has a reputation for Y - many people know X as being Y

the profit margin - the company's profits expressed as a percentage of revenue

room to maneuvre - flexibility that can be used to change things (the absence of constraints)

upcoming - will happen soon

upcountry - in the provinces north of Bangkok

restructured - changing a business to make it more efficient

Flight cut threat to tourism revenue in Thailand:
Will state subsidies be necessary?

This week Thai Airways announced the company's worst performance in 10 years during the second quarter, a loss of 9.3 billion baht ($276.8 million).

Worldwide the airline industry is finding business next to impossible because of rising fuel costs.

The effect of higher oil prices has been sudden. A projected profit of US$4.5 million for the world airline industry earlier this year has turned into a projected loss of $6.1 billion during the course of the year. During the last six months, 25 airlines have entered bankruptcy proceedings.

To cut costs, Thai Airways cancelled unprofitable routes, such as Bangkok-New York and Bangkok-Oakland, and set aside funds to encourage early retirement for 400 to 500 staff.

Possible effect on Thailand's tourism industry

If airlines are forced to cut flights to Thailand to stay in business, this could have a negative effect on Thailand's tourism industry.

Last year 547.7 billion baht of revenue and national wealth was generated by international tourism arrivals to Thailand. This was a large increase of 13% from the previous year.

The international arrivals that generate tourism income increase at a steady pace every year: 2007 - 14.46 million, 2008 - 15.48 million projected, 2009 - 16 million projected.

Possible state subsidies to help the flights to Thailand

Many measures have been proposed to reduce costs for airlines while they are operating in Thailand.

A coalition of international airlines operating in Thailand, the Airline Operators Committee (AOC), has requested the state-controlled Airports of Thailand Plc (AoT) to help airlines weather recent jumps in oil prices so that they can maintain their regular scheduled flights to Thailand. The first three items could result in a 15% cost savings for airlines:

1. Cut landing and parking fees by at least 50% for 12 months or waive the fees entirely.

2. Reduce electricity (400Hz) and aircraft air-conditioning charges by 30%.

3. Cut the current boarding fee of 25 baht per passenger;

4. Cut the concession fees on ground handlers which are passed on to airlines.

5. No longer require airlines should to pay overtime for immigration and customs officers.

6. If immigration Thai Immigration Bureau or TAT provided the TM6 immigration cards for passengers it will save 45 million baht a year for the airlines.

7. Air traffic control (air navigation service providers) can help reduce fuel usage by "allowing aircraft to reach the optimum altitude as quickly as possible so as to reduce fuel burn, and for continuous descent arrival."

8. Shortening the routes that flights take through Thailand.

(Source #1: Bangkok Post, op-ed section, 13-08-08, BOONSONG KOSITCHOTETHANA, temp-link)
(Source #2: Bangkok Post, breaking news, dpa, 15-08-08, temp-link)

Vocabulary:

Thai Airways - the national air carrier of Thailand, operating out of Suvarnabhumi Airport, operates some of the longest non-stop commercial flights, including routes from Bangkok to Los Angeles (See Wikipedia)

projected - experts predicted and expected this in the future

bankruptcy - when a company is legally declared incapable of paying the money they owe (creditors), the company can no longer continue doing business (See Wikipedia)

entered bankruptcy proceedings - started legal proceedings to declare a company bankruptcy and divide its remaining assets among creditors (this usually takes a long time)

early retirement - a common (and humane) method used by companies in Thailand to reduce costs during difficult economics times by reducing their workforce

state subsidies - when the government pays part of the costs to help an company, organisation, or person

a coalition - a group of people or organisations working together

weather Y - do what it takes to survive and continue operating in a difficult situation (for example, weather a storm)

international tourism arrivals - people arriving in tourism from other countries for the purpose of tourism

proposed measures - suggested actions to solve a problem

Airports of Thailand (AoT) - large Thai public company that runs several national airports on a contract basis (See Wikipedia)

waive - give permission not to do something (See glossary)

waive the fees - allow them to not pay the fees

concession - a special right or privilege to run a certain kind of business for a certain period of time, usually given by the government (See glossary)

concession fees - the money paid to get the a special privilege (concession)

fee passed on to Y - the fee is added directly to the price that the customer pays (not absorbed by the company paying it)

ground handlers - people who work with the airline when it is on the ground (providing fuel, maintenance, food service, guiding the plane in and out and connecting it to the passenger ramp)

pay overtime - pay a worker extra for working more than normal hours

Air traffic control - the service of guiding aircrafts as they travel in the air and on the ground, provided by people in the tall air-traffic control tower at airports (See Wikipedia)

Y service providers - companies that provide service Y as part of their business

US General Motors diesel engine plant planned for Rayong

General Motors (GM) is planning a new factory in Rayong to manufacture diesel engines for small pickup trucks. The new factory will produce 100,000 engines annually and will employ 340 workers initially.

The new plant is part of GM's strategy to strengthen its flagship Chevrolet brand in Southeast Asia. GM is still the world's top automaker though Toyota may become number one this year.

This will be GM's first diesel engine plant in Southeast Asia. GM opened an assembly plant in the year 2000 that now employs 2,000 people.

(In photo on right a car being built on the GM assembly line at Rayong)

Here is the article in full:

GM plans $445m plant in Rayong

General Motors is preparing to invest US$445 million (15 billion baht) in a diesel engine plant and production line retooling in Thailand as part of its strategy for growth in emerging markets.

The new plant in Rayong will supply diesel engines for Colorado pickup trucks, taking the place of the local Isuzu diesel engine factory, as GM has divested its holdings in the Japanese automaker.

Slated to begin production in 2010, the plant will make 2.5- and 2.8-litre engines for small pickups and would have a capacity of more than 100,000 units annually. It would initially employ 340 workers.

The 14,492 square-metre facility will be GM's first diesel engine plant in Southeast Asia. It will be located next to the assembly plant that opened in 2000 and now employs 2,000 people.

GM said the remaining investment would be used for engineering development and retooling of the vehicle manufacturing plant in Rayong as well as production of the next-generation Colorado small pickup for sale in Thailand and abroad.

The new investment would enable GM and its flagship Chevrolet brand to become stronger players in Thailand and across Asean, GM chairman and chief executive Rick Wagoner said at a groundbreaking ceremony yesterday in Rayong.

"This plant is an example of how we are proactively pursuing two key aspects of GM's global strategy," he said.

"The first is the accelerated application of alternative fuels and propulsion systems to reduce global dependency on fossil fuels. The second is growth in the emerging markets, including the Asean region, as a key factor in our continued global leadership."

Industry Minister Mingkwan Sangsuwan, who attended the event, said Thailand would be in a position to produce two million vehicles annually within five years, given the continued investment and rising demand for locally built vehicles in Thailand and export markets.

He said the government's long-term plan aimed for Thailand to become a leader of the next generation of vehicles and fuels for local and global marketplaces. It includes the production of eco-cars that use less fuel, and the increased promotion of alternative fuels.

Toyota Motor Corporation, poised to overtake GM this year as the world's top automaker, announced two months ago that it would invest 5.4 billion baht to expand its diesel engine plant in Thailand to 350,000 units per year from the existing 200,000 units. The plant is scheduled to begin commercial production in 2010. Toyota projected demand for diesel engines would grow to 300,000 units in 2010.

Speaking about the global rivalry with Toyota, Mr Wagoner refused to concede that GM might fall into second place.

"This year is not over yet," he said. "We don't worry about coming back to be No. 1, but we want to be driven by outstanding cars and trucks, the latest technology and participating in the world market overall."

Although GM has increased its market share in Asia, by its own calculations, to nearly 7% from 5.9% in the last three years, it sales remain small compared with North America, where it still makes one out of every five cars sold.

"GM needs Asian markets more than other automakers do to offset sluggish demand at home," said Matthew Kong, associate director of Fitch Ratings in Beijing.

