Thai-Norwegian Business Review

Thai-Norwegian Business Review 2010 – 2

Thai-Norwegian Chamber of Commerce

Theme New Ambassador

Katja Nordgaard

Thailand’s Recovery

Contents Embassy’s new Arrivals Theme: Recovery

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Sharing Thailand’s Recovery with the World The World after 3G issuance in Thailand

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Joint Chamber and Embassy Golf Tournament

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Felicia Jewellery Continues Healthy Strech

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The Insurance Implications of the Political Protests

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It couldn’t be you, could it?

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Do Exchange Rates Matters

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Amassing Transit Projects right and left

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Industrial Estates - The Locomotives of Thailand

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Planning a Renewable Energy Plant

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My Place

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Jotun Painting Wat Patumwanara

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The Gataway to Asia

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Dusit Thani - after the Riots

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Map Ta Phut - Creating a Fair Playing Field

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Ragnar Nielsen - A Captain of Thai Industri

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Members Directory

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Editor: Vibeke E. Corneliussen Journalists: Eric Baker, Laurence Civil, Emma Long, Jørgen Udvang, Colin Jarvis, Nadia Willan Photographer: Jørgen Udvang Design/artwork: Kristine Hasle Advertising: Elisabeth Bashari Media Commitee: Eric Mallace, Torpong Thongcharoen, Jan Egil Amundsen

Front page picture: New Ambassador, Katja Nordgaard Photo by Jørgen Udvang

Reconciliation, Reconstruction and Recovery It is now four months since the occupation of central Bangkok ended and everyday life at Rachaprasong intersection is close to normal again with the visible scars of the mayhem being slowly removed. Still, the polarisation in Thai society is still bubbling under the surface, and it could easily flare up again.

The Government faces a difficult task in determining what constitutes legal and rightful demonstrations and what must be branded terrorism. The two descriptions are only separated only by a hairline border, yet they are vastly different in terms of consequences.

Thailand’s economic recovery since the crackdown cannot be described as anything but remarkable. With a 7-7.5% growth projected for 2010 Thailand is close to a double digit economic growth. In addition the country’s export output is moving forward like never before, and this despite a very strong Baht which should in fact hurt the export figures. The automotive production figures for August were just released, and in eight months of 2010, we have already surpassed 2009’s total production of 1 million cars. These are positive signs indeed.

However, behind the positive figures there are unfortunately also some worrying developments; we have followed the progress of the Map Tha Phut cases where a number of approved projects have been stopped after investments have been made and projects have been started. The deadlock has seemingly been resolved, but a number of unhappy stakeholders are still venting their anger in the press.

In addition, the farce started by the National Telecom Commission (NTC) in brandishing Foreign Dominance Restrictions in the telecom industry sets a dangerous precedence, not only for the telecom industry but also for other industries. Such restrictions are simply a way to create a dangerous monopoly situation, and the loser is most likely the consumer who could end up paying inflated prices for services which are not up to international standards. At the time of writing we have also seen the sorely needed 3G licences put on hold yet again due legal technicalities. The ways these issues are played on the global arena are certainly not positive for potential investors in Thailand, and clearly the government needs to understand how damaging such bad publicity can be. We can only hope that the decision makers will come to their senses and that the acts will be overturned towards a freer and more competitive business environment for all players, not only a selected few.

While closing, allow me to also to welcome Norway’s new top diplomats in Thailand, H. E. Ambassador Katja Nordgaard and Minister Counsellor Erik Svedahl to an amazing country trying to navigate the rocky road to true democracy. We look forward to work together with you in increasing the trade and positive relations between our two countries.

Sincerely,

Axel Blom President Thai-Norwegian Chamber of Commerce Thai-Norwegian Business Review

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Embassy’s new Arrivals

by Nadia Willan photo by Jørgen Udvang

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ooking after Norwegian political and economic interests in Thailand, as well as Norwegian citizens who are living and working in Thailand are two new faces to Bangkok.

Katja Nordgaard, the new Ambassador for Norway and the newly appointed Minister Counsellor, Erik Svedahl. Nadia Willan asked these new European representatives about their work here in Thailand.

You have both been here less than a month, what’s your first impression of Bangkok?

Katja: It’s quite overwhelming at first. It is busy, hot, crowded, very friendly and fun with lots to do.

Bangkok seems to be such an energetic place.

Erik: Bangkok is a vibrant place. The mixture of rich and poor, modern and old, is quite visible. It’s less polluted than I thought it would be, though.

What are your roles as Ambassador and Minister Counsellor for Norway in Thailand?

Katja: My job is to represent Norway in Thailand and to promote and safeguard Norwegian interests here.

A lot of the Embassy’s work is focused on assisting the substantial amount of Norwegians who either live in Thailand or are visiting for shorter or longer periods.

Other important tasks are to support Norwegian companies and business interests and to report on the political development in the region.

Erik: An important part of the Embassy’s job is promoting the image of Norway - the Norwegian “brand”. We also liaise closely with organisations such as the Thai-Norwegian Chamber of Commerce and Innovation Norway to give Norwegian companies operating in Thailand the necessary support.

New Ambassador Katja Nordgaard Born 1962, Bekkestua, outside of Oslo Education: MBA, Norwegian School of Economics and Business Administration, (NHH) Started in Ministry of Foreign Affairs in 1988 and has previously been stationed in London and Pretoria. During leave of absence from the Ministry of Foreign Affairs Mrs. Nordgaard has been working for Norwegian Shipowners’ Association, the Office of the Prime Minister and in Scatec Solar (solar energy solutions).

Married to Jørn Unneberg Three daugthers, 18, 16 and 11 years with the two youngest staying here in Bangkok studying at NIST

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Thai-Norwegian Chamber of Commerce

Likes reading, cooking, travelling, hiking in the mountains, play tennis and dance. Her ambition is to learn how to play golf while living in Thailand.

What specific attention do you want to give to the role?

Katja: To engage in a dialogue with the Thai government about issues such as climate change and energy, foreign policy and health, and humanitarian disarmament. Also, I will discuss wider regional issues, such as developments in neighbouring Myanmar, where Norway supports the development of dialogue and engagement, away from isolation.

Erik: Asia is a region that has long been underestimated in its importance, not least in Western Europe. I would like to contribute to creating more awareness of Asia in a geopolitical sense. Thailand is an important regional player. We need to have a more informed view of Asia, including Thailand, which is so much more than beaches and resorts. I see this as quite an interesting challenge ahead.

What do you see as the challenges you might face?

Katja: To really understand a new society is always a challenge. This will take time. I hope to promote Norway as an open international economy and responsible international partner for Thailand. In the business world we represent perhaps more democratic values. We are maybe more direct, less polite and formal and less hierarchical than in Thailand. I had a lot of background information on Thailand before I came, but there are many things you can only learn from experience and actually being here. I see that as an interesting challenge.

Erik: I think a challenge will be learning to appreciate the cultural values in Thailand and how they play a role in Thai society, politics and economy. I was previously posted in at the Embassy in Beijing, so I am a little familiar with Asia, but there are certainly cultural differences also within this region.

You have not had time to be homesick yet though have you?

Katja: No, not at all and my impression is that you can have a really nice and interesting life here. I will go back to Norway regularly to visit family and friends.

My husband and two of my daughters are living here and are really positive about the experience so far.

Erik: My wife is Australian so we are one step closer to her homeland and my three children are all here too.

I will go back regularly and also travel to Australia.

I miss sweet brown cheese which I am yet to see in Thailand!

