Thai firms eager to tap opportunity

Huge scope in many industries.

Among the biggest investors in Burma for years, Thai enterprises are eager to inject more money into the neighbouring country, headed by the energy sector and followed by the food and agriculture businesses, which hope to tighten trade and investment and create secondary manufacturing bases there.

The gradual opening of the Burmese market to the world, particularly the coming trade liberalisation under the Asean Economic Community (AEC), will encourage it to develop both its economy and its politics rapidly, observers say.

As a bordering nation, Thailand is in a position to benefit by investing in various businesses in Burma, including oil and gas, agriculture and services. In particular, along with China and Singapore, the Kingdom is investing heavily in mega-projects in Dawei.

ENERGY AND PETROCHEMICALS

A source at PTT said its chemical business was not likely to enter Burma immediately, as the country needed to develop upstream industries such as petroleum exploration and production first, then the downstream industry could come later. Between 80 and 90 per cent of Thailand's investment in Burma concerns the energy sector.

Anon Sirisaengtaksin, president and chief executive officer of PTT Exploration and Production (PTTEP), said that if his company can prove the petroleum reserves in the M3 block in the Gulf of Martaban, which is believed to be a good potential resource for the downstream business, investment in gas-separation plants and petrochemical business would be possible. PTTEP expects to prove the oil and gas reserves in the M3 block this year.

Anon said PTTEP had been in Burma for 10 years. Its three-year investment plan for 2011-13 requires total investment of US$2 billion (more than Bt60 billion) to drill in Block M9, also in the Gulf of Martaban of the Andaman Sea, as well as a 300-kilometre gas pipeline. It will start exporting gas to Thailand next year, aiming for output of 240 million cubic feet per day. PTTEP has been granted concessions in the Yadana, Yetagun and Zawtika projects and Blocks M3, M7 and M11.

Surong Bulakul, CEO of Thai Oil, said the company and PTT were jointly conducting a feasibility study on forming a joint venture to invest in Burma. Thai Oil would rely on its strength in oil refining, while PTT would take responsibility for processing from upstream to downstream.

Kovit Kantapasara, president and CEO of GE Thailand, said the company recently inked a memorandum of understanding with Sea Lion, a Burmese partner, to distribute medical equipment, a sector with great opportunity.

CONSTRUCTION MATERIALS

Burma is also attractive for the Thai cement industry, as both the largest and the second-largest cement-makers - Siam Cement Group (SCG) and Siam City Cement (SCCC) - are exploring opportunities there. Both companies have exported cement products to Burma for many years.

Kan Trakulhoon, president and CEO of SCG, recently said Burma was one of the countries in which it was considering setting up a production plant, in addition to Indonesia. Neither the size of the proposed investment or the production capacity of a cement plant in Burma was revealed. However, Chaovalit Ekabut, vice president for finance and investment and chief financial officer, said the cost of investment in a cement plant was $120 per tonne.

Meanwhile, SCCC is studying three investment options in Burma:

acquiring an existing plant, setting up a joint venture with a local partner, or establishing a new, wholly owned plant.

BANKING

Thai banks say trading and consumer-goods manufacturing have a high chance of doing business in Burma, while heavy industries should be concerned about environmental issues. The banks are ready to open representative offices in Burma to serve Thai investors who are rushing to invest there. Only Bangkok Bank has established an office in Rangoon so far.

Siam Commercial Bank and Krung Thai Bank plan to set up offices in Burma after approval from its central bank. Foreign banks are not allowed to open branches there.

Sopon Asawanuchit, SCB executive vice president, said foreign investors were moving in to cash in. Firms dealing in energy, tourism, consumer products and food have already jumped in.

FOOD

Large food conglomerates are also looking for business opportunities in Burma. Saha Group has shown strong interest in establishing a biogas power plant there, while its instant-noodle subsidiary Thai President Foods would like to set up a noodle plant.

Boonsithi Chokwatana, chairman of Saha Group, and Pipat Paniangvait, CEO of Thai President Foods, the maker of Mama instant noodles, visited Burma recently to study the feasibility.

Boonsithi and Pipat were seeking locations in Rangoon and Mandalay for their integrated facilities. Pipat said Thai President Foods already had an instant-noodle factory in Rangoon, which had been operating for about 10 years and was now running at full capacity of about 30,000 cases per month.

With the second factory, the company would be able to double production in Burma, which would serve not only the local market but also India.

Berli Jucker (BJC), another leading trading and manufacturing company in Thailand, is also interested in expanding into Burma, including the setting up of a glass factory to cash in on the growth potential of the country's beverage market.

BJC president Aswin Techajaro-envikul said the company was looking at acquiring existing logistics and distribution firms both in Burma and Thailand.

Charoen Pokphand Group has been the second-largest Thai investor in Burma for the past 20 years, operating livestock and feed-meal plants with a total investment of $100 million to $200 million.

Singha Corporation is planning to operate food and beverage businesses in the neighbouring country.