In Thailand, GM has benefited in the last decade from its partnership with Isuzu. GM has kept costs down in Thailand by cutting the number of expatriate managers to about 10, from 40 earlier in the decade. It has instructed its workers to follow the Japanese formula of "kaizen", or continuous improvement, and the plant uses the just-in-time production system.

Entry-level workers earn about 8,000 baht a month at the factory.

(Source: Bangkok Post, business, 14-08-08, SANTAN SANTIVIMOLNAT, temp-link)

Vocabulary:

General Motors (GM) - a multinational corporation founded in 1908 and headquartered in the United States. As of January 1, 2008, GM is the world's largest automaker as measured by global industry sales, and has been the sales leader for the last 77 calendar years. As of 2008, General Motors employs about 284,000 people around the world. It manufactures its cars and trucks in 35 different countries and sells them under the brands of Buick, Cadillac, Chevrolet, GM Daewoo, GMC, Holden, Hummer, Opel, Pontiac, Saab, Saturn and Vauxhall. As of 2007, General Motors is the fifth largest publicly traded company in the world (See Wikipedia)

a diesel engine - the engine used in most large vehicles such as trucks, diesel locomotive trains and SUV's (See Wikipedia)

retool, production line retooling - changing the production capabilities of a factory (for example, by installing a new set of machinery and tools for making different parts)

a pickup truck - a small to medium sized truck with an open-top rear cargo area (See Wikipedia)

an assembly line, a production line - manufacturing process in which parts are added to a product in a sequential manner using optimally planned logistics to create a finished product much faster than with handcrafting-type methods (See Wikipedia)

emerging markets - a rapidly growing but not fully industrialised and developed economy, examples include China, India, and Thailand (See Wikipedia)

divest - sell stock that you own

divested its holdings in the Japanese automaker - sell the stock that it owns in the Japanese car maker

slated - planned for the future (See glossary)

slated to begin production in 2010 - plans for production to begin in 2010

capacity - quantity that can be produced with available equipment and resources
(See glossary)

flagship - the most important in a group of things owned by a company

the flagship brand - the company's most important brand

groundbreaking ceremony - the ceremony held when a new building or factory begins operation

proactive - acting in advance to cause change and improvement, rather than merely passively reacting to events (See glossary)

proactively pursuing X - acting in advance to get X done, rather than waiting for deadlines or to be told

alternative fuels - ethanol fuels from agricultural products (sugar cane, plam oil, taro, corn)

propulsion systems - a system that provides the force that moves a car forwards (driving force, propelling force, new hybrid electric vehicles combine traditional gas powered engines with battery)

dependency - need, can't live or operate without

global dependency on fossil fuels - the world needs and cannot operate without oil

poised to Y - about to do Y, will do Y soon (after a short period of time)

X overtakes Y - X passes Y, X goes beyond Y

poised to overtake GM - will do more business than GM soon

market share - the percentage of sales in market that the company has (See glossary)

sluggish demand at home - no one is buying car's back in the US where GM is based

offset sluggish demand at home - sell cars to make up for or replace cars not sold in the US becayse the economy is slow

expatriate managers - managers in the country who come from foreign countries

kaizen - a Japanese business philosophy that focuses on continuous improvement of all aspects of a business, improving standardized activities and processes to eliminate waste started in post World War II businesses such as Toyota (See Wikipedia)

just-in-time production system - a production strategy of reducing inventory, improves the return on investment, must have signals of what is going on elsewhere within the process (See Wikipedia)

Thailand's new consumer protection law has teeth

Thailand will soon have a new set of laws designed to protect consumers.

The provisions of the new law modify some of the flaws in the current system that allow unscrupulous business people to cheat customers.

When my next door neighbor in Maesai, a wealthy and streetwise business woman who does business on both sides of the Thai-Burmese border, told me that an air conditioning shop in Chiang Rai city, the provincial capital, had installed a second-hand air conditioner in her car after she paid for a new one, I was shocked.

Anticipated court delays meant that she like many others decided not to pursue the matter any further and seek redress.

The lesson for me was simple, trust no one unless you've known them for a long time or perhaps if you have a mutual powerful friend that would cause a considerable loss of face if they cheated you.

Once again, long-term business relations, connections and friendships were all important and basic rule of law could not be assumed. This seems about to change.

The law is apparently yet another pathbreaking law passed by the post-coup interim legislative assembly (NLA) at the end of last year before the end of their tenure. Why do laws that change the system for the good like this only seem to be passed under non-elected parliaments?

Here is the article in full:

New law eases consumer ills

Consumers will find it easier and faster to complain about unfair contracts, products or services at any court nationwide when the 2008 Consumer Case Procedures Act takes effect on Aug 23. The new law would give consumers more rights, said Teeravath Chantarasomboon, director of legal affairs at the Office of the Consumer Protection Board (OCPB).

Officials would record a consumer's statement, collect evidence and ask the business in question to attempt to settle with the complainant. If they cannot, a lawsuit could proceed.

"It will be more convenient for consumers to complain or sue at any court near their residence. If there is a counter-suit, the party suing must sue only at the court in the area where the consumer lives," he said.

In the past, he said, some consumers had lost cases as they were unable to travel to the civil court.

Speedy resolution of cases

Currently, consumers can complain to the OCPB, by mail, e-mail, the 1166 hotline or at the city hall in each Muang district.

"The prosecution process will also be faster," said Mr Teeravath.

If a new suit by a consumer is a repeat of an earlier one against the same party for the same reason, there will be no trial and the judgment would be based on the previous complaint.

Courts will process cases with a minimum of delays; only one postponement of 15 days or less is allowed. Trials will be handled by only two courts: the court of first instance and the appeal court.

New law fairer to consumers

"The new act will be fairer to consumers. It will force entrepreneurs, which have more bargaining power than consumers, to prove their cases," said Mr Teeravath.

"If it's proved that the entrepreneur is at fault, the entrepreneur will have to be responsible for all expenses including those of consumers."

Consumers will be exempt from fees including court fees, commissions, witness and lawyers' fees unless the suit is found to be unreasonable or the damages sought are judged to be excessive.

Impact on real estate industry

The changes could have significant impact for the real estate industry.

For example, if property firm cheats buyers or dishonestly transfers assets to others and the remaining assets are not enough to pay debts, its shareholders would also be defendants and be responsible for the debt.

According to OCPB figures from October 2007 to June 2008, consumer complaints totalled 4,210. Real estate accounted for 1,901 cases or 45.15% (see chart), followed by products and services at 30.40%, advertisements 18.58% and direct sales and marketing 5.87%.

Of the complaints about contracts and real estate, 1,200 were real estate cases and most ended with reconciliation as both consumers and developers tried to avoid court action.

Mr Teeravath suggested that consumers keep all contracts, receipts, brochures or advertising documents to support their cases. If they are lost, consumers could report the loss to the police and use the notification as documentary evidence.

