Home' Trinidad and Tobago Guardian : November 7th 2013 Contents BG26 | INTERNATIONAL
BUSINESS GUARDIAN www.guardian.co.tt NOVEMEBER 2013 • WEEK ONE
Prosperity in Thailand is spread-
ing from glitzy Bangkok to less-
developed regions, thanks in
part to a boom in auto-man-
ufacturing in places such as
Rayong province, where this state-of-the-
art Ford plant is located.
When Tos Chirathivat and his billionaire
family make acquisitions for their Thailand-
based retail, property and hotel empire, they
often do it in style.
Seeking additional prime space in
Bangkok s congested downtown in 2006,
Tos s Central Group bought 1.4 hectares (3.5
acres) of the British ambassador s front lawn,
which it s now transforming into a curva-
ceous luxury shopping mall in the shape of
an infinity symbol, Bloomberg Markets mag-
azine will report in its December issue.
Then, in 2011, the family entered the Euro-
pean market, paying US$350 million for the
Italian department store chain La Rinascente
SpA, whose stately flagship emporium fronts
Milan s Piazza del Duomo.
Lately, the urbane Tos, a former Citigroup
Inc. investment banker who was educated
at New York s Columbia University, has also
been expanding in an entirely different direc-
tion. He s opening stores, malls and hotels
in Thailand s poorest region, the parched
northeastern plateau of Isan, which is home
to one-third of Thailand s 67 million inhab-
"We are going into towns we would never
have thought of five years ago," says Tos,
49, in his executive suite overlooking the
UK s now much-diminished Bangkok
embassy compound. "There s a real boom
going on in those places."
For much of Thailand s recent history, the
powerhouse of Southeast Asia s second-biggest
economy has been its glitzy capital. Now, a
convergence of local and international currents
is reshaping the nation s economic geogra-
In the northeast, rising incomes, property
prices and consumer spending have sent eco-
nomic growth surging by eight per cent annu-
ally, or double the rate of Bangkok, according
to Siam Commercial Bank Pcl.
Meanwhile, further to the south, Thailand s
burgeoning auto industry---in 2012 the tenth-
biggest manufacturer in the world---has
brought such prosperity to a region known
as the eastern seaboard that one province,
Rayong, has become twice as rich as Bangkok
in terms of per capita income, according to
A visit to Udon Thani (population 400,000),
565 kilometres (350 miles) northeast of
Bangkok but only 90 kilometres from Laos s
capital, Vientiane, testifies to the transfor-
mation taking place.
In 2011, this rice-growing region s gross
domestic product per capita was just US$1,700
---one-ninth that of Bangkok, according to
government statistics. Yet today, Tos s bustling
Central Plaza mall in the center of town would
not look out of place in Hong Kong, Singapore
or even Milan.
Nearby, at the local Mercedes-Benz deal-
ership, owner Chettaphon Ruangpattana,
whose family originally started off in business
dealing in retreaded tires, says he sold 120 of
the German luxury cars last year, compared
with 55 in 2008.
Across town, the Siam Global House Pcl
home-improvement center now stocks $6,000
timber-paneled Jacuzzis alongside more-mun-
dane bathroom fittings. The local unit of UK-
based supermarket giant Tesco Plc anchors a
second shopping mall.
And down a dirt road in a village of still
predominantly wooden houses, farmer Uthai
Thongsaensuk, 45, slurps spicy tom yum soup
and tells how he bought 1.2 hectares of land
in 2011 for 500,000 baht ($16,000), then sold
it this year for three times the price. He spent
part of the proceeds on a tractor for himself
and a washing machine for his mother-in-
In the past two years, populist Prime Min-
ister Yingluck Shinawatra, whose government s
power base is among the poor, has lifted rural
incomes by subsidising Thailand s 17 million
rice farmers and raising the minimum wage
to US$10 a day.
Yingluck also fuelled a property boom by
announcing she would spend US$64 billion
over six years on infrastructure such as high-
speed trains that would cut travel time between
Bangkok and Udon from eight hours to 2-1G2.
At the same time, moves by Thailand and
nine Southeast Asian neighbours to relax border
controls and form a European Union-style
common market of 604 million people in 2015
are transforming remote Thai regions.
Towns such as Udon, once the penultimate
stop on a railroad line of little consequence,
now straddle international trade routes linking
Thailand to fast-growing Laos, Cambodia,
Vietnam, Myanmar and, ultimately, China.
"The future is outside Bangkok," says Tos,
who, since 2009, has also opened malls in the
Isan cities of Khon Kaen and Ubon Ratchathani
as well as Chiang Rai, in the former opium-
growing Golden Triangle.
Although few foreign investors are likely to
have visited those cities, they re already betting
Tos has got it right.
During the four years ended on Oct. 28,
shares in the three listed companies the Chi-
rathivat family controls -- mall developer Cen-
tral Pattana Pcl, hotel operator Central Plaza
Hotel Pcl and retail chain Robinson Department
Store Pcl -- far outperformed even the 110
per cent rise in the benchmark Stock Exchange
of Thailand Index, lifting the value of the fam-
ily s stake to US$6.4 billion.