New Minister Councellor Erik Svedahl Born 1960 in Trondheim Education: Cand. Philol with a Master in Russian from Univercity of Oslo (Blindern) Started in Ministry of Foreign Affairs in 1993.

Before coming to Bangkok, Mr. Svedahl has also been working in Moscow, London and Beijing.

Married to Vicki o’Neill from Australia Three daugthers age 16, 13 and 10 years, all students at NIST Likes football – the favourite team is RBK from Trondheim! He also likes playing golf as a beginner.

Thai-Norwegian Business Review

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Recovery This issue of Thai-Norwegian Business Review focuses on recovery, both in terms of removing the visible scars of the mayhem, reconciliation and moving ahead. Thailand received a lot of press attention in connection with the riots in May. The press has gone quiet and the times seem to have turned, despite the looming uncertainties which is still affecting investor confidence. The country has outperformed even the most optimistic projections. This proves that Thailand still has a lot to offer both for investors and for the 15 million tourists who visit Thailand every year. In this issue we cover existing businesses as well as new businesses; both from regulatory points of view to practical hands-on experiences of how to succeed in the Kingdom. Happy reading!

Sharing Thailand’s Recovery with the World

by Emma Long photo Jørgen Udvang

Thailand’s Board of Investment (BOI)

D

uring the months of February to May of 2010, Thailand was in the grip of political turmoil. The Red Shirts laid siege to the centre of the city and paralysed Bangkok in the process. As we all know, on May 19th, we witnessed a city on the brink of civil war as the conflict reached its flash point.

But that was then. Thailand has a long history of bouncing back quickly from past political crises and this is no different. Within a few days of the May 19th clashes, Bangkok was straight back to business, the business of recovery.

In the last issue of Business Review we interviewed Khun Duangjai Asawachintachit, Deputy Secretary General of the BOI, about the BOI’s role in promoting investment within Thailand. For this recovery issue, we sat down with Khun Duangjai again to talk about how the BOI are promoting Thailand’s comeback.

“The recent political turmoil had little effect on BOI promoted businesses which tend to be mainly located outside of Bangkok, and so our operations were not adversely affected. However, the focus of the BOI will now be on restoring confidence in our investors as they are our main responsibility. We need to send out as much information as possible on the current situation so that we can provide a wider point of view than what they see in the press. Therefore our public relations activities are very important so that investors, both current and prospective, are fully aware and up to date on the current situation. An example of this is a week after the May 19 protests; we issued a statement to our investors and also posted information on our website about the current status of investments.”

“We are also keen to stress to investors that despite what political upheaval there may be in Thailand, all BOI policies remain unchanged. This is a very important point. Throughout all of Thailand’s coups and changes of Government, all policies have remained, so, we can build on that history of continuity. Our focus is very much one of a ‘confidence restoration’.”

Assistant Secretary General of BOI, Khun Duangjai Asawachintachit 10

Thai-Norwegian Chamber of Commerce

Every year, the BOI reach out to the international investment communities with an extensive series of road-shows spanning more than 25 countries worldwide. This year sees the road-shows take on an even more crucial role by showing the rest of the world that Thailand is back and ready to do business. As well as visiting existing and well established markets and trading partners such as Japan, the US and Europe, the BOI are also targeting new emerging markets such as China and India. It is interesting to note here that the Thailand stand at the 2010 World Expo in Shanghai has one of the highest rates of visitors.

Khun Duangjai took us through some of the messages that the BOI are taking as they hit the road, “we make sure that our BOI officials are well prepared for anything that they may be asked about in relation to the political turmoil” she says “so we have prepared a list of FAQ’s to assist them in this. We also engage the assistance of existing investors to help promote Thailand as a place that is still a safe and an efficient place to do business. This alone can be of huge benefit.

For prospective investors to hear from those here already that all is good can speak volumes in restoring confidence.”

“New investors are still visiting Thailand and the trend of new investments is still on the rise. For example, the number of foreign investment applications submitted to the BOI increased by over 40% and the value almost doubled to 88 Billion Baht, and this is all within the first 6 months of this year. A prime example of this is a major international corporation,

Canadoil, who already have existing operations in Thailand, recently announcing an expansion program with a value of 20 Billion Baht. This is a huge vote of confidence for our investment efforts in Thailand.”

“In our seminars and one to one meetings with business people around the world our messages are clear. The opportunities in Thailand outweigh the short term political risk. Moreover, the Thai economy continues to grow regardless of political difficulties. The economic performance in Q1 this year clearly indicates that fundamental strength. Our investment measures are still in place and are conducive to investing in Thailand and our policies are transparent and are always being improved.”

So, whilst it is true that Thailand is in recovery mode, investments are still on the rise and prospective investors are still coming. For confidence restoration, look no further than the BOI.

The World after 3G issuance in

by Eric Baker photo by Jørgen Udvang

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well-functioning, competitive telecom industry in Thailand has the potential to create a multiplier effect on the economy because of its key support role for other industries.

This is the counsel of Robert Fox, the chairman of the Information and Communications Technology group for the Joint Foreign Chambers of Commerce in Thailand (JFCCT).

And never has there been a more urgent time to consider the future of the industry than August and September 2010. The National Telecommunications Commission (NTC) has embarked on an auction for third-generation (3G) licences by the end of September, which happens to be when likely changes to the NTC make up occur.

The JFCCT recommends taking the first steps in structural reform by converting the concessions issued by the state-owned enterprises (TOT and CAT), or at the very least agreeing their terms, before issuing 3G

spectrum. The basis is that it would reduce complexity in the new 3G environment, reduce the number of regulatory regimes and promote fair competition.

Some Thai senators expressed doubts about holding an auction this early as well, and some senior members of Prime Minister Abhisit Vejjajiva’s administration were initially sceptical. The prime minister himself proposed doing the conversion before an auction, said Mr Fox. Against the backdrop of this gamesmanship, the NTC proposed draft regulations that sought to curb what it calls “foreign dominance” in the market.

The regulation sought to limit shareholdings and management positions held by foreign nationals.

The European Union filed a letter complaining that the rule would restrict the rights of foreign investors in setting policy, engaging in management and operations, and possibly represents a violation of the General Agreement on Trade in Services (GATS) under the World Trade Organisation.

Independent telecom commentator Anuparb Thiralarp told the Bangkok Post that the regulation violates

Thailand’s telecom whirlwind world trade rules and operators could file suit with the Administrative Court or the World Trade Organisation on grounds that it contravenes the most-favoured nation status under GATS. Most-favoured nation status requires countries to offer equal trade advantages and similar treatment to locals and foreign nationals, or between locally produced and foreign goods.

Many entities purchased bid documents for the 3G licence auction scheduled to take place September 20, including subsidiaries of AIS, DTAC, True Corp, the three main mobile operators. Although the NTC decided that the proposed foreign dominance rules would not apply in pre-qualifying 3G participants, the proposed rules (and the unclear nature of some parts of the actual rules) may have scared off potential foreign investors as only subsidiaries of the three existing mobile operators submitted the bids and 1.28 billion baht deposit for the auction. The NTC has qualified these three as able to participate in the bidding.

AIS, the country’s largest mobile operator, had Singapore Telecom as a major shareholder for years and counts Temasek Holdings as an indirect part owner. DTAC, the second-largest mobile operator, is affiliated with Norway’s Telenor.