To learn more, visit www.ocpb.go.th

(Source: Bangkok Post, business, 13-08-08, KANANA KATHARANGSIPORN, temp-link)

Vocabulary:

Legal Terminology

a complaint - a legal statement charging a person with a criminal offense that sets out the facts on which the claim is based (can also mean an informal expression of displeasure, such as poor service at a store)

the complainant - the person making the complaint

resolution - the process of finding a solution to a problem, resolving a problem (See glossary on resolve)

complaint resolution - solving the problem that caused the complaint (either helping the two sides reach an agreement or punishing the company, if they cheated a consumer)

settle with the complainant - payment of money or some action solving the problem, rather than by legal penalty

a settlement - the money paid or action done by the company to the consumer making the complaint

2008 Consumer Case Procedures Act - Thailand's new consumer protection law

takes effect - when a new law becomes active and can be enforced

provisions of a law - arrangements to deal with problem included in a law

Office of the Consumer Protection Board (OCPB) - the office of the Thai government that deals with consumer complaints against businesses that have cheated them (See website)

a lawsuit - a case in a court of law that involves a dispute between two sides

a counter-suit - a lawsuit that is a response to another lawsuit (a lawsuit against the person who started a lawsuit against you)

sue - start a legal case against someone to claim money from them because they harmed you

a judgment - the money that a court awards someone in a lawsuit

a trial - the formal meeting in a law court where judges listen to the evidence and decide the legal case

a postponement - when a legal case is delayed for a time

court of first instance - the first court to hear and decide on a legal case

an appeal court - the court that reviews a legal case after it has been decided (to make sure that the law has been applied and interpreted correctly)

review Y - go over Y, checking the details of Y, to make sure they are okay

reconciliation - ending a dispute or disagreement

notification - officially informing someone of something (here means the police are officially informed that a crime has been committed)

evidence - information used in a court of law to prove something

documentary evidence - evidence in writing

Other Vocabulary

has teeth - (See glossary on toothless)

a flaw - a mistake, imperfection, or undesirable quality

unscrupulous - a person prepared to act in a dishonest way to get what they want

cheat customers - behave dishonestly without customers, give customers something different from what was agreed on

pathbreaking - new and innovative

tenure - the period of time someone serves in their position

streetwise, streetsmart - a person who has a lot of practical experience and knows how to deal with difficult and dangerous everyday problems (often beyond the law)

X anticipated - people believed that X was going to happen

a matter - a situation with problems that you have to deal with

pursue the matter - continue working on the problem (to improve the situation)

decided not to pursue the matter any further - decided not to continue working on solving the problem

seek redress - try to do something to improve the situation for someone who has been wrongly treated

the rule of law - a legal system in which rules are clear, well-understood, and fairly enforced, including property rights and enforcement of contracts

a hotline - a telephone line that provides a quick response to a problem

X based on Y - X developed from Y, X was built using Y as foundation

negotiations - formal discussions between two groups to reach an agreement

bargaining power - how much power you have to get the agreement you want in negotiations

Y at fault - Y is to blame for the problem, Y is the cause of the problem

Thailand's steel industry
navigates through
a changing world steel industry

The world steel industry is undergoing consolidation:

Surging demand for steel products over the past five years, coupled with capacity utilisation constraints, have been key catalysts. As a result...a handful of gigantic players can wield huge influence on prices.

The world's largest steel company ArcelorMittal has "output bigger than the combined capacity of all its peers."

Sahaviriya Steel, Thailand's largest hot-rolled steel coil manufacturer, has adopted a strategy of vertical integration, with a new 500-billion-baht smelter in the works and investments planned in ore mining.

With this strategy Thailand's dependence on imported steel will be reduced and Sahaviriya will move closer to its goal of being the region's largest integrated steel producer.

The strategy might also make it an attractive acquisition target for foereign steel producers seeking even greater consolidation.

Read a recent article about Sahaviriya's joint Thai-China smelter project.

Read more articles on Thailand's steel industry.

Here is the Bangkok Post article in full:

Sahaviriya says scale critical in global battle

Thailand's biggest steelmaker, Sahaviriya Steel Group of Companies (SVG), is looking for ways to better integrate its operations in a bid to strengthen negotiating power with global steel giants who are hunting smaller firms to acquire.

"We are aiming at investing in ore mining, pushing our 500-billion-baht smelting project to start as soon as possible, and a steel production plant overseas also is in our sights," said group president Win Viriyapraphaikit.

"In doing so we could achieve a goal of being the region's largest integrated steel producer.

"I have to admit that it is very difficult for us to keep a majority holding in the assets we founded," he said, adding that integration among its own businesses from raw materials to downstream products would ensure supplies of raw materials and lower its costs at a time of intensifying competition.

The world's largest steel company, ArcelorMittal, has set the tone for a global wave of consolidation in the industry, and has annual output of 120 million tonnes. Mr Win said the market leader's success had pushed other big contenders such as JFE, Nippon Steel and Posco to pursue similar strategies.

Surging demand for steel products over the past five years, coupled with capacity utilisation constraints, have been key catalysts. As a result, says Mr Win, a handful of gigantic players can wield huge influence on prices.

"With ArcelorMittal's output bigger than the combined capacity of all its peers, it can announce production cuts when steel market prices soften."

He said world steel prices were now completely controlled by a few groups from iron ore miners to steel producers, making it even harder for smaller players to survive, even when they are the beneficiaries of high prices.

Not only have steel producers been consolidating, but also more than 75% of the iron ore in the world is controlled by three operators that can basically dictate the prices of raw materials.

The iron ore prices have risen by 70% to 85% on average since early this year. The spot price of coking coal, the main fuel used in the steel industry, is up more than 300% to a record $365 a tonne from only $80 last year, while high oil prices have doubles freight costs - a major concern for shippers of heavy products such as steel.

Mr Win said steel bar was $1,500 per tonne in July compared with $570 in June 2006, with steel sheet up to $1,200 a tonne from $600 at the end of last year

He said Sahaviriya's huge smelter would be a key weapon to help the company fight back against global market dominance by a few foreign companies.

The company, however, has faced three years of delays due in large part to protests by environmental activists and communities in Prachuap Khiri Khan.

The company is now conducting an environmental impact assessment and once the report is approved, it will resubmit its application for investment privileges with the Board of Investment.

Mr Win also called for support from the government in the form of a master plan for the steel sector, similar to plans prepared by rival countries. Among them are Vietnam, China and Pakistan, which view steel as a national strategic industry.

"The Thai government has overlooked this industry. We have survived in business through numerous periods of hardship without any help from the state," he said, adding that steel as an industry represented economic value second only to energy.

Having a local smelter, he said, would reduce dependence on imported steel that now costs the country some 500 billion baht a year. It would also reduce the costs of local producers that want to make more varieties of high-grade steel to meet the demand of key industries such as automobiles and electronics.

The Sahaviriya Group is the majority shareholder in the country's top hot-rolled steelmaker, Sahaviriya Steel Industry Plc (SSI). It also makes cold-rolled steel, bars for construction and various high-grade finished steel products.

SSI shares closed on Friday on the Stock Exchange of Thailand at 96 satang, unchanged, in trade worth 11.7 million baht.

(Source: Bangkok Post, business, POST REPORTERS, 11-08-08, temp-link)

Vocabulary:

scale - teh size of operations, whether a large or small amount is being produced

critical - important

acquisition - buying another company, the purchase of a company or asset (See glossary)

target - what you aim to reach or achieve (See glossary)

in the works - currently being planned and worked on, but not yet finished

Sahaviriya Group, Sahaviriya Steel Group of Companies (SVG) - manufactures hot rolled steel sheets and coils in Prachuap Khirikan. The company is the Thailand's largest hot-rolled steel coil manufacturer and will be upgrading its facilities with the new smelter (See Yahoo Finance)

X in a bid to Y strengthen negotiating power with global steel giants -

strengthen negotiating power - have a better position in negotiations to get whaat you want

strengthen negotiating power with global steel giants -

integrate its operations in a bid to strengthen negotiating power with global steel giants -

vertical integration - when a firm owns its upstream suppliers and its downstream buyers, when it owns many stages of production (See Wikipedia)

JFE - a Japanese steel company created in a merger in 2002, main business is steel production, although it also engages in engineering, construction, logistics, and chemicals. The company also operates several overseas subsidiaries, including California Steel in the United States, Fujian Sino-Japan Metal in China, and Minas da Serra Geral in Brazil (See Wikipedia)

Nippon Steel - the world's second largest steel producer after Mittal Steel, a Japanese company (See Wikipedia)

Posco - South Korea's large steel company (See Wikipedia)

