"I think the new government should be formed early next year after a lengthy certification process. Then the new government will need to consider the 2007 Budget Bill. All infrastructure projects will probably open for bidding in the late third quarter or fourth quarter. Only then will demand kick in," Kan said in an interview.

About 10 million tonnes of cement will be needed to construct the slew of mega-projects worth Bt1.7 trillion on the drawing board. While anticipating the potential new business, Siam Cement, like other companies, has suffered from the absence of a fully vested government. The political conflicts have delayed investment and spending across the country.

Following the official confirmation of the election date last week, business circles have high hopes that investors will resume stalled investment plans and consumers will regain confidence and splurge on large items.

Despite the uncertainties, Siam Cement is committed to spending its Bt74-billion investment budget, part of its five-year Bt120-billion capital plan running until 2010.

About Bt60 billion is for the conglomerate's petrochemical business, which contributes half of the group's revenue. But none of the investment will go to new businesses, as diversification is not on the cards, at least for now.

Siam Cement has been rocked by the flagging economy as some of its businesses are geared towards the domestic market, particularly cement and construction materials. Its second-quarter financial results are expected to come out on Wednesday.

In the first quarter, it posted Bt9.5 billion in net profit.

The group's four core businesses - cement, construction materials, paper and pulp, and petrochemicals - account for 22 per cent, 8 per cent, 10 per cent and 50 per cent of its revenues. The rest comes from logistics and trading.

Higher oil prices have forced the company to implement every solution possible to keep energy costs under control.

It has switched to using more coal and introduced alternative fuels including biomass, while adopting a logistics outsourcing strategy.

"We're already under huge pressure as oil prices hover around US$70 [Bt2,657] per barrel, what more if the price escalates to $80?," Kan said.

The group is now focusing on brand building, particularly among foreign investors. A new logo incorporates 'SCG' to indicate Siam Cement Group's diverse business profile. It operates in many businesses through more than 100 companies, not just in the cement industry.

That goes with the company's strategy to increase its presence in the same industries outside the Kingdom, in the realisation that competition is on a global scale.

The group recently opened a CPAC tile-manufacturing plant in Ho Chi Minh City, following a petrochemical complex in Indonesia and a paper business in the Philippines.

The group is open to taking over more paper businesses in Asean countries.

"In going overseas, we concentrate on acquisitions. Existing capacity [in the region] is enough to satisfy demand. It's better to buy stakes in companies that already own factories. It's an easier investment," Kan said.

Siam Cement limits its international explorations to Asean. Growth areas are in Asia - Asean, China and India. China is a big market, but competition is really tough there.

By putting about Bt5 billion into a paper business in the Philippines, Siam Cement immediately grabbed half of the market there, while a similar investment in the huge Chinese market would only be a drop in the bucket.

"We'd rather be somebody somewhere. Though it's a small market, the market keeps growing," he said.

Asean can possess strong potential, if the governments work harder to ensure smoother market integration like in the euro zone, Kan said. Once that happens, each country can become the best place for the manufacturing of items they are most competent at.

"Then, what we should do is consider which industry should expand where."

Siam Cement is also looking to do more outsourcing, to reduce its own investment needs, but that requires developing strong brand awareness. Then the group can contract manufacturers to produce products under its own brand.

"Now we have let out the production of CPAC tiles. While others invest, we provide quality control and training services, which is what we're good at.

"And we can also supply cement for the manufacturing," Kan said.

Achara Deboonme

The Nation