Thai Eastern Group (TEG) and Sumitomo Rubber Industries (SRI) have agreed to form joint ventures to manufacture automobile tyres to serve the Japanese automobile industry. Together, they will produce products under such brands as Dunlop, Falken and Goodyear as well as other rubber-related products.
According to Apichai Boontherawara, president of the Export-Import Bank of Thailand - the financial adviser on the Bt1.1-billion partnership deal - SRI had expressed interest in establishing a joint venture with a Thai company to invest in natural rubber plantations and set up a factory to produce block rubber and other rubber products in Thailand. TEG, a client of the bank and a leading Thai company in the rubber plantation and high-grade block-rubber production business, was introduced to SRI.
Under the deal, which was materialised through the advisory support of Daiwa Securities Capital Markets, the Thai and Japanese companies agreed to establish two joint ventures.
Sumirubber Thai Eastern Plantation, having TEG as its major shareholder, will undertake the rubber plantation business. Latex tapping is expected to commence within the next four to six years.
Sumirubber Thai Eastern Corporation, with SRI as major shareholder, will operate a Board of Investment (BoI) promoted high quality block-rubber production factory, which is scheduled to start operations in 2011. Moreover, another innovative rubber material manufacturing project is under consideration.
The total investment value of these projects is estimated at approximately Bt1.1 billion.
"Apart from the development of Thailand's quality block-rubber production, this Nippon-Thai joint-venture will help create a number of jobs and enhance the Thai rubber export value by over Bt4 billion each year," said Apichai.
"Under this collaboration, Thailand will gain benefits from employment generation and advanced manufacturing technology transfer from Japan. Relying on Thailand's competitive advantage as the world's first-ranking exporter of natural rubber with strong potential in rubber processing and production, Japan will be able to increase efficiency in raw material quality control and development of innovative rubber products, particularly high performance automobile tyres," Apichai said.
He noted that this deal highlights the success of the bank's role as a financial adviser. The service was recently provided by the Investment Banking Department, which encompasses areas dealing with fund-raising for business expansion, financial restructuring, merger and acquisition consultation, business and financial partner identification and matching as well as other financial counselling facilities.