ArcelorMittal - "the largest steel company in the world, with 310,000 employees in more than 60 countries. It has led the consolidation of the world steel industry and today ranks as the only truly global steelmaker. The company was founded in 2006 when Arcelor and Mittal Steel merged. It ranked at 39th position in Fortune Global 500 companies list. The company is headquartered in Luxembourg City, in southern Luxembourg, the former seat of Arcelor." (See Wikipedia)

ore, iron ore - rocks and minerals that contain the metal iron, a smelter is used to turn ore into steel and iron (See Wikipedia)

ore mining - digging deep in the ground to get the iron ore

a smelter, a steel smelter - an industrial plant that uses a high-temperature process to separate out a pure metal, usually in a molten form, from an ore (Source: Nova Science; See Wikipedia)
smelting project - Sahaviriya is currently building a smelter

is in our sights - is something we plan to do (a target we plan to hit or a goal that we plan to achieve)

integrated - become part of a system closely linked with other parts in the system (See glossary)

an integrated steel producer - a steel producer engaging in many different stages of production, from mining to finished product

integration among its own businesses from raw materials to downstream products

intensifying competition - getting more and more competitive, competition growing

the tone of Y - the general atmosphere, environment, or situation in which events happen

set the tone for Y - determine the general atmosphere, environment, or situation in which events happen

consolidation in the industry - join or merge smaller companies into a larger company

global wave of consolidation in the industry - smaller companies are joining together into larger companies all over the world

contenders - people or companies competing for something

capacity, production capacity - the largest amount that can be produced from a factory or plant

capacity utilisation, utilisation rate - the percentage of full capacity that is used, for a machine, equipment, or a factory

constraints - something that limits or controls what you can do

capacity utilisation constraints - limited capacity places a limit on what a company can do

coupled with - combined with

full capacity, run at full capacity - when the factory is producing the largest amount that can be produced (given current facilities, machines, and equipment)

peers - the people at the same level as you, doing the same job, activity, or business

the combined capacity of all its peers - the capacity of all companies in the same industry

a catalyst - something that causes change or an event to happen

wield huge influence on prices - can act to change prices (because it is powerful)

dictate the prices of raw materials - set steel prices (because it is so powerful)

investment privileges - special business advanatages, such as reduced taxes, that are given to encourage certain types of businesses beneficial to the economy

Board of Investment (BOI) - the Thai government agency responsible for providing incentives to encourage investment in Thailand (See website)

master plan for the steel sector - a long-term government plan for developing the steel industry (five to ten years)

national strategic industry - industry has long-term importance for the whole country (so the government should be involved in planning, promoting it, and perhaps supporting it financially)

overlooked - do not realise or notice how important something is (See glossary)

dependence - need, cannot function without

reduce dependence on imported steel - don't need to import if there is a supply inside Thailand

hot rolling - a steel manufacturing process used to produce sheet metal and other intermediate products (See Wikipedia on steel and hot rolling)
hot-rolled steelmaker - a steelmaker that uses the hot rolling process in its steel mill

cold-rolled steel - a steel making process (See Wikipedia)

bars for construction, girders - steel bars used to support construction, a support beam used in construction (See Wikipedia)

finished steel products, finished steel - "Steel that is ready for the market and has been processed beyond the stages of billets, blooms, sheet bars, slabs, and wire rods." (Source: About.com Metals Glossary)

Bangkok wins World's Best City 2008
Tourism scholar Dr. Kamolwat Praprutitum
looks beyond the award

The close to one million readers of Travel & Leisure magazine recently voted Bangkok the World's Best City 2008.

Today, Dr. Kamolwat Praprutitum, a Thai scholar who specialises in Thailand's tourism industry at the Thailand Development Research Institute (TDRI), analyses what this award means for the Thai tourism industry and how the industry can prepare itself for more successes in the future.

First of all, the readers of Travel & Leisure magazine "account for only 8% of overall arrivals in Thailand." Most arrivals in Thailand are Asian tourists. In other words, the award only represents one tourism market segment, even though it is an important market segment.

Bangkok is seen as a "slow city" with a "leisurely pace of life" (laid back, in the slow lane) that appeals to older (greying) westerners (Europeans, Australians, Americans). In Bangkok tourists have the opportunity to slow down and "immerse themselves in the experience."

In contrast to this leisurely "slow tourism" is "smart tourism" where tourists use their travel experiences to upgrade their knowledge, to study the history, politics, economics, and cultural differences of the places they visit, gaining knowledge to make them, their children and their children's children wiser in the future.

Finally, Dr. Therdchai ends his essay on a sobering note that a major tourism award does not mean that Bangkok is yet the most comfortable place to live.

Initiatives currently underway such as new subways and skytrains may go a long way towards this more meaningful goal.

Here is the article in full:

Room for improvement

Slow pace of life in capital appeals to elderly western tourists, but lively Asians bring in money too, writes Kamolwat Praprutitum

Winning Travel & Leisure magazine's award as the World's Best City 2008 was a great achievement for Bangkok, but keeping the crown may not be easy, says a leading tourism planner.

To hang on to the crown, Bangkok must understand the finer points of its tourism growth and observe trends, said Therdchai Choibamroong, the director of the Thailand Tourism Development Research Institute, which is under the Thailand Research Fund.

While the award from the US-based Travel & Leisure magazine gives the city pride and prestige, it could also be a source of motivation for Bangkok to look inwards and harness its strengths and correct its weaknesses, said Mr Therdchai.

Award represents only one market segment of tourists

Bangkok won the award after readers of the magazine, which has a circulation of close to one million, voted for their favourite cities.

The publishers of the magazine, which is distributed to holders of the American Express card as well as subscribers in the US and Canada, claim it is read by 4.5 million people.

The question now being asked is how widely the award was representative of the foreign tourists who arrive in Thailand. Statistics revealed tourists from North America - Americans and Canadians - who form the bulk of the readers who voted for the award, account for only 8% of overall arrivals in Thailand. Europeans accounted for only 26% last year. The largest share of the tourist pie is taken up by Asians.

The slow tourism trend and Bangkok as a "slow city"

Mr Therdchai said although the award reflects the preference of only one tourist segment, it arouses curiosity as to what actually earned Bangkok the coveted top spot, although it beat Buenos Aires, the first runner-up, by a razor-thin margin. Bangkok walked away with a score of 87.61% compared with 87.24% for Buenos Aires.

Mr Therdchai, who holds a PhD in tourism from the University of Queensland, said Bangkok may have won the prize for being in the "slow lane".

He explained that the city exudes a leisurely pace of life and has many cultural attractions, which defines the concept of an authentic city, which is popular with foreign tourists, particularly Americans, Canadians and Europeans.

The academic predicted a shift of consumer behaviour, where tourists will take time to appreciate their travel more and be more perceptive to exotic surroundings.

He says they will be ready to switch on their five senses and fully immerse themselves in the experience. Thai food, for example, already enjoys a head start in the "slow food" trend, where tourists savour green curry while indulging in the sight of elaborately-carved garnishes.

Mr Therdchai, however, cautioned that Bangkok's version of a "slow city" may not hold tourists forever because a large portion of foreign tourists from the baby-boom era are in a constant search for "slower," lesser-explored destinations. That is where Thailand is losing to Luang Prabang in Laos or Hue in Vietnam.

The grey population will make inroads into global tourist traffic with high-spending American pensioners lifting the momentum of demand for "slow-lane" visits worldwide.

But Bangkok may count its blessings as it manages reasonably well the balance of tourist offerings between the features of a slow city and non-cultural pull factors such as shopping, which top the must-do list for many Asian tourists.

The laid-back beat of tourism here, and tourists' craving for the authentic charm of Bangkok explain the spectacular jump in the numbers of foreign visitors to the traditional massage school at Wat Pho as well as to culturally rich Chinatown in Yaowarat.