Ironically, at the same time the NTC was pushing foreign dominance regulations at home, the NTC was also was conducting international road shows abroad to attract foreign investment, said Mr Fox. “To be a regional or global leader in a sector requires drawing in of local and foreign talent and investing in education and training,” said Mr Fox. “All three mobile operators have had or do have skills, knowhow and technology from all over the world, including in Thailand. It’s difficult to see how proposals like those on foreign dominance could encourage investment in this sector. It is normal for investors to require deployment of tried and tested skills and management.”

There remain some aspects of the 3G rules that Mr Fox describes as unattractive, including the requirement to hand back 2G spectrum to the SOEs. JFCCT recommends a national spectrum plan with any spectrum handed back to the regulator and to have a clear and agreed upon re-farming or reallocation plan.

Monopoly supply requirements for operators to obtain connection or backhaul connectivity from a stateowned source (or even limiting the sources to currently existing licensees) are also troubling, he added.

Mr Fox says that for years now the JFCCT has been recommending reforms to the sector which would enable the state-owned enterprises to evolve into contributive players in a multi-operator, competitive environment. “Evolution and change involve some pain along the way. In the long run the national flag should be planted on the industry as a whole, not just on those actors which are currently state-owned. That means that the whole economy benefits”.

As this issue of TNBR was going to press, CAT Telecom’s management started a legal action against the NTC for holding the auction without having the authority to do so. CAT president Jirayut Rungsrithong told the Bangkok Post the authority for issuing 3G licences lies with the yet-to-be-established National Broadcasting and Telecommunication Commission (NBTC). CAT management’s position is that the auction will allow 3G licensees to roam on existing 2G networks, but prohibits 2G operators from doing the same, which is unfair and would make the SOEs (CAT and TOT) lose some 40 billion baht a year. An injunction against the planned auction was also sought. The Court declined to issue the injunction immediately but did agree to take on the case to assess the alleged harm and the authority of the NTC. CAT’s labour union (which was not successful in a similar bid as the Court ruled that it had no legal standing) has submitted a petition to the Senate Committee on Corruption and Good Governance concerning the bid.

Long-standing legislation pending parliamentary approval holds that the NTC be replaced this year or next by a 15-member NBTC made up of industry employees, academics, consumer advocates, and government representatives.

Confused yet? That’s because the industry has evolved in Thailand unlike any other comparable nation as developed as the Kingdom, although there are many global industry norms which do not make Thailand unique said Mr Fox. In the early days, the country kick-started mobile services by using concessions to encourage investment.

TOT and CAT Telecom provided licences for 2G spectrum to AIS, DTAC and True Move in exchange for concessions under Build, Transfer and Operate (BTO) arrangements. World market, economic and technology demands have moved on and those structures are not compatible with the legal, regulatory, Thai-Norwegian Business Review

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solid wireline and wireless broadband future. But those are bigger issues and will surely take longer. We have recommended that the mobile concession issues be addressed first. We do not see agreeing a future broadband structure as a necessary pre-condition to concession conversion, and we have recommended that care be taken to avoid creating new monopolies unnecessarily.”

Mr Fox also believes having a strong information and communications technology sector is key to supporting the creative economy that the current administration is so keen on, because ICT is needed for any knowledgebased society. “An economy wanting to be a hub for any major sector needs to have good local and international data communications to support voice, data and video for business use and use by other segments,” he said.

On a basic level, Thailand needs to work on improving its English teaching in primary and secondary school, as most IT and computing classes are taught in English at university, said Mr Fox. In addition, software skills utilise project management and problem-solving skills that require the ability to work in groups, and if some members of the group cannot communicate because they don’t understand the language or culturally feel that they should not contribute, it holds back the whole team.

market or technology environment now. The plan was for TOT and CAT to evolve through corporatization to at least partial privatization, but that plan stalled at the corporatisation stage, said Mr Fox. But for the concessions they receive, these SEOs would be loss-making, said Mr Fox. Instead of evolving into efficient competitors, the lack of a supportive vision for the economy has led to that old axiom “vested interests prefer the status quo”.

Specifically, the JFCCT is suggesting concession conversion whereby the SOEs transfer concession ownership to the Ministry of Finance. In addition, access regulation to essential facilities and base infrastructure at wholesale/cost-plus rates needs to apply for all relevant supply sources, said Mr Fox. Without concession conversion, there will be two different regulatory and operational regimes for 2G and 3G. “3G requires a virtually seamless interface with 2G from a user perspective,” said Mr Fox. “A user should not have to change his or her phone or consciously switch networks when they go outside 3G coverage, because 3G is not going to be everywhere. The engineering, operations and accounting which support that are made more expensive and complicated with more than one regime.

“It is the government which has to change the stateowned enterprises. No one should expect the SOEs to be able to decide for themselves their future in an environment where the most important factor is a thriving economy. As with any significant change, it is likely that not everybody will agree with every change.

“There are related issues in broadband and moving to national industry structures which will support a 14

Thai-Norwegian Chamber of Commerce

Thailand and Asia in general have had some success with software parks, but mainly these have been used for lower-end outsourcing for foreign export processing and high-tech manufacturing zones. The real value lies in innovation, said Mr Fox, and amongst the main roadblocks is the lack of a broadband infrastructure through which to do massive collaborations. 3G will make a positive contribution in that respect but it will not meet all needs. In addition, the JFCCT says foreign investors are looking for knowledgeable and trained personnel, a politically and socially tolerant environment, the ability to utilise private equity and venture capital funding, and free movement of skilled labour.

Even as some countries prepare to welcome 4G technologies, Thailand is struggling to introduce 3G, which first came out in 2002. A vice president of research at the Thailand Development Research Institute recently stated in the Bangkok Post the NTC’s listing of its 3G technology as 3.9G was a marketing gimmick so that Thailand doesn’t look like it is falling so far behind. It is really 3G. Momentum for 3G and IT changes seem to moving haltingly forward. Typically, the vested interests Mr Fox speaks of in Thailand delay changes, reforms and the ability to introduce new technology. “I remain encouraged because the government seems to have the intention of reforming the sector, part of which is to map out a future for the state-owned enterprises. All this will require a shared vision and strong will”.

The impact of 3G services in Thailand even for basic higher speed connectivity could relatively make a greater difference in Thailand than has the advent of 3G in some other markets which already had greater broadband penetration. On the other hand, the operational challenges which will result from the set of rules to be used in Thailand may dampen that impact.

The first joint Chamber and Embassy Golf Tournament The first joint Chamber and Embassy golf tournament was held at the Thana City Golf and Sports Club on Friday 25 June 2010 with tee off 12.30 pm shotgun start.

The teams in the tournament were made up of 4 persons per Chamber with a minimum of one Chamber and/or Embassy player in the team. Being a networking event as well as a golf tournament the players were paired based on their handicaps and the players from the same team did not play together.

The tournament was a great success and after the game the players enjoyed the dinner and some great prizes for Best Gross Individual & runner up, Best Net Individual & runner up (Men and Ladies), Best Net Team 1st, 2nd & 3rd places in A,B,C Divisions, Longest drive, Nearest to pin, Nearest to Fairway line and also miscellaneous prizes by lucky draw. The Thai-Norwegian Chamber’s team even won a prize as third team in B class handicap group! Congratulations to Eric Mallace, Darran Mallace, Mana Boobyachotima and Somchai Kaeasorn.

The surplus form the event was completely donated to charity.

