Eastern seaboard report july 2015

Eastern Seaboard Report July 2015 – Prepared by Mark Bowling, Chairman BCCT Eastern Seaboard

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Slow economic prospects and myriad risks have prompted Toyota Motor Thailand to cut its domestic sales target to 280,000 vehicles this year from an earlier projection of 330,000. The cut means the Japanese car maker's sales will fall for three years in a row. Toyota recently reported its sales fell by 24.9% in the first half of the year to 123,125 vehicles, with its market share falling to 33.4% from 37.1%. However earlier in July, Toyota made the first shipment of 2,700 Hilux Revo pickups to 120 countries and territories from Chon Buri's Laem Chabang port. It plans to export 186,000 Hilux Revos this year.

Mitsubishi Motors Corp’s factory in Thailand will see an increase in production if published reports prove true that the Japanese automaker will close down operations in the United States. Japan's leading business newspaper, the Nihon Keizai Shinbun, said that Mitsubishi will stop making vehicles at its factory in Normal, Illinois, and try to sell the plant. It was also stated that the withdrawal from the US is part of an effort to focus more on growing Asian markets.

The company has three facilities in Thailand, bought a plant from Ford in the Philippines, and is building one in Indonesia. Afterward, the carmaker will shift more resources to its Asian plants. With three plants in Laem Chabang on the Eastern Seaboard, Mitsubishi has a maximum capacity of 500,000 units per year here, with Thailand ranking the company's second-largest production centre globally after Japan.

US car maker Ford Thailand remains positive on its pickup truck sales prospects despite falling sales in the first six months and sluggish consumer consumption in light of falling farm prices. Managing director Yukontorn Wisadkosin said pickup sales still had room to grow in the second half thanks to a new weight regulation. The Land Transport Department in March introduced a regulation raising the maximum weight of pickup trucks from 1,600 to no more than 2,200 kilogrammes. This should lead to more attractive specifications as manufacturers add more technology and options to vehicles. The new excise tax due to take effect early next year will increase the price of pickup trucks, passenger pickup trucks and sports utility vehicles by 30,000 to 40,000 baht. But with customers able to buy bigger pickup trucks, the tax is not expected to harm sales. The new tax regime will be based on carbon dioxide emissions, E85 gasohol compatibility and fuel efficiency instead of engine size as before. Ford sold 10,202 pickup trucks from January to June, down 18% from the same period last year.

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British Chamber of Commerce Thailand, 7 Floor 208 Wireless Road, Lumpini, Pathumwan, Bangkok 10330, Thailand Tel: 038 427 771 Fax: 038 427 772 Email: mark.bowling@colliers.com www.bccthai.com

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Good news for Pattaya businesses and hotels as we may see a shift in mass tourism to more independent, well heeled travellers according to Hotels.com - Thailand is one of 10 hot spots Chinese travellers would like to visit over the next 12 months. The country ranked as the ninth-most desired destination to visit during the period, with Australia, Japan and France heading the list, according to the latest survey conducted by the global accommodation booking website Hotels.com. Thailand ranked second among the 10 countries for most welcoming to Chinese visitors.

Outbound Chinese travellers rate South Korea as the most welcoming country with Japan third. The survey underscores the fact that Chinese tourism continues to boom, with traveller numbers up 20% to 107 million in 2014 with no slowdown in sight. It described Chinese tourists as younger, more independent and tech-savvy — in addition to wealthier. The findings are startling: outbound Chinese travellers could number 174 million in four years, spending US$264 billion annually, according to forecasts. This is roughly equivalent to the GDP of a developed country like Singapore.

SET-listed Amata Corporation Plc, the country's largest industrial estate developer, has reassured investors that there will not be any water shortages on its estates. The estates have well-prepared water management plans, said Amata's chief marketing officer Viboon Kromadit. The reassurance came after groups of investors raised their concerns over the drought, which has already affected the farming sector. "We experienced a drought crisis in 2005 that forced businesses to cut their production capacities due to falling water reserves, so this year we are well prepared for the drought and are confident shortages will not happen again," said Mr Viboon. Amata houses about 1,000 factories, with 700 at Amata City in Chon Buri and 300 at Amata Nakorn in Rayong.