"We can be as fast as we want, but when we go in reverse, we need to be certain we know exactly what to do," Mr Therdchai said.

He said the Bangkok Metropolitan Administration may be getting into the "slow" act with the launch of the Saneh Krungthep (Enchanting Bangkok) tourism promotion touching on culture, dining, the river, and sight-seeing at night and shopping, which fits the trend of "slow" tourism.

The new trend of "smart tourism"

Mr Therdchai said the new genre of "smart tourism" is giving the traditional browsing tours - where tourists sniff the air around one attraction, hop back on the bus and head to another - a run for its money.

When tourists slow their pace, they tend to appreciate more the finer details of their travel, affording them the chance to cultivate new knowledge along the way.

However, residents also have a part to play.

While tourists seek food for thought and generate income for the local economy, residents must be educated about the history of the attractions in their localities.

Tourists form many of their impressions from meeting locals, who reinforce the "soul brand" if they can tell a story or two about their heritage or the tea shop at an intersection where aunts and uncles sip coffee over political chitchat.

"Best city to live in" something different

Mr Therdchai said Bangkok should not try to exaggerate the merits of winning the Best City award by claiming it is the best city to live in, which would spoil the credit earned. The best city to live in is rated using much broader criteria.

But he said the most liveable city and best tourist destination may share some common ground.

"The best city in the world for tourists is also the city in which people feel the most comfortable living," he said.

Vocabulary:

Travel & Leisure magazine - a travel magazine based in New York city that features articles written by novelists, poets, artists, designers and non-travel journalists, known for travel photography (See Wikipedia)

Thailand Development Research Institute (TDRI) - "established in 1984 to conduct policy research and disseminate results to the public and private sectors. TDRI is Thailand's first policy research institute; it was conceived, created and registered as a non-profit, non-governmental foundation and is recognized as such by the Royal Thai Government. The Institute provides technical and policy analysis that supports the formulation of policies with long-term implications for sustaining social and economic development in Thailand." (From website also see Wikipedia)

a scholar - a person who studies a subject in detail (research) and knows a lot about it

end on a sobering note - after much enthusiasm, ending with criticism meant for improvement

room for improvement - things that could be improved exist

pace - the speed and rhythm of something (See glossary)

slow pace of life - when life is not so demanding and people move slower and "take their time" (in contrast, life in western cities is often fast-paced and stressful)

elderly - older people over 65, senior citizens

tourism planner - a government official or researcher who contributes to government plans to develop tourism in a country or region

pride - a good feeling when you or someone you know is successful

prestige - admired and respected because it is associated with wealth and high social position

motivation, source of motivation - what causes you to do something

market segment - a smaller market with specialised needs within a larger market (See glossary)

tourist segment -

circulation, newspaper circulation - the number of copies distributed to readers on an average day (See Wikipedia)

American Express card - a famous credit card used by business people, balance is usually paid in full each month (See Wikipedia)

curiosity - the desire to know about something

arouses curiosity - creates curiousity, makes someone curious

covet - want to have another person's possessions for yourself

coveted top spot - a very high position in a company or organisation that everyone wants to have

a runner-up - the person who finishes in second place in a competition or race

a margin - a difference

win by a razor-thin margin - win by a very small difference

being in the "slow lane" -

exudes Y - greatly show quality Y

exudes a leisurely pace of life - "a leisurely pace of life" is the most important quality that most people see

charm - real charm, not faked

authentic - the real thing, genuine, not fake

an authentic city - a "real" city, what a city should really be like

authentic charm - real charm, not faked

an academic - a teacher who works in a university (lecturer, professor, researcher)

consumer behaviour - the study of how people buy things, "what they buy, when they buy and why they buy. It blends elements from psychology, sociology, sociopsychology, anthropology and economics. It attempts to understand the buyer decision processes|buyer decision making process, both individually and in groups. It studies characteristics of individual consumers such as demographics, psychographics, and behavioural variables in an attempt to understand people's wants. It also tries to assess influences on the consumer from groups such as family, friends, reference groups, and society in general" (See Wikipedia)

perceptive - good at noticing and realizing things, especially things that are not obvious

exotic - unusual and interesting (because it comes from a distant country)

surroundings - the places around you where you are currently staying

exotic surroundings - an unusual and interesting place where you are currently staying

the five senses - Sight, Hearing, Taste, Smell, Touch (See Wikipedia)

immerse - become completely involved in some activity

immerse themselves in the experience - become completely involved in the experience

a garnishe - a small amount of salad or herbs used as decoration on food

elaborate - something complex because it has many different parts

elaborately-carved garnishes - food decoration with a complex design

grey population - older people (with grey hair)

X make inroads into Y - X has greatly affected Y (perhaps destroying it or replacing it)

pensioners - retired people receiving a fixed income (pension)

count its blessings - be thankful for the good things that have happened (rather than focusing entirely on the bad things)

laid-back - relaxed with a slow and comfortable pace

beat, pace - how fast something goes

laid-back beat of tourism - the slow pace of tourism

craving for Y - wanting Y very much

Bangkok Metropolitan Administration (BMA) - the name of the Bangkok local government

a genre - a special type of art, literature, music, or film

smart tourism - tourism in which tourists "cultivate new knowledge along the way"

sniff - inhaling air with nose to see how something smells

giving a run for its money - competing with

reinforce a brand - make people think even more about your brand, strengthen the positive ideas and images consumers have about your brand

reinforce the "soul brand"

heritage - the history, customs, and traditions of the past

exaggerate - make a claim that is greater than the truth

Post-1997 crisis property liquidator BAM
redefines itself as property developer

Bangkok Commercial Asset Management Co (BAM) was founded after the 1997 Asian financial crisis as a state-owned company for selling off the assets of the no-longer operational Bangkok Bank of Commerce.

Over the last decade BAM has transformed itself into a company that purchases non-performing loans (NPLs) from the Thai banking system and then sells (liquidates) them.

As Thai banks adopt the new IAS39 accounting standards they are being forced to sell non-performing loans and assets to save on provisioning expenses.

Recently, BAM has started operating as a property developer. The details of this new business plan were provided in a Bangkok Post article this week.

BAM is owned by the Bank of Thailand's Financial Institutions Development Fund (FIDF). In the past, the Bank of Thailand has said it planned to sell its shares in in BAM to investors and list the company on the stock market.

Read more articles on non-performing loans.

Here is the article in full:

Renovation scheme helps BAM hit target

Despite the sluggish economy, Bangkok Commercial Asset Management Co (BAM) achieved its sales target in the first seven months as an asset-renovation programme and aggressive marketing activities helped boost sales.

BAM president Bunyong Visatemongkolchai said two types of non-performing assets (NPAs) that generated healthy sales were agricultural plots, where marketing events helped to group them by location, and residential assets in which it had invested for renovation to improve their conditions.

It sold 80 plots of land at the Khao Yai Casa project worth 300 million baht during the Money Expo in Nakhon Ratchasima last February.

BAM also invested in renovation from cleaning to refurbishing buildings so they will be ready for new tenants. "If we don't do it, we can't sell the assets. This means not only poor sales but also higher expenses to maintain them," said Mr Bunyong.

BAM has 100 contractors ready to undertake renovation and decoration jobs.

Improvements to real estate before sale

The Hatairaj apartment development is one example of BAM's policy to upgrade living quality for purchasers through facility and infrastructure improvement.

Last week, BAM signed a contract with the homebuilder Royal House to renovate four houses in the Patra Nives housing project in Bang Ku Wat, Nonthaburi before handling more units.

"Our assets have very low prices but many of them are not in good condition and are not attractive to buyers. We have to make them look better," he said.

In the future, BAM will improve its renovation programme to focus on quality construction materials and more attractive decoration.

Mr Bunyong said BAM not only improved assets but also living quality through facility and infrastructure improvement.

