Philips Electronics (Thailand), the Dutch-based manufacturer of consumer electronics and healthcare systems, has expressed serious concern over the strengthening value of the baht, which it says will lower both consumers' confidence and spending power.

Chairman and CEO Jan Eggebeen said, "The baht's appreciation is not in line with the economic development of the country."

While growth in Thailand's gross domestic product is expected to be weaker than many other countries in the region this year, at only 4 per cent, his biggest concern is how the economy is developing.

Economic development is very much to do with the stability and balance of the local currency, he said. Thailand relies on exports for growth, yet exporters are finding it more expensive to continue overseas trade.

At the same time, local businesses are buying imported products at lesser cost, but this is not offering any advantage.

"We [Philips] have already sold our semiconductor business, so our major business is importing. We are not so much export dependent. However, we haven't gained any competitive advantage over our competitors because they are importing their products as well," Eggebeen said.

"The baht appreciation's influence on the economy seems to be no good for us," he said. "It will lower both consumers' confidence and their spending."

Eggebeen, who has headed up Philips' Thai operation since January 2005, said the confidence of Thai consumers has grown slightly, but they are waiting to see what is going to happen next year, especially in the political and economic arenas.

Eggebeen said sales in Thailand's consumer electronics market are expected to grow by only 6 per cent this year, despite the prices of some products, such as LCD television sets, having dropped by between 25 per cent and 30 per cent.

"The only way to sustain our consumer electronics business is to grow with the market; to bring up our average prices by offering new innovations with better and more expensive features, and to gain market share from our competitors," he said.

Eggebeen said that with the recent divestment of its semiconductor business, Philips is further transforming into a healthcare and lifestyle corporation. As a result, the group's market capitalization has gone up and the Philips brand has moved up to 48th place in Interbrand's list of the world's 100 most valuable brands in 2006, from 53rd in 2005 and 65th in 2004.

Philips has doubled the size of its medical systems business and this continues to grow. It is now the number three in healthcare in the world market, the number two in diagnostic medical imaging, and number one in patient monitoring. It has spent almost €5 billion on acquisitions to reposition itself as a global healthcare company, he said.

"The medical-systems business is a strategic growth engine, and eventually it will expand to one-third of our total business, up from 20.8 per cent in 2005.

"In Thailand, Philips Medical Systems business enjoys double digit growth year on year. It holds a 30-per-cent market share and is therefore one of the top three market leaders. It also supports Thailand's policy of becoming the region's leading healthcare centre," Eggebeen said.

With Philips' transformation into a healthcare and lifestyle company, its domestic appliances and personal care business is expanding rapidly and transforming into personal health and wellbeing.

Philips Lighting will further strengthen its market leadership in both the domestic and professional fields with a market share of more than 50 per cent in energy-saving lamps and a growing 20-per-cent share of company-to-company business, Eggebeen said.

Kwanchai Rungfapaisarn

The Nation