Felicia Jewellery Continues Healthy Stretch

by Eric Baker photo by Eric Baker and Jørgen Udvang

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hough the riots in Bangkok shook much of the country’s economy, several sectors excelled as you will read in this edition of the magazine. One company that didn’t experience any hiccups was Felicia (Thailand) Ltd, a jewellery, silver and gold designer. Felicia designs all of their jewellery for export, with 80% going to Scandinavian countries, and its business has grown this year. The Business Review sat down with Wanida Treejittanachai, the general manager, to talk about the company and how it has coped in the aftermath of the riots.

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Thai-Norwegian Chamber of Commerce

Felicia was founded in 1995 as an initiative of a Norwegian jewellery designer and a few experienced expatriates in Thailand. The company purchases loose stones, meaning they are already shaped and carved, and sets them as jewellery.

“Our business has been growing so fast we didn’t have enough workers for part of last year and the beginning of this year,” said Ms Wanida. “But for the third quarter we are now fully staffed. Workers were easier to find than usual this year.”

Some 70% of its workforce are women and most of them come from Isaan. “We treat the workers like a family and they feel comfortable here,” she said.

“The protests did not affect our business at all.

Our orders were not delayed. The only possible problem was if a customer wanted to fly to Bangkok to talk about a design, but we have other ways to communicate if we can’t meet face to face.”

All of Felicia’s products go to Europe, and Ms Wanida credits an improved economy there with orders picking up. Felicia has its own designs, but the company also works with customers if they have a custom request.

“Thailand is the best country in the world for value in the jewellery business. Everyone in the industry knows this,” she said. “The workers here are very specialised, and the wages are cheap while the quality is very high.

Our specialty is mid to high-end jewellery.”

Because of this Thai advantage, most of Felicia’s competitors are local, and customers often call around the Bangkok shops to compare prices and delivery times.

The company buys 80% of its loose stones from Bangkok, with the rest from China and Hong Kong.

Ms Wanida said in her experience, more of the foreigners that are scared to travel to Bangkok are from Asia, not the West.

Mrs. Wanida Treejittanachai, general manager, Felicia

“If I could talk to a prospective buyer from abroad, I would say ‘Don’t worry, everything is fine. Thailand is safe to visit and invest in,’” said Ms Wanida.

“Private Banking makes life easier.”

The only Nordic Private Bank in Asia Pacific. www.sebgroup.com/privatebanking Tel: +65 63570895 singapore@sebprivatebanking.com.sg 50 Raffles Place #36-01, Singapore Land Tower, Singapore 048623

The Insurance Implications of the Political Protests

by Paul Thomson, Lawton Asia photo Jørgen Udvang

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he unfortunate events which occurred earlier in the year in Bangkok brought into focus, in particular, two aspects of insurance coverage – the degree to which companies in Thailand have adopted cover for terrorism and political disturbances, and the limitations of cover for business interruption.

Every business should carry out an assessment of its risks to determine what could happen in the event that something goes wrong. Having identified those risks and the impact they could have on the business if they occur, business owners, directors and risk managers can decide whether they are willing to retain those risks or mitigate them in some way, for example by buying insurance.

Regarding terrorist activities or political disturbances, a standard Property Insurance policy will exclude those

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Mr S.S.Loo in front together with his Sales Manager Khun Wallapa Nicrothanot and Sushi Chef Kato Ishibashi

Thai-Norwegian Chamber of Commerce

risks, and additional cover must be purchased. Prior to the recent red shirt demonstrations many companies had taken the view that, having balanced the risks of a loss against the premium cost, buying this type of insurance was unnecessary. After the events, however, attitudes are changing and the insurance industry is seeing an increasing number of enquiries. Company directors do, of course, have a duty to consider business risks and measures for dealing with them, and the balance appears to have shifted, meaning that purchasing insurance is more widely regarded as the prudent way forward.

For those premises which were damaged, the debate is continuing as to whether the acts constituted terrorism, and from the insurance viewpoint ultimately the policy wordings will be the determining factor. As for those companies now looking to buy this category of insurance for the first time, there will be a limited capacity of insurance available and prices are inevitably higher than they were at the start of the year.

Regarding Business Interruption Insurance, the demonstrations showed that, assuming a business takes a decision to buy any type of insurance, it is always

important to understand the extent of the cover and any exclusions which may apply.

Frequently, it is only after a loss occurs that an insured company really considers the details of its cover and this certainly occurred for many businesses which were subjected to lengthy closures while the red shirt demonstrators camped on their doorsteps.

In simple terms, Business Interruption Insurance covers the insured company for loss of profit resulting from an insured event. The insurance is an extension to (or mirrors, in terms of the definition of an insured event) a Property Insurance policy. Most importantly, therefore, and with few exceptions, a physical loss to property is required before a valid claim can be made.

This means that, for example, a fire resulting in the closure of the business premises for several weeks while reconstruction works are carried out will be covered but, much to the disappointment of those affected by the recent disturbances, an inability to trade without actual

property damage will not give rise to a claim for business interruption, even though access to the property was denied by circumstances beyond the insured’s control.  Good business interruption insurance will extend to cover an inability to trade because of the outbreak of contagious diseases - something which was relied upon by many hotels in Hong Kong during the SARS outbreak a few years ago - but it will not apply because of closure due to a political rally.

This is obviously a simplified view of the available insurance covers, and there are several complex issues which businesses should discuss with their insurance advisers when considering whether to buy the insurances.

We all, of course, hope that there will be no further demonstrations and destruction, but now is the time for companies to consider the potential impact of a repetition.

It couldn’t be you - could it?

by Colin Jarvis

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n April 20th an explosion on the Deepwater Horizon oil rig killed 11 people, injured 17 more and started spewing oil into the Gulf of Mexico. By the time the flow was stopped on July 15th an estimated 45 million barrels of crude oil had flowed into the sea and some rather delicate ecological areas. The lives of thousands of people were affected.

Disasters do happen, mistakes are made, and errors can be compounded: after all we are human. When it happens in our organisation we need to ensure that the company survives in the best possible condition and as a side issue, if we hold a senior post, we would hope to be able to keep our job. Good communication is vital if we are to achieve both these objectives as the ex CEO of BP, Tony Hayward, can attest.

Tony Hayward decided to act as the spokesman for the company. I am sure Tony is a nice man and a talented engineer and businessman but his lack of skill in communication has caused huge damage to his company and resulted in the loss of his job. So what did he do wrong and what can we learn from it?

Lesson 2: During a disaster people are looking for sympathy and empathy, not someone attempting to minimise the problem. Forget the statistics, they will be used to imply a minimilisation of the problem or used to make to problem look bigger than it is. Be careful that what you say does not look like an evasion of responsibility.

The most famous statement from Mr Hayward was “… I want my life back”. I am sure that Mr Hayward was using this phrase to imply that he was at least as keen as anyone else to see the oil spill stopped and the mess cleaned up. However it came across as a selfish remark, particularly when one considers that some 11 people had been killed in the explosion.

Lesson 3: Work out all the questions that the media representatives are likely to ask. It is not terribly difficult. If you feel you cannot do it yourself, and you do not have specialists in your organisation, ask a consultant to help you. Once you have considered the likely questions carefully work out your answers and rehearse them. Never speak to the media without preparation.

Engineers and scientists are very thoughtful people and assume other people are as well. They prefer to look at a problem from many different sides in order to arrive at a considered view. Unfortunately the media want very simple answers to, sometimes very complicated questions. The familiar term used is “soundbite”.

Lesson 1: If you are managing a crisis and speaking to the media, learn to speak in soundbites. Everything you say can be quoted and if your answers are lengthy only the most newsworthy part will be used. This will often be the part that is most damaging to the company.