Directly inviting developers to bid on properties

BAM also used a direct approach to attract potential or local developers to acquire large plots of land.

After inviting a handful of large developers in Bangkok and Chiang Mai to bid for a 96-rai site on Middle Ring Road in Chiang Mai with an initial appraised price of 165 million baht, BAM will announce the result within this month.

BAM generated sales of 7.3 billion baht as targeted in the first seven months of the year and half of them came from NPA sales. It expects to generate 11.7 billion baht by the end of 2008.

"This year the economy is worse than last year, but we can achieve our sales target," he said.

Purchasing power is declining but this helps boost demand for second-hand homes as prices are 30-40% lower than for most new homes.

Real estate a good hedge against inflation

At the same time, higher inflation has encouraged some people to invest in assets that have more future value such as second-hand properties and NPAs.

As of June 2008, BAM had 15,282 NPAs worth 39.87 billion baht, accounting for 24.8% of total NPAs held by local financial institutions worth 160.72 billion baht.

Over 70% of BAM's NPAs were land plots with 10,962 pieces worth 23.98 billion baht, followed by 1,256 condominium units worth 917 million baht, 1,137 townhouses worth 883 million baht, 879 single houses worth 1.58 billion baht and 499 shophouses worth 1.53 billion baht.

According to the Bank of Thailand, non-performing loans fell from 3.76% at the end of March to 3.43% at the end of June. Total NPLs also declined from 249.7 billion baht to 232.12 billion baht.

(Source: Bangkok Post, business section, KANANA KATHARANGSIPORN, 06-08-08, temp-link)

Vocabulary:

Bangkok Commercial Asset Management Co (BAM) - a state-owned company for selling off the assets of the no-longer operational Bangkok Bank of Commerce, founded nearly a decade ago, recently has started operating as a property developer (See website)

default, in default - fail to pay back a loan, as promised

non-performing loans (NPLs) - a loan that is in default or close to being in default (See article; See glossary)

non-performing assets (NPAs) - an asset such as real estate that has been purchased with a loan that is no longer being paid back

liquidate - sell an asset to get cash

IAS39 accounting standards, International Accounting Standard 39 - the international financial reporting standards for the valuation and reporting of financial instruments such as derivatives, loans, and employee option schemes (See Wikipedia on International Financial Reporting Standards)

provisioning, provisions, provisions against loan losses - putting money aside to pay for and solve future problems, an uncertain liability, uncertain when the liability will arise and how much it will be for (this can include costs for corporate reorganisation, legal cases, non-performing loans in a bank; See Wikipedia)

renovation - repairing and decorating an old building or house to improve it, so that it is in good condition again (See glossary)

a renovation scheme - a programme for repairing old buildings to improve them

target - what you aim to reach or achieve (See glossary)

hit target - achieve what you aim to achieve, reach your goal

as targeted - according to the goal they set in the past

spur - cause or encourage something to happen (See glossary)

spur sales - causes sales to increase

tough times - an economic slowdown, a sluggish economy (difficult for many companies and people to make money)

aggressive - forceful, determined, and eager to succeed

aggressive marketing activities

agricultural plots - pieces of land used for growing crops

refurbishing buildings - clean and redecorate a building to make it more attractive

tenants - renters (people an companies renting apartments, homes, offices, and buildings

undertake - do or carry out a task

upgrade - improve and make up-to-date (See glossary)

upgrade living quality

facility - buildings, equipment, or services provided for a special purpose (See glossary)

infrastructure - the basic services and facilities in a country such as water, electricity, transportation, and communication that make everyday life and business possible (See glossary)

bid on properties - offer an amount of money to buy some real estate

direct - when two things are closely connected

indirect - when two things are not closely connected

a direct approach - trying to achieve a goal immediately by your actions (do A and achieve C, rather than do A, which leads to B, which leads to C indirectly)

acquire - obtain, get

a handful of large developers - a small number of large developers

appraise - determine value after a thorough examination

appraised price - a price determined after a thorough examination

purchasing power - the amount of goods and services that your money can buy (inflations decreases purchasing power)

hedge against inflation - way of protecting your money and savings from inflation (if the interest rate you receive on your savings is not as high as the inflation rate, your savings will decrease over time)

Simon Royle discusses the software business in Thailand

Many ATM networks and banking systems have been pushed beyond their limits. Old technology can no longer handle peak loads.

Thailand also faces a shortage of programmers.

Today's Bangkok Post Database features an interview with Simon Royle of the Australian software company Hyro Thailand.

Simon Royle discusses the type of work his company does in Thailand. This should give students a good idea about where business and job opportunities will be in the future.

(Photo on right is of a Thai GPS system by Mobile Innovation Co. that helps drivers find their way and protects their car from theft.)

Here is the article in full:

Hyro sees shortage of coders on horizon

Thailand faces a severe shortage of programmers in the medium term future, as legacy systems reach their limits and break under the load as a new generation of demanding users go online to use e-banking and e-commerce, according to a major IT outsourcing company, Hyro Consulting, that has invested in Thailand as one of its major development centres alongside Shanghai and Hong Kong.

Simon Royle, head of Asia for Hyro Consulting explained how Hyro Thailand started as a small web development company called Cyberworks Consulting in 1999, before being bought by Hyro Australia in 2003. It moved from generic web development to more focused development in the financial services industry and lately, to managed services, which is the fastest growing area in Thailand's ICT industry.

Digital media in Thailand today represents just one per cent of total advertising spent. On the one hand, this means that it is too small to support itself just yet. On the other hand, it means that there is a lot of work available for companies to put together campaigns involving the Web, TV, SMS and viral email, and tying them into the back end, payment systems and CRM (customer relationship management) systems, which is what Hyro does today.

However, the industry is set for a shake-up when ancient legacy systems reach their limits. Even today, at the end of the month on payday, ATM networks and banking systems are pushed beyond their limits and customers are often unable to withdraw money from other banks' machines. Royle says that the situation will be much worse when more of Thailand's mobile phone users go online and engage in e-banking.

Royle estimates that the number of capable programmers needed to re-write the legacy code base exceeds supply by a ratio of five to one.

In Thailand, Hyro's highest-profile customer is the Bank of Thailand. It is also one of the BoT's preferred vendors. Outside the financial sector, other clients include True, GMM, Osotsapha, Chevron and even IBM. Hyro is technology-neutral, working with IBM, Microsoft and Oracle. The development team in Hong Kong is focused around Java. The team here in Thailand is mainly .NET based. For a client in Tokyo it is currently supplying a major asset management company with a performance management solution running on SQL Server, accounting on Oracle and hardware from Sun, HP and IBM.

Royle noted that the computer market in Thailand is much more sophisticated than Shanghai, which is similar to Thailand 10 to 15 years ago. Systems integrators in Thailand are mostly small, with between five and 10 developers, or big players such as IBM and Fujitsu, with little in between.

Royle explained that unlike many outsourcers who take on a project and charge per transaction, Hyro is more traditional and supplies developers to go and work in the company.

One high profile client is IBM Global Business Services which took on the transformation of K-Bank's IT department. IBM GBS won the contract and then turned to Hyro for developers in key positions who now effectively work for K-Bank. He said that project in particular needed 40 or 50 developers and Hyro was one of the few companies who could provide the skills needed within the required time frame of eight to 12 weeks.

Another project was the back office system for Nissan Leasing Thailand. Nissan used to rely on GE Auto Leasing, which also supplied leasing services for its competitors. It was decided that since GE also supplied services to competitors Toyota and Honda, Nissan could create a competitive advantage by taking its leasing operations in-house.

In the past, applying for a lease took about a week. Now, Hyro's system can take in information, connect with the credit rating bureaus and provide a decision in less than two minutes. In practice, the scanning of paper and entering of data means that it can take up to 45 minutes, which is still a vast improvement than the competition.