Japanese car maker Mazda Sales (Thailand) remains bullish about sales prospects this year despite falling figures the first six months. Mazda reported yesterday its sales from January to June fell by 1.79% year-on-year to 16,837 vehicles, but its market share rose to 4.5% from 3.9% last year. During the first six months, 43% of sales came from the Mazda2 SkyActiv eco-car, both diesel and gasoline, with 7,220 units sold in that period, up by 110%. Sales of the Mazda3 SkyActiv, a medium-size passenger car, also rose by 4% to 3,751 vehicles in the same period. Meanwhile, sales of the Mazda BT-50 pickup truck dropped by 42% to 4,117 vehicles over the first half of the year. Likewise, the sports utility vehicle (SUV) Mazda CX-

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British Chamber of Commerce Thailand, 7 Floor 208 Wireless Road, Lumpini, Pathumwan, Bangkok 10330, Thailand Tel: 038 427 771 Fax: 038 427 772 Email: mark.bowling@colliers.com www.bccthai.com

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5 also saw sales decline by 42% to 1,734 units. Sales of pickup trucks were not only affected by the overall sluggish market in light of low farm prices but also banks' rejections of hire-purchase loans for pickup trucks, which rose to 50% from 30% last year.

Japanese car maker Suzuki Motor (Thailand) expects its eco-car shipments to surge by 285% this year to 40,000 units. President Takayuki Sugiyama said the company shipped a total of 8,504 units of two eco-car models, the Swift and the Celerio, from January to March, up by 308% on the same period in 2014. The shipments represented 3% of Thailand's overall shipments, which amounted to 328,232 vehicles in the first quarter, up by 12.6% from the same quarter last year. The company recently officially kicked off its third eco-car, the Ciaz, bound mainly for Asean within this year. The Ciaz was developed under the first phase of the government's eco-car scheme in which Suzuki Motor Corporation has invested 13 billion baht at the eco-car facility in Rayong province since 2011. The factory at the Eastern Seaboard Industrial Estate has an annual production capacity of 100,000 vehicles.

SET-listed developer Nusasiri Plc is offering a 6.5% rental yield guarantee to tempt buyers and stimulate sales of ready-to-transfer units and new projects. Chief executive Visanu Thepcharoen said the campaign would cover 2,400 units worth more than 20 billion baht. "We hope the yield guarantee scheme will help spur sales in the second half to reach 3 billion baht," he said. As a result, Nusasiri has revised up its 2015 sales target from 3 billion to 6 billion baht. The campaign, Nusa One, will guarantee an annual yield of 6.5% throughout the nine-year contract. Buyers can sell the unit back to the company from the sixth year. The 6.5% yield will comprise a dividend of 5.5% per year, paid every three months, and 1% that can be redeemed for staying at the company's five hotels in Phuket, Pattaya, Khao Yai, Si Racha and Chiang Mai. The government has agreed in principle to an Industry Ministry proposal to reduce the industrial zone at Map Ta Phut in Rayong to 30,000 rai in a compromise with local authorities. The National Industrial Development Committee chaired by Deputy Prime Minister MR Pridiyathorn Devakula yesterday endorsed a proposal to reduce the current industrial area by 10,000 rai — less than the cut of 20,000 rai proposed by Map Ta Phut municipality. It assigned the Industry Ministry and the Interior Ministry’s Public Works and Town and Country Planning Department to settle the issue before it is resubmitted to the committee for consideration next month.

The following news items reproduced with kind permission of SATCC

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Transport Minister Air Chief Marshal Prajin Juntong recently visited the construction site of the Pattaya – Hua Hin ferry pier. He disclosed that the Marine Department has been given two months to conduct a feasibility study of the project to construct ferry piers in Chonburi th

British Chamber of Commerce Thailand, 7 Floor 208 Wireless Road, Lumpini, Pathumwan, Bangkok 10330, Thailand Tel: 038 427 771 Fax: 038 427 772 Email: mark.bowling@colliers.com www.bccthai.com

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province’s Pattaya municipality and Si Racha district, as well as a ferry garage in Samut Prakarn province.

BTS Group Holdings Plc has proposed a plan to invest in the Khon Kaen-Laem Chabang dual-track railway. It says its investment could save the state budget 70 billion baht. The plan was unveiled as BTS chairman Keeree Kanjanapas met Transport Minister Prajin Juntong in June. Citing the plan, ACM Prajin said BTS will wholly invest in the construction of the 500-km route, the installation of signal systems and the purchase of locomotives and carriages. The company also asked to jointly handle the train operation and goods shipment service with a proposed return given to the State Railway of Thailand (SRT), the minister said. If the proposal is approved, the government’s 70-billion-baht budget earmarked for construction of the rail route could be used for other projects, the minister said. BTS also asked for a power grid to be installed to support the SRT’s move to replace diesel locomotives with electric ones from 2017 as well as acquiring locomotives and carriages for cargo trains, he said. “All the investment would be under the public-private partnership (PPP) model, whereby a private firm will jointly invest,” the minister said. “BTS will have to present the details of the partnership model and each investment project to the ministry by June 25, particularly the cargo train timetables, which the SRT and the Office of Transport and Traffic Policy and Planning still consider to be unclear.” To proceed with the project, there could either be a bid called or the company’s proposals could be considered, he said.