Poor Tony Hayward seemed unable to anticipate the likely interpretation of his words. When he stated that the spilled oil was “tiny” compared to the ocean as a whole people saw him as trying to minimise the problem and reduce his responsibility. The same thing happened when he said “… the effect of the oil spill and the 950,000 gallons of toxic dispersant that have been used to treat it will be very, very modest”. What he said is probably true but that it is not what people wish to hear.

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Thai-Norwegian Chamber of Commerce

Photo by Jazavac/Dreamstime

During all his interviews I am sure Mr Hayward made many rational and knowledgeable remarks. Most of these would never be reported and certainly he will never be remembered for them. I am also sure he was honest in what he said. Unfortunately, when speaking in front of the US House Committee on 17th June he repeatedly and truthfully said that he did not know the answers to the questions he was asked. This came across as sullen incompetence rather than honesty.

caused by this oil spill will be cleaned up very shortly after it occurs.”

There also appeared to be an attempt to shift the blame to other participants in the project such as Halliburton. Don’t do it, again it looks like a refusal to accept responsibility.

Let us hope you are never faced with such a dreadful problem but I am certain that some day you will be faced with a problem not too dissimilar though perhaps on a smaller-scale. May I suggest you plan for it now? It will be too late when it happens!

Lesson 4: Anticipate the questions. Make sure you know the answers. If you don’t, find out or take along those that do. Lawyers will try to get you to say nothing in case you appear to admit liability. You are responsible so face up to the liability. Legal advice will often make things worse in this situation.

This statement pretty well covers what BP actually did and if it had been stated early the company would have kept the initiative and probably Tony Hayward his job.

It is also likely that the hardship fund would have been lower than was eventually demanded by the American government.

It seems to be the case that the only person authorised

by BP to speak to the media was Tony Hayward himself. This is not always a good strategy. The media do not trust senior people within an organisation to be truthful. They will often accept the word of people lower down in the organisation. If employees are not allowed to speak to the media then the media will find disgruntled, ex-employees who will often be glad to speak to the media and paint the blackest picture of your organisation that they can.

Lesson 5: Let employees speak to the media; indeed encourage them to do so. That is, providing your organisation has strong Vision and Values throughout the organisation. If your organisation is healthy you should be able to trust your employees.

Imagine if Tony Hayward’s message, within a day or two of the disaster, had been along these lines.

“This is a terrible disaster for which we take full responsibility. - We are giving the families of those killed and injured every support we can. - We are very concerned about all the people whose lives could be affected by this disaster. - We are arranging a fund of $50 million to be made immediately available to anyone who has suffered as a result of this incident.

If more money is needed we will make it available.

- We are working with the government and other organisations to make sure that every effort will be made to stop the flow of oil and minimise the pollution. - We will also ensure that any pollution

Highly committed team of lawyers in providing

professional legal consultancy on all business matters.

Suite 3801, Level 8, 54 BB Building Sukhumvit 21 (Asoke), Wattana, Bangkok 10110 Tel: 02-259-2627 thru 9 Fax: 02-259-2630 Email: wissen@csloxinfo.com Website: www.wissenandco.com

Do exchange Rates Matter?

by Colin Jarvis

I

n 2007, if you had European or North American currency to exchange into Thai baht, you would get 20 - 30% more than you would today. This has a very real meaning to expats living in Thailand, for many it has resulted in a real fall in their standard of living.

Businesses too suffer or benefit, depending on whether they are importers or exporters. The question is how much the fall in the value of western currencies will affect the economy of Thailand and its recovery.

However, the effect on businesses is not a simple as basic economic theory might have us believe.

For example, Thailand’s exports of shrimp products are worth about $1.25bn a year. Recently the EU raised the import duty on Thai shrimp products from 4% to 14.4%. The cost of importing Thai shrimp products into the EU has therefore risen by almost 50% if we add on the change in exchange rates. Basic economic theory should suggest that the volume and value of Thai shrimp exports should fall. In fact, in 2010, it is expected that the value of exported Thai shrimp products will rise by almost 8%, according to the Thai Frozen Foods Association.

How can this possibly be, it appears to break every rule in the economic textbook. Prawns are not a cheap product and there are many substitutes so why should Europeans and North Americans increase both the amount of prawn products they are eating and be willing to pay a much higher price, at a time when their economies are struggling.

The answer is relatively simple; there is a problem with the competition. Indonesia and Brazilian shrimp farms have recently suffered from an outbreak of infectious myonecrosis virus which has meant they have been unable to export leaving the market is wide open for Thai producers.

The sea food business operates both ways. The best quality sushi is made from fish, particularly salmon, caught or farmed in Northern Europe and North America. Norwegian salmon is of the finest quality and greatly sought after by top quality sushi manufacturers. The drop in price of Norwegian product, due to the fall in the Kroner, should mean that the importation of top quality Salmon from Norway should increase, but it hasn’t. This is because the demand for top quality sushi has fallen. It is mostly

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Thai-Norwegian Chamber of Commerce

eaten by well-heeled tourists and as we all know tourist numbers have fallen dramatically due partly to the increase cost of visiting Thailand but also because of the apparent political unrest.

An export one tends to forget is labour. Over the past 20 years thousands of Thais (estimated to be 1.2% of the population) have emigrated to the West to open up restaurants. It is now estimated that the value of the money they send back as remittances to their families in Thailand amounts to some 3% of Thai GDP. This means that if the people sending the remittances continue to send the same amount in their host country’s currency then Thai GDP will fall by up to 1%. The problem for Thailand will also be far greater than any similar fall would be in some of the larger in industries. The people who receive remittances tend to be among the poorest in the country and it is estimated that 35% of the households in Thailand receive remittances from family members abroad. This fall in the exchange rate can mean that one third of the poorest households in the country will suffer a serious drop in nett income, one they cannot afford.

Many of these households will be involved in the production of rice. Currently Thailand is the world’s biggest exporter of rice. However, Vietnam is rapidly catching up and is expected to become the world’s largest exporter in 2015. The reason for this is that Vietnam is producing rice at a relatively inexpensive price so Thailand’s strategy is to concentrate on increasing the value of its rice rather than the volume of its export. Currently Thai rice is valued at about 50% more than rice from Vietnam. This year Thailand is expected to export 8.5 million tonnes of rice. Much of this will be its famous Jasmine rice.

Due to the huge number of Thai people running restaurants throughout Europe and America and to the interest in Thai cuisine they have stimulated; the demand for specialist rice such as Jasmine remain fairly stable, despite the hike in the price. As the country’s marketing strategy for rice is now based on providing high quality premium products the demand for this rice will be less volatile as it lifts itself up from the commodity market.

The manufacturing of some products, for example computer hard drives and other electronic items, is very important to the Thai economy. There is no doubt that some companies are sourcing electronic products elsewhere where the cost of production is lower. However, the lower production cost is

not necessarily to do with a fall in the exchange rate. Indeed, the majority of the countries to which production is emigrating are countries that have currencies that have hardly moved in relation to the Thai baht.

It would seem therefore that exchange rates alone will make little difference to Thailand’s future success as there are many other factors at work that can often overwhelm the effect of changing exchange rates.

Perhaps the best example of this is tourism which used to account for some 10% of GDP. Tourism has fallen dramatically over the last 18 months but this is less to do with the additional cost of visiting Thailand than it does to the apparent political unrest.

It would seem therefore that the people to whom exchange rates matter are the expats living in Thailand and the Thai families relying on remittances from their family members abroad. The major food exporting industries seem to be thriving and no doubt the tourists will return in time.