That system in particular was a challenge as it was based on a system used by Nissan in Mexico, meaning it had to be localised from Spanish to Thai, a rather unique combination.

Right now, Thailand provides the best balance for Hyro but in the future, Royle says that he views Vietnam, as well as the Philippines, Cambodia, Laos and even Burma as possible locations for investment.

(Source: Bangkok Post, Database section, 06-08-08, DON SAMBANDARAKSA, temp-link)

ATM networks - the networks between banks and their cash withdrawal machines (located in convenient places)

pushed beyond their limits - when a system or machine is given more work than it is designed to handle

peak load - the largest amount of work that a system must handle (for example, the evening of a hot day when everyone has their lights and air-conditioners turned on)

code - computer programs, software

coders - programmers, software developers (people who write the computer programs used for different tasks such as Photoshop, Word, games, etc)

on the horizon - in the near future

the medium term - a period of three to five years for investments (between short-term and long-term)

legacy systems - a company's older existing computer and software systems (that must be accommodated in building new systems)

e-banking, online banking - software systems that allow customers to do their banking conduct on the internet safely and securely (See Wikipedia)

e-commerce - the buying and selling of products and services over the Internet (See Wikipedia)

outsourcing -

generic, generic, generic versions - a version of a product without a special brand or trademark, usually much less expensive

focus - dealing only with one or a few things (and not a lot of other possible distracting things) (See glossary)

the financial services industry - the banking, insurance, and securities industries

managed services - a company that sells software services to other companies via the internet (See Wikipedia)

the ICT industry - the "Information Communication Technology" industry, includes all digital devices and services from computers to networks and servers to mobile phones (See Wikipedia)

viral email - a kind of email which rapidly moves from person to person, like "word-of-mouth" advertising (See Wikipedia)

the back end - in software the front-end is the part of a software system that interacts directly with the user, and the back-end processes and stores data and information entered via the front end, includes servers and databases

CRM (customer relationship management) systems - a computer system for improving a company's relations with its customers, "processes implemented by a company to handle their contact with their customers. CRM software is used to support these processes, storing information on customers and prospective customers. Information in the system can be accessed and entered by employees in different departments, such as sales, marketing, customer service, training, professional development, performance management, human resource development, and compensation. Details on any customer contacts can also be stored in the system. The rationale behind this approach is to improve services provided directly to customers and to use the information in the system for targeted marketing and sales purposes" (See Wikipedia)

payday - the day when employees are paid by their company, for work done last month

capable programmers - programmers that have the skill and experience to do the work successfully

preferred vendors - the small set of companies selling goods and services that the BOT turns to first

technology-neutral - willing to use any technology, does not specialise in or use one technology exclusively

IBM - a major US software consulting firm, and in the past hardware company (See Wikipedia)

Microsoft - the most famous software company in the world (See Wikipedia)

Oracle - a major US database company(See Wikipedia)

an Application Programming Interface (API) - ther set of functions that a programming language or operating system provides to support requests made by computer programs (See Wikipedia)

Java - a popular computer programming language with a very large and useful API (See Wikipedia)

.NET - the API that supports the Microsoft XP operating system (See Wikipedia)

SQL Server, Microsoft SQL Server - a relational database management system (RDBMS) (See Wikipedia)

Relational Database Management System (RDBMS) - the most popular software technology for storing data (See Wikipedia)

Sun - a major US computer manufacturer and orginator of the Java programming language (See Wikipedia)

HP (Hewlett-Packard) - a major US computer and electronics equipment manufacturer (See Wikipedia)

a systems integrator - an company that builds complete computer systems by combining components from different vendors, customized for a particular customer's needs

a vendor - one of the companies that sells a good or service that your company needs

a time frame - the length of time during which an event happens or develops (See glossary)

in-house - done withint the company (instead of hiring outside company to do it) (See glossary)

taking its leasing operations in-house - start doing the "leasing operations" within the company (done outside by another company in the past)

credit rating bureaus - companies that provide information about how well people have paid back money they owed in the past (this indicates how risky they are to loan money to)

localise software - adapting computer software to different languages and regional differences, translating the language in the software to another language (See Wikipedia)

localised from Spanish to Thai - translating the language presented by the software from Spanish to Thai

Adjusting to the tough new Thai banking laws

New regulations mean new things to worry about.

The post-coup interim NLA passed a lot of new laws with a lot of radical changes last year (Read article). These laws have been coming into effect recently.

New banking laws come into force today. Banks will have to adjust a lot of their policies and procedures to comply with the new laws.

Today's Bangkok Post reports on how people in the banking industry feel about these new laws. Here is the article in full:

Bankers complain about new bank law

Local bankers are rushing to review their risk management and compliance functions as the new Financial Institutions Business Act formally takes effect today.

Many executives are privately fuming about the complexity of the new law, which intends to modernise the regulatory framework for the financial sector.

Related-party lending is a major complication under the law, which stipulates criminal penalties in many cases for violations.

"In practice, many of the rules will be very difficult to follow. The concept of related party covers a huge range of people, and the felony penalties and prospect for jail sentences for violations represent a massive risk for any bank," one banker said.

Section 48 of the law restricts bank lending to directors and senior executives, their spouses and underage children. This could include a home mortgage or personal loan to a bank executive.

Kannikar Chalitaporn, the president of Siam Commercial Bank, said it was even more alarming that loans to a corporate client could be undermined by the related party rule.

Loans to a client with a director or senior executive married to a bank executive would fall under the rule, potentially forcing the bank to either terminate the customer relationship or force the bank executive to quit.

Chaiwat Utaiwan, the president of Siam City Bank, said that while he understood the good intentions of the law, the Bank of Thailand needed to clarify many points to prevent disruptions of bank operations.

"We frankly don't have a good understanding of all the issues. For instance, Prasert Bunsumpun, the president and chief executive of PTT Plc, is an independent director of the bank," Mr Chaiwat said. "Mr Prasert does not have management authority at SCIB. But we're not certain whether we can offer loans to him."

The issue has massive implications for local banks, which have recruited prominent businessmen to their boards to help set strategy.

Single lending limits represent another sticking point. The new law caps lending at 5% of total capital or 25% of total outstanding loans to any single business group to help limit concentration risk.

The limit would certainly affect loans to large conglomerates such as PTT or Siam Cement Group. Many large firms are likely to turn more to the bond market as an alternative to bank loans as a result.

"Considering that many large companies have many subsidiaries, it will not be easy to follow the single lending rule in practice," a TMB executive said.

"We should see the bond market and equity market rise in importance as a funding source for businesses as a result."

Banthoon Lamsam, the chief executive officer at Kasikornbank, agreed that greater restrictions were inevitable.

"We certainly will become more prudent in operations considering the more complicated rules and stiffer penalties set out under the law," he said.

But Mr Banthoon said he was hopeful that the law, which expands the scope of businesses financial institutions can undertake, would help strengthen Thailand's financial system and bring greater stability overall.