The Thai government has approved the Harbour A Development Project at the gateway port of Laem Chabang, the government website reported after a cabinet meeting. This allows the Port Authority of Thailand (PAT) to construct an L-shaped harbour measuring 30 m wide and 120-125 m long, with a 115 x 120 m marina and a mean sea level of 10 m.The facility will be located at Marina 1 between Harbour A1 and A0 on a 6.9 ha area. The construction is estimated to last for 24 months.

Dutch company AkzoNobel is planning to spend over €30m to build a new manufacturing facility in Thailand in order to support regional growth of its Performance Coatings business.

Being supported by the Thailand Board of Investment, the project includes construction of a 120,000m² site within the Hemaraj Eastern Seaboard Industrial Estate in Chonburi. The new facility will have an initial capacity of 45,000t per year, and production on the plant is scheduled to start in the third quarter of 2016.

Habitat Five Company Limited has launched “X2 Vibe Pattaya Seaphere”, a luxury low-rise condominium on the beach of Na Jomtien Road. The 300 million baht project offers 65 units, priced at 115,000 baht per square meter on average. Management is by X2 brand.

FITNESS operator Pure Pure Fitness & Taekwondo Centre Co Ltd plans to open a second branch by the end of the year in a move that should enable the company to double its revenue in 2016. The company has set aside Bt3 million to open the next Pure Pure Fitness centre, which will be located in Pattaya.

A large garbage dump on Koh Larn is prompting local authorities to seek ways to limit the number of tourists visiting the island, as the site cannot handle the amount of waste produced and growing problems from rubbish and wastewater are ruining the island's nature.

Local sugar cane farmers and millers are worried that the dry spell could lower production sharply. Thailand, which is the world's biggest sugar exporter, is likely to have smaller th

British Chamber of Commerce Thailand, 7 Floor 208 Wireless Road, Lumpini, Pathumwan, Bangkok 10330, Thailand Tel: 038 427 771 Fax: 038 427 772 Email: mark.bowling@colliers.com www.bccthai.com

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sugar-cane crops to be sold on the world market, according to producers and a senior government official.

The residential inventory in six beach provinces - Prachuap Khri Khan, Phetchaburi, Phuket, Songkhla, Chon Buri and Rayong - was worth Bt257.66 billion for a combined 85,200 units as of the end of last year, according to a survey by the Real Estate Information Centre of the Government Housing Bank The housing stock would take up to two years to absorb in the scenario that no new projects were launched during the period, said the centre. The survey, which covers detached housing, townhouses and condominiums, found a combined stock of 44,800 units worth Bt116.3 billion in Chon Buri province; an inventory of 13,700 units worth Bt44.26 billion in Songkhla; and 9,900 units worth Bt24.3 billion in Rayong.

Asia Aviation Plc (AAV) continues expansion into China. China recently gave AAV the nod to routes to three new cities in China and, in 4Q15, AAV plans to launch four new routes to China: two from Don Muaeng airport and two from U-Tapao airport in Rayong. The government is hoping to make U-Tapao airport into a commercial airport serving more travelers, particularly international passengers wanting to visit Pattaya, which is only ~45 km from U-Tapao airport. To this end, the government is expanding U-Tapao airport to lift passenger capacity from 870K/year to 3mn/year in 2016 and to 5mn/year in 2020.

The US-based company has begun a "voluntary separation programme" for its employees at the main office in Bangkok and two plants in Rayong, said managing director Marcos Purty. While GM will still sell cars such as the Cruze sedan in parts of Southeast Asia - an emerging-market battleground for global makers - it is shifting focus to push the "American heritage" of its SUVs and pickups such as the Trailblazer and Colorado.

It has been announced the start of production of the freshened Ford Ranger-based pick-up truck at the AutoAlliance Thailand (AAT) plant in Rayong, with market introduction slated for the second half of the year starting in Thailand and Australia.

Thai Air Asia plans to base two Airbus A320’s in U-Tapao from October onwards and hopes to announce new routes from the airport next month. U-tapao authorities are wooing airlines to operate scheduled flights through the airport with an offer of unprecedented incentives such as a 25% discount for landing fees and possible lower aircraft fuelling charges from PTT.

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British Chamber of Commerce Thailand, 7 Floor 208 Wireless Road, Lumpini, Pathumwan, Bangkok 10330, Thailand Tel: 038 427 771 Fax: 038 427 772 Email: mark.bowling@colliers.com www.bccthai.com