Bangkok Office: 10th Floor Vibulthani Tower 1, 3195/15 Rama 4 Road, Klongton, Klongtoey, Bangkok 10110 Thailand Tel: +66 2 661 3486 Fax: +66 2 661 4385

Mill Location: 64/3 Moo 3, Asian Highway, Phokruam Amphur Muang, Singburi 16000 Thailand Tel: + 66 3 653 111 Fax: +66 3 653 1100

torpong-t@papcothai.com www.norskeskog.com

Bridging Societies is our business Nera Networks provides wireless transmission solutions to communication network owners in most market segments including: • Mobile • Broadcast • Enterprises and Internet Service Providers • Government and Educational institutes • Defence • Offshore and Utilities • Retail Payment Solutions Nera (Thailand) Ltd. 26th Floor, 253 Asoke Tower 253 Sukhumvit 21 (Asoke) Road Klongtoeynua, Wattana Bangkok 10110 Tel: +66 (0) 2664 1464, Fax: +66 (0) 2664 4002 www.nera.no

Amassing Transit Projects right and

by Eric Baker photo by Jørgen Udvang and Kristine Hasle

W

hile tourism and hotels have struggled mightily in the aftermath of the Bangkok riots, transportation infrastructure firms such as NorCiv Engineering Co have been enjoying healthy business as plans to connect Bangkok via mass transit gain momentum.

“In the future, Bangkok city planners are going to depend on rail, not roads, to move people. They are trying to update the system now, but there is some opposition. I think at this point, most people in Thailand realise rail is the solution. You can see people get excited when the possibility of a highspeed rail line from Bangkok to the Eastern Seaboard is mentioned,” said Sittisak Imsombat, managing director of NorCiv. NorCiv works on infrastructure for transportation projects, including roads, bridges and more recently rail lines. Projects can take about five to 10 years to complete, as two years is taken for a feasibility study, another two for a detailed design, and then three years or more for construction. NorCiv is usually involved in the first two steps, although it sometimes acts as a consultant for contractors during construction “if reality is different than the detailed design,” said Mr Sittisak.

The Office of Transport and Traffic Policy and Planning (OTP) makes a master plan every 10 years for Bangkok and environs. The latest calls for eight more rail lines in addition to the two BTS Skytrain lines, the MRT underground line and the Airport Link. The Purple Line from Bang Sue to Khlong Bang Phai and the Light Red Line from Bang Sue to Taling Chan are already under construction.

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Sittisak Imsombat and Sopon Ritdumrongkul, photo Jørgen Udvang

projects when detailed designs change because traffic has grown, the road has widened or pollution has increased. The company often acts as a go-between for contractors and supervisors (people hired by the investors to keep an eye on a project).

Now, NorCiv is not going to pretend that Bangkok will have eight new rail lines in the next 10 years, or that a high-speed rail line to Chonburi or Chiang Mai will appear anytime soon either. Massive projects often take a painfully long time to become operational in Thailand because of bureaucratic inertia, shifting political will or any other number of potholes. Like most Thai companies, NCE has learned to sit back and not worry about that which it cannot control because for the time being, work seems to be rolling in.

“The protests don’t really affect NCE. There is a thrust now in the government to build up Thailand’s infrastructure through the Thai Khem Khaeng project, so there is a lot of work,” said Mr Sittisak.

The company did work on the Skytrain, assisted in the construction of slim, European-style super-structures for the MRT Blue Line Extension from Tao Poon to Lak Song, performed the detailed design on the Airport Rail Link Extension from Phaya Thai to Don Mueang back when there was still a scheme to use both for flights, and supervised on the Light Red Line from Bang Sue to Taling Chan.

Much of NCE’s work is dubbed value engineering, which involves working with contractors to redesign

“We are experts on concrete bridges and cable bridges.

We just sent a guy to Hanoi for a cable bridge they

Thai-Norwegian Chamber of Commerce

left

are building, and there is a 2.8-kilometre suspension bridge joint venture in Istanbul that Aas-Jakobsen is working on where we are assisting.� said structural engineer Sopon Ritdumrongkul.

The perennially popular but rarely profitable monorail may make an appearance in Thailand as well. Mr Sittisak reports there is government interest in building one around Siam Square and the Pattaya city government is keen on one as well. One of NCE’s great triumphs is the Jumeirah Monorail in Dubai that was a Japanese joint venture, but Japanese funding does not appear to be forthcoming for a Thai monorail.

After the riots, the government is trying to invest more on infrastructure such as a high-speed rail line from Bangkok to the Eastern Seaboard to encourage industrial investors. Past National Economic and Social Development plans mainly focused on car transport, but the latest one has changed its focus to rail because roads cannot accommodate the number of travellers in Bangkok and its suburbs. NCE has bright prospects in the coming years because of its rail expertise.

“In the future, Bangkok city planners are going to depend on rail, not roads, to move people (photo, Kristine Hasle).

Industrial Estates – The Locomotives of Thailand?

by Jørgen Udvang

hailand has through the last 30-40 years built a strong portfolio of foreign industrial investments, which again has resulted in a vibrant export industry. There are several reasons for this phenomenon, but one that deserves special mentioning is the large industrial estates with large clusters of international industries.

T

Most of the estates are situated in central and south eastern Thailand (Eastern Seaboard), mostly between 50 and 150 kilometres from Bangkok. The largest concentrations can be found in Rayong, Chonburi, Ayuttaya and Saraburi. Most of the estates are private enterprises that offer a varying degree of flexibility, land ownership and services. Still, there are more commonalities than differences.

Industrial estates are neither Thai inventions nor something unique for Thailand, but in a country with varying degrees of well-organised infrastructure and a changing political climate, they have become trusted powerhouses that work well, regardless of season, weather and non-essential influences.

More important than the proximity to Bangkok is the distance to ports and airports. All of the areas mentioned above are situated less than a 90 minutes drive from Suvarnabhumi International Airport, and the estates at Chonburi and Rayong are all within an hour from the deep sea ports of Sriracha, Laem

Hemaraj Eastern Seaboard Industrial Estate. Photo, Hemaraj 26

Thai-Norwegian Chamber of Commerce

Chabang and Map Ta Phut. This has also been important for the type of industries located at the different estates, with the heavy industries, oil and offshore being in Laem Chabang and Map Ta Phut.

Industrial clusters Clusters have been established within the estates as well as across the boundaries. The most prominent one is the car manufacturing industry in Rayong, mostly at Eastern Seaboard Industrial Estate (Hemaraj) and Amata City, where a large number of car factories, assembly plants and parts suppliers have created one of the most concentrated car industries in the world, which is reflected in the nick-name, Detroit of the East.

Similar clusters can be found for the oil and chemical industry (Map Ta Phut in Rayong and Laem Chabang in Chonburi) and the electronics industry (Ayuttaya).

While the cluster philosophy has obvious advantages for the industry (short lead times, just-in-time deliveries, access to related industries), there are also advantages for the employees (alternative job opportunities and career choices in related businesses).

The latter isn’t always an advantage for the employers, since it may increase turnover as well as salaries, but it does strengthen the cluster as a whole through increased personal development and competence.

Single point of contact While the relaxed Thai attitude has created a society that westerners have learned to appreciate, it doesn’t always make things easier in contact with assorted entrepreneurs and government offices. Within an industrial estate, this is much simplified by the fact that the owners of the estate are responsible for all infrastructures, and sometimes also the building (some estates, like Hemaraj, offers ready-built buildings for upstarts and expansions, lowering the risk and making it possible to get a swift start).