Foreign investors own about one-fourth of
the biggest listed Central Group company,
Central Pattana, which leapt 344 per cent over
"It is a stock that has done really well for
us," says Adithep Vanabriksha, Bangkok-based
chief investment officer for Thailand at
Aberdeen Asset Management Plc, which man-
ages $318 billion worldwide.
Some investors who backed other entre-
preneurs have done even better.
Witoon Suriyawanakul, 56, began his busi-
ness life selling nuts and bolts from a wooden
shack in one of Isan s poorest towns, Roi Et.
Today, after building a 25-outlet chain of Home
Depot-style, cash-and-carry stores, he s a
In August 2009, Witoon raised US$19.5
million by selling shares in his company, Siam
Global House, on the Thai exchange. Last year,
blue-chip Siam Cement Pcl, a company con-
trolled by King Bhumibol Adulyadej s money
manager, the Crown Property Bureau, paid
the equivalent of US$322 million for a 30 per
Since the initial public offering, Siam Global s
shares have risen more than 15-fold as of Octo-
ber 28. Yet it doesn t have a single outlet in
"Our investors want us to stay upcountry,"
says Witoon, whose 40 per cent stake is worth
"People who think that Bangkok is Thailand
are wrong," says Boonyong Tansakul, 48, Singer
Thailand Pcl s chief executive officer.
The company, a descendant of the US
sewing machine manufacturer founded in 1851,
makes 95 per cent of its sales outside the cap-
ital. It has delivered an almost 20-fold return
since the beginning of 2009 by diversifying
into appliances as diverse as air conditioners
and simple gasoline pumps that are increasingly
replacing jerry cans in rural villages.
Viewed from Bangkok, prospects for Thai-
land as a whole certainly don t look as exciting
as they do from the hinterland.
After devastating floods stalled output in
2011, the economy surged back in 2012 to grow
by 7.1 per cent. Since then, slowing demand
for Thailand s exports forced the central bank
to cut its 2013 growth forecast to 3.7 per cent.
In the first half, the economy even entered
a technical recession when it recorded suc-
cessive quarters of negative growth.
The benchmark SET Index was up 4.1 per
cent this year in local currency as of October
28 compared with a 23.4 per cent rise in the
Standard & Poor s 500 Index as of its October
In another blow, Thailand lost its 30-year-
old status as the world s No 1 rice exporter,
falling behind India and Vietnam after the
government s decision to pay above-market
rates to farmers kept prices high and made
Thai rice less competitive.
"The rice scheme has been widely acknowl-
edged by foreign investors as a disaster," says
Prinn Panitchpakdi, Bangkok-based country
head for investment bank CLSA Ltd.
Still, Thailand has bounced back from worse
Although the country is prone to coups d e-
tat, civil strife and natural disasters, tourism
is booming. Through it all, Thailand has
become the world s leading manufacturer of
hard-disk drives by quantity and last year
leapt ahead of Britain, Spain and Canada as
an auto producer. Of the 2.4 million vehicles
produced in Thailand by Japanese, US and
European carmakers, one million were export-
In 2012, Dearborn, Michigan-based Ford
Motor Company opened its second factory in
Thailand, where sales that year rose 88 per
cent to 55,000 -- Ford s biggest jump anywhere
in the world, according to its president for
Southeast Asia, Matt Bradley.
Domestic sales account for only about one-
fourth of Ford s production in Thailand, where
it makes Fiesta and Focus small sedans and
Ranger one-ton trucks. The rest of the vehicles
were shipped mainly to neighboring countries
Most attractive for Ford is Southeast Asia,
where the company says vehicle ownership
per capita is less than a tenth that of the US.
"It s one of the best potential growth areas
in the world," Bradley says.
Beside a broad highway two hours out of
Bangkok, a signpost directs motorists to turn
off for "Detroit of the East."
In one sense, this industrial zone in Rayong
province is well named because it s the regional
headquarters of both Ford and General Motors
In another, the moniker couldn t be more
inappropriate. While Detroit is in the throes
of the biggest US municipal bankruptcy, Rayong
has become the richest province in Thailand,
according to government statistics.
There may be more good news to come. A
renewed marketing effort in 2014 should help
Thailand regain the No. 1 spot in the inter-
national rice market, says Sumeth Lao-
moraphorn, CEO of the country s largest pack-
aged-rice producer, CP Intertrade Company.
Equally important for investors, Thailand
remains politically stable, says Adithep, of
Aberdeen Asset. The country has been rocked
by 15 successful and attempted coups since
1946; the last of which, in 2006, overthrew
the present prime minister s brother Thaksin
Shinawatra. In August, Yingluck completed
her second year in office and should now see
out her four-year term, according to Adithep.
"This government is quite dominant," he
Still, things can change fast in Thailand.
Since Thaksin s overthrow, Thai society has
been split between a minority urban elite and
the majority pro-Thaksin and pro-Yingluck
Ensconced in his Central Group headquar-
ters, Tos Chirathivat knows that all too well:
In 2010, during a period when anti-Thaksin
parties were in power, pro-Thaksin protesters
burned down Tos s biggest Bangkok mall, Cen-
tralWorld. Now, he says, he s hopeful the nar-
rowing of the urban-rural wealth gap will ease
simmering tensions. "It s part of growing up,"
he says. "Once we pass that stage, Thailand
will become a major player." (Bloomberg)
Thailand's rural boom yields
Mercedes and $6,000 jacuzzis
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