Depa United Group CEO Mohannad Sweid yesterday said Thailand would become the group's new investment destination. This follows a change in the group's investment policy to explore more business opportunities outside the United Arab Emirates. It plans to acquire majority stakes in companies or seek strategic partners in the global interior-decoration industry.

He said negotiations to buy a major stake in a Thai furniture firm should conclude successfully in the second half of the year. Describing it as Depa United's second investment step in Thailand, he declined to disclose the value of the deal.

"We began expanding our investment into the world market two years ago by focusing on the interior [decoration] industry. The group set aside an investment budget of up to US$100 million [Bt3.49 billion at today's exchange rate] per year to support our expansion," he said.

So far, the group has invested $10 million in Asian markets this year.

"We are confident in Thailand and are focused on long-term investment despite the political uncertainty, the implementation of the amended Foreign Business Act and the Bank of Thailand's reserve-requirement policy. These will not affect our investment expansion in Thailand," said Sweid.

He said Middle East investors had a growing interest in Thailand, because they believed the country to be the best investment destination.

"We believe that the political risks will be short term, whereas the country's growth challenges us to expand our investments here," he said.

Currently, the group has joint ventures in India, Malaysia and Singapore. Its entry to Thailand began with its purchase of a 20-per-cent stake, worth Bt82 million, in Thailand Carpet Manufacturing from TMB Bank.

The Depa United Group is one of the world's largest interior-contracting companies and the market leader in the Middle East. It has more than 20 subsidiary companies in the Middle East, North Africa and Asia and estimates last year's total revenues at Bt10.8 billion.

Earlier, the Agency for Real Estate Affairs said the Depa Group was expanding its investment into the Thai real-estate market and concentrating on developing new property projects in Pattaya.

Sweid said he was unaware of the group's real-estate investments in Thailand but agreed it held property-sector interests in other countries.

It is expected that Sweid will take a place on Thailand Carpet Manufacturing's board of directors, following an April shareholders' meeting. Company's chairman Chalermbhand Srivikorn said the Srivikorn family would continue to hold a 30-per-cent stake in the firm.

"Our management will not change, because Depa believes we have the experience and ability to manage the business to achieve its targets," he said.

Chalermbhand said Thailand Carpet Manufacturing, which produces Axminster and hand-tufted carpets, plans to increase its registered capital this year from Bt555 million to Bt714 million and will expand its production capacity of Axminster carpet 420,000 square metres, from 240,000 now.

The expansion will cost Bt200 million, 79.5 per cent, or Bt159 million, of which will come from the capital increase, with the remaining Bt41 million borrowed from a bank, he said.

With the Depa United Group as its strategic partner, the company expects to expand its export sales from last year's 50 per cent of total sales to 65 per cent this year. It expects total sales of Bt1 billion this year, up 66 per cent from last year's estimated figure of Bt600 million. In the first nine months of last year, Thailand Carpet Manufacturing recorded total sales of Bt496.61 million and a net profit of Bt20.02 million.

In terms of domestic marketing, the company plans to focus on both private and government organisations, four- and five-star hotels and entertainment complexes. It expects domestic sales this year of only Bt350 million, representing a 35-per-cent share of Thailand's Bt1-billion carpet market.

Somluck Srimalee

The Nation