This works very well as long as the owners of the estate have the resources to build and expand the infrastructure as the number of tenants increases. It is in other words important to have a look behind the curtains, to see what resources are available, check what industries already established at the estate think, and to gather an impression of what the reality looks like beyond the glossy sales material.

IEAT The Industrial Estate Authority of Thailand (IEAT) is a state enterprise attached to the Ministry of Industry. It is chartered to implement the government’s industrial development policy. Its objective is not only development but to ensure orderly planned industrialisation of the industries concerned and the country as a whole. To manage all this and the broad planning needed to cope with problems related to various locations, for example, the control and monitoring of industrial pollution, a national authority with muscle was called for, and so the IEAT was formed.

Industrial Estates in Thailand are classified into three categories:

1. Those owned and managed by the IEAT. 2. Those that are joint ventures between the IEAT and private developers.

3. Those developed, managed and owned wholly by private developers.

Industrial estates are mainly divided into two zones. Area in General Industrial Zones (GIZ) is reserved for the location of industries manufacturing for domestic and/or export consumption.

The area in the Export Processing Zones (EPZ) is reserved for the location of industries manufacturing for export only. Most industrial estates with EPZs have government customs houses for fast clearing.

Social responsibilities and environment Most of the estates make an effort to act responsible from an environmental as well as from a social point of view. The environmental side is relatively easy to define, since it covers mostly physical installations similar to those one would find in any industrialised city, like electricity, water supply, flood protection, waste water treatment, solid waste disposal etc., and adapting the systems to the needs of the industries present at the estate.

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Continues from page 27 The social responsibilities are more difficult to define. Some estates establish or support schools at or near the industrial area, and some support the local communities in other ways. Still, there’s no escaping the fact that an industrial estate is not, and will probably never become, anything resembling a traditional Thai community. There are no temples, no local shops and no natural hangouts for employees after hours. This is particularly critical for employees who have followed their employers from other locations, often 50 kilometres or more, to a new factory. When the day is over, most of them are bussed back to where they came from, to be picked up again early next morning. No time for a football match or a beer after work.

This obviously leaves a responsibility to the employer, to create a socially acceptable atmosphere that makes life worth living for all employees. With a workforce of several hundred thousand people within the most central industrial estate, this is indeed an important issue.

Support and networking One of the largest operators within this field, Hemaraj, hosts more than 400 companies with over 600 factories on its estate. Many of the units, like car factories and related industries, are very large, while others are relatively small. To maximise the advantage of establishing a factory at their estates, Hemaraj offer a string of activities, like newsletters, networking

Koh Sichang Laem Chabang

Siracha Hemaraj/Amata City Maptaput

events, investor clubs, training centres etc.

Amata, another major player, has built an international standard golf course, Amata Spring at Amata Nakorn in Chonburi, not only for the staff and business associates of the member industries to use, but also for international tournaments, increasing the status and entertainment value and trying to make it into something more than an industrial estate.

More information on industrial estates in Thailand can be found at the homepage of Board of Investment, www.boi.go.th or at the homepages of each estate.

With the compliments of

Attorneys at Law

Kamthorn, Surachet & Somsak 31st Floor, Sinn Sathorn Tower 77/131-132 Krungthonburi Road Klongtonsai, Klongsarn Bangkok 10600 Telephone: +66 (0) 2440 0288-97 Fax: +66 (0) 2440 0298-00 E-mail: kss@kss.co.th www.kss.co.th

Jotun, a Piece of Norway at Amata

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hen Jotun grew out of their old factory during the 1990s, they decided to locate the new production unit for decorative paint at Amata Nakorn just north of Chonburi City.

Among the reasons for choosing this location, were the distance to the important customers in the Bangkok region, the fact that warehouse facilities and administration would still be located in Samut Prakan, between Bangkok and Chonburi and only 40 kilometres from the new factory, in addition to the fact that many employees would travel to the new location on a daily basis. As much as half the staff from the old factory moved with the company to the new one.

The land was acquired in 1996/97, and the factory opened in December 1999. During the 10 years that have passed, there are still employees being transported every day in 10 vans from their homes near the old factory, but some have also moved to Chonburi or found other work. Operations Manager, Khun Sujitra Khosavanna at Jotun says that finding qualified office staff locally hasn’t been a problem, with several schools and universities located in the area. Finding and keeping operators for the industrial machinery at the factory has been more of a challenge, with many alternative employers being present at Amata Nakorn.

Still, the move has been a success for Jotun, and now represents a very visible piece of Norway with neighbours like Mitsubishi, Bridgestone and Triumph Motorcycle.

Picture from Jotun’ s factory in Amata Nakorn. Photo: Jotun

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Planning a Renewable Energy Plant

by David Duncan Consultant, Corporate and Commercial Department, Tilleke & Gibbins This article has been published in Informed Council, Tilleke & Gibbins client newsletter.

R

enewable energy is a major focus of Thailand’s energy policy. The Ministry of Energy has announced a plan which aims to increase the proportion of renewable energy in total consumption to 20.3% by 2022. This represents a huge increase, considering that renewable energy accounted for about 1.5% of Thailand’s energy consumption in 2009, depending on which sources one counts as renewable. Many investors are now considering undertaking renewable energy plants here in Thailand, particularly given the generous incentives offered by the government. In pursuing such a development, however, there are many legal issues to navigate.

BOI Incentives As an industry targeted by the Board of Investment, renewable energy plants can qualify for certain benefits.

These include corporate income tax holidays of up to eight years with no ceiling, as well as exemption or reduction of import duties on machinery and raw materials. In addition, developers can qualify for land ownership rights, permission to bring in foreign experts and technicians, as well as for long-term visas. Importantly, there is no restriction on foreign shareholding in this category of projects. To qualify for the tax holiday with no ceiling, energy from renewable energy must be at least 75% of the total energy used to generate electricity. Otherwise, the tax holiday has a ceiling of 100% of the investment, excluding the cost of land and working capital.

Of particular interest to investors, the National Energy Policy Council sets subsidies for the production of renewable power sold to the Electricity Generating Authority of Thailand (EGAT). These take the form of “adders”. Funded by the Thai government, they set a higher price at which EGAT will purchase electricity generated by power producers that use particular sources. Adder rates may vary based on energy source, capacity, and project location. For example, higher

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Thai-Norwegian Chamber of Commerce

adder rates are offered for solar projects located in the south of Thailand than for biomass projects located upcountry.

Carbon Credits In addition, renewable energy plants in Thailand may qualify for carbon credits, or Certified Emission Reductions (CERs). Following Thailand’s ratification of the Kyoto Protocol in 2002, the Thailand Greenhouse Gas Organization (TGO) was established by Royal Decree in 2007. TGO is the Designated National Authority (DNA) for the Clean Development Mechanism (CDM). It is responsible for formulating the procedures to review and approve CDM projects, as well as establishing criteria by which CDM projects are evaluated on their potential economic, social, and environmental benefits and how they align with national sustainable development policy. TGO’s approval is necessary to receive CERs for projects in Thailand.

In considering such projects, TGO looks at many indicators, categorized into four major groups including natural resources and environmental indicators, social indicators, development and/or technology transfer indicators, and economic indicators. Importantly, CDM projects must meet additional requirements in terms of finance, investment, technology, and environmental aspects. All the processes involving the development of a CDM project must be transparent, efficient, and accountable under independent auditing and verification.