Vocabulary:

radical changes - big changes, changing everything

come into force - become a law that can be enforced

comply with - follow

review Y - go over, checking the details, to make sure they are okay

risk management - special department in companies for monitoring and planning for events that could have an effect on business (See Wikipedia)

compliance - following rules or laws

compliance functions - activities in a company to make sure that the company is following all rules and regulations

Financial Institutions Business Act - Thailand's new set of laws regarding financial institutions

takes effect - when a law starts, from this time the law can be enforced and people can be punished for breaking the law

fuming about - angry about

a framework - a system to deal with a problem

a regulatory framework - a system of regulations to deal with a problem

related-party lending - lending to people you are related to in your family

stipulate - state clearly that something must be done (for example in a condition in an agreement or contract)

a felony - a serious crime

a misdemeanour - not a serious crime

felony penalties - punishments for a serious crime

prospect for - the possibility for, the likelihood or chance that something might happen

your spouse - the person you are married to

alarming - surprising and worrying

a corporate client - a customer that is an important and large company

undermined - made weaker

potentially - could possibly happen

terminate the customer relationship - stop doing business with the customer

good intentions - means to help, not harm

good intentions of the law - the law meant to help the situation (but maybe it didn't)

implications - things that are likely to happen (because of some event or situation)

recruited - find suitable people to fill positions or jobs at a company

prominent - well-known

board, board of directors - the group of elected or appointed people who set the highest level of policy and strategy in a company (See Wikipedia on board of directors and corporate governance)

recruited prominent businessmen to their boards - find suitable well-know businessmen to govern their company

a sticking point - a detail during negotiations that people cannot agree on, that causes a delay or complete halt

caps lending - puts an upper limit on lending, cannot lend above a certain amount

bank capital - bank capital is regulated by law and risk weighted, unlike the capital of normal companies (See Wikipedia on capital requirement)

shareholder's equity, owner's equity, capital - total assets minus total liabilities of an individual or company, the value of a company for the people who own it (See Wikipedia)

outstanding - still exist, have not been settled or finished yet

outstanding loans - loans which have not been paid back yet

concentration - limited to a few different items or kinds of items

diversification - includes a wide variety of different kinds of items

limit concentration risk - make sure that loans are not all in the same kind of business that could fail at the same time

conglomerates - large companies that own many different kinds of companies

inevitable - will happen for sure in the future (but not sure when)

prudent - sensible and careful

stiffer penalties - punishment that hurts more (either physically or financially)

the scope of an activity - the whole area or set of cases that an activity deals with

expand the scope - deal with more things, increase the number of cases that the activity deals with

undertake - do a task (not a simple task, a task that requires some time)

Restructuring The Nation:
Thailand's second largest English daily cuts costs

The Nation, Thailand's second largest English language newspaper, has launched a series of cost cutting measures.

While newspaper ad spending has declined, newsprint costs have risen from US$540 a tonne last year to $870 this year, reducing The Nation's profitability.

Last year the company ran a loss of 797 million baht. In the first quarter of this year the company managed to achieve a small profit of 6.94 million baht.

The company also has a problem with massive debt, around 3 billion baht, that it is trying to reduce. The company has assets of around 4 billion baht.

Possible sale of pieces of the company

The Nation Multimedia Group (NMG) is listed on the Stock Exchange of Thailand and owns several different kinds of media businesses (print, radio, satellite TV, internet). Dow Jones in New York owns 7% of the company.

The core business is the daily newspaper, The Nation, founded in 1971.

The newspaper has now been split off from the rest of the company and placed in a separate subsidiary of the parent company. There have been rumours that some parts of the company will be sold. The Bangkok Bugle blog raises the question of who would buy it and why?

"How would you value a product like this? If you go back even a couple of years ago revenues appeared to be healthy but how about now? How much would you pay?"

The Nation Multimedia Group (NMG) announced yesterday that is was looking for "strategic partners" and is planning to eventually dilute its holdings in the new newspaper subsidiary to below 50%. Management will hold 10% of the newspaper subsidiary to begin with.

The Nation has recently been given a new focus as a business newspaper. The newspaper has hired many business columnists and plans to provide more business news and analysis and become similar to the Financial Times or the Wall Street Journal. Political coverage currently dominates all other news so this remains a plan for the future. Bangkok Bugle is sceptical:

...it seems The Nation will continue to focus on business in a market where business news is available in millions of places, is out of date before it's printed and where two or three other business-centric publications have failed in recent years.

I wouldn't be so skeptical. A profitable high quality English business publication in Thailand might well be possible, but a weekly magazine rather than a daily newspaper might be the right choice. The recent Thai Capital: After the 1997 Crisis, edited by economist Pasuk Phongpaichit and historian Chris Baker clearly points the way to a more value-added form of business journalism. (Read article). On the web a Thai newspaper's comparative advantage is going to be local news in Thailand and mainland Southeast Asia. The web will continue to gain a ever increasing portion of news readership so the content mix should start heading towards the local now.

Cost-saving measures

Last week, the parent company offered a voluntary early retirement package for editorial staff at The Nation newspaper. Of the 130 employees eligible to receive the package 30 Thai and foreign workers chose to accept the package.

A separate sub-editing company partly owned by former sub-editors of The Nation was also set up. The new sub-editing firm will provide services for The Nation as well as outside clients. This news matches recent rumours in the blogosphere:

- deep cuts including firing all foreign staff and rehiring them on one-year contracts

- setting up a new company to hold liabilities (such as staff) to clean up The Nation balance sheet for an eventual sale (probably complicating this is are local rules that limit foreign ownership in media to 49%)

- replacing top editors with those "less strident" about Thaksin and the PPP to regain lost ad revenue (Source: www.2bangkok.com, July 25, 2008)

Launching free newspaper Daily Xpress, a mistake

Experimenting with a free newspaper during an economic slowdown and times of rising newsprint costs was a mistake.

Four months after the launch of the free Daily Xpress several cost-saving measures are visible in the newspaper's operations. The paper has been cut from 48 pages down to 24 to 28 pages. Last month the paper stopped printing on weekends. Reduction in colour on the inside pages is an additional cost-saving move some have observed.

Initially, 100,000 copies of the Daily Xpress were printed every day. This was an audited circulation, certified by a special company hired to guarantee these numbers. Exaggerating circulation is a fairly common media practice in Thailand so audited circulation would have been a guarantee to advertisers to win their confidence. This in turn would increase advertisements placed in the paper. This was the plan, apparently never achieved, as Bangkok Bugle Blog observes:

Just 6.2 of the 28 pages are advertising, and I'd guess that at least one of those is barter or promotional advertising and not revenue-generating. So that's around 20 per cent of the pages generating income, and even if the sales team are achieving the holy grail of rate card prices that's still not going to come close to covering the printing and distribution costs...

The 100,000 print run claim was included on the second of the Daily Xpress has disappeared recently, implying that 100,000 copies are no longer being printed.

A free daily newspaper such as The Daily Xpress was probably premature for the Thai market. Many free publications have failed, changed into for-sale publications, or moved permanently to the internet (Read this article).

The Daily Xpress might be heading for the internet like the popular Not The Nation, that lampoons The Nation, or maybe it will become a weekly newspaper, or maybe it will turn into a Thai language free newspaper, or maybe it will just be written off as a failed experiment.

(Source #1: Bangkok Post, business, 01-08-08, WORANUJ MANEERUNGSEE, temp-link)

(Source #2: Bangkok Bugle, link)

Vocabulary:

The Nation - the second largest English-language daily newspaper in Thailand founded in 1971 (See Wikipedia)

Nation Multimedia Group (NMG) - the media company based in Thailand that owns the The Nation newspaper, founded in 1971 and listed on the Stock Exchange of Thailand in 1988, has both on-line and off-line media including newspapers, television channels, books, magazines and web contents (See Wikipedia)

measures - actions taken to solve a problem

newsprint - the low cost and low quality paper used in newspaper, does not need to last for a long time because people throw their newspapers away quickly after they are read (See Wikipedia)

ran a loss - lose money, no profit

Dow Jones and Company - an American publishing and financial information firm (See Wikipedia)

the core business - the main business that a company is involved in

subsidiary - a company owned by another company, a company within a company

dilute its holdings - reduce the amount of the company that it owns

cost-saving measures - actions taken to save on costs, to spend less money

voluntary early retirement package - can choose to retire early and receive money for doing this

editorial staff - employees of the company involved in producing the newspaper every day (other staff include marketing, sales, customer service, computer and internet)

sub-editing, copy-editing - make formatting changes and improvements to articles before they are published, make the text (copy) (i) clear, (ii) correct, (iii)