Documents required for application include a letter of intent, self-assessment forms, 30 copies of the project design document, 30 copies of an approved Environmental Impact Assessment (EIA) or Initial Environmental Evaluation (IEE) report as applicable, and 30 copies of the public consultation report.

Consideration can take up to 180 days. If a project is approved, a formal letter of approval is issued by the Permanent Secretary of the Ministry of Natural Resources and Environment, and appropriate notice is given.

Power Purchase Agreements In establishing a renewable energy plant, one of the major issues is negotiating a power purchase agreement (PPA). A PPA is an agreement between an energy producer and an energy buyer, providing for the energy producer to sell electricity it generates to an energy buyer at particular pricing for the term of the agreement. In

A

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Thailand, the energy buyer is usually the Electricity Generating Authority of Thailand. Terms in a PPA vary depending on the type of plant. For any plant, attention should be given to important terms including those relating to capacity, minimum output, and payment. Of particular importance is the force majeure clause. Given the extent to which unpredictable environmental factors can impact a renewable energy plant’s completion and/ or success, it is important to make sure that the force majeure clause accommodates such circumstances, and that the same such clause is used consistently in all the agreements pertaining to the plant. The PPA is particularly useful in that it defines the output of the generating assets and credit of related revenue streams, which goes a great distance toward arranging financing from banks or other lenders.

Engineering, Procurement, and Construction Agreements Similar review will be necessary with respect to agreements for engineering, procurement, and construction of renewable energy plants. These plants are often approached as a package, meaning that the plant owner would contract with one entity to engineer the plant, procure the equipment, and complete construction. The advantages of this approach for the plant owner are that only one contract need be negotiated, and that the contractor is responsible for coordinating the various subcontractors and suppliers that will work on the plant. Some types of plants more often use an unbundled approach, whereby the plant owner would individually negotiate agreements with various subcontractors and suppliers. The costs of such an approach are generally higher, and result in the plant owner having to negotiate more agreements, but the advantage is that the plant owner has more control over the subcontractors and suppliers used. In an unbundled approach, careful attention should be given to scheduling and coordination of the various subcontractors and suppliers, in order to ensure that everything proceeds smoothly and on schedule.

Regardless of which approach is used, it is important to give attention to clauses on liquidated damages, contained in the agreements. Nearly every construction agreement contains clauses providing liquidated damages for delays and imposing standards on the quality of construction and materials used. However, with respect to some renewable energy plants, particularly wind projects, such agreements often

also contain performance liquidated damages. This is because such a project’s performance is one of the main determinants of whether it is successful. Performance liquidated damages are usually based on results of testing and can relate to the entire plant, or to parts of it. Consideration should also be given to clauses that establish liability caps, as well as those that deal with warranty issues.

Fuel Supplies In planning a plant, consideration must also be given to fuel sources to be consumed by the plant. In the case of a wind or solar plant, this is determined, for the most part, by a plant’s location. However, consideration should be given to potential obstructions that are within human control, in sites where that may become an issue. Depending on the specifics of the plant, such issues may need to be addressed in the applicable lease or land use agreement. Similarly, in the case of biomass and biofuel projects, it is important to provide for a long-term, reliable supply of fuel. These sorts of fuel supply issues can be addressed to some extent in agreements with fuel suppliers, which should contain terms addressing the quality of the fuel to be provided, pricing, and transportation issues.

Many renewable energy plants are already underway in Thailand. In the near term, renewable energy is projected to make up only a small portion of Thailand’s overall energy mix, but it is a rapidly growing area and, for certain plants, quite profitable. As renewable energy technology advances and as the cost of traditional fuels rise, renewable energy will only grow in use.

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My Place: Jatujak Weekend Marked Mr. Pornchai Phaungsuwan’s in Jotun Powder Coatins, loves Jakujak Weekend Marked. Here you can get anything and this place attracts everyone, he says.

This Bangkok weekend market (actually a ‘minicity’) has to be seen to be believed. Over its 14 hectares Jatujak contains between 9000 and 15,000 stalls (depending on what’s on and who’s doing the counting) and it attracts 200,000 visitors per day. Come here for Thai handicrafts and antiques among many other delights, but don’t come here on hot, humid days, pressed against all that flesh, you might faint or fade away. Once only popular among wholesalers and traders, Jatujak Weekend Market has reached a landmark status as a must-visit place for tourists. Jatujak has a long history of being the largest market in the world and made up of 27 sections. The market attracts shoppers from young to old, and foreigners who love Thai arts.

The published opening hours for the market are from 9.00am to 6.00pm on Saturday and Sunday, though many of the stalls actually open sometime between 9.00am and 10.00am and close around sunset. Jatujak is also open on Friday as a market for wholesalers, but there is no problem doing normal shopping on this day either.

Everyone has heard of “Jatujak” the centre of a great variety of goods, lots of shops, and Thai products, wholesale market for farmers’ products and local handicrafts. Furthermore, this place is a big market for Thai local products export. The variety and lively atmosphere of Jatujak Market has added colour to the weekend for Bangkok people for long time. This place has helped create careers and added wealth to thousands of people and attracts huge numbers of foreign tourists.

Mr. Pornchai is passing the relay stick to Jan Egil Amundsen managing director of DNV, Det Norske Veritas.

Jotun painting Wat Patumwanara

by Colin Jarvis photo by Jotun

H

aving seen the damage done to the walls of Wat Patumwanara during the demonstrations in Bangkok the Jotun Thailand Sales & Technical Team Penguins pooled their resources to repaint the temple.

They saw this as their opportunity to not only revitalize public property but also to bring colour to a city that had been scarred and to put the traditional Thai smile back onto the faces of the people of Bangkok. As Wat Patamwunram is close to the hearts of many Thai people, passers by would stop and thank the Jotun staff for their kind efforts.

When the Jotun team arrived at the temple they noticed the surface of the concrete had degenerated, on some areas of the concrete the previous coats of paint was peeling and the concrete was damp with high moisture content. Not ideal conditions for a paint job.

They started by cleaning the walls with jets of water and scrubbing the surface clean with plastic brushes.

Once it was clean they filled in any cracks and crevices with fill so they had a smooth surface on which to apply the paint.

They first applied one coat of Cito primer 09, a primer made for old concrete, and then two coats of Concrete Primer Jotatough, exterior emulsion paint.

In total they applied three gallons of Cito Primer and fifty gallons of Jototough to an area of 550m².

The preparation phase took ten technical service

advisers eight hours to complete; the painting itself was completed in six hours by a team of fifty sales and technical service advisors.

The activities went well for the whole day with fun and smiles from the Jotun team and passers-by who volunteered to help Bangkok by joining our activity.

Such an activity gave Jotun employees and Thai people the opportunity to align with Jotun Values of loyalty, care, respect, and boldness. A key objective was to cultivate consciousness mind for public property and environmental preservation to local people.

Jotun Thailand Penguins look forward to engaging in similar worthy activities in the future to continue to support the people and country of Thailand.

Thai‐Norwegian Chamber of Commerce

Styrekompetansekurs

Innovasjon Norge vil bidra til økt verdiskapning i små og mellomstore bedrifter gjennom å øke kompetansen og profesjonaliteten i styrearbeidet.

Innhold: Kurset holdes på norsk og gir kunnskap om sentrale problemstillinger og teorier som har betydning for praktisk utøvelse av styreverv i privat og offentlig sektor.

Kursdato: 22. – 24. november i Bangkok Styrekompetanse AS fra Norge står for kursledelse.

Det tas forbehold om men. antall deltakere.

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Kurset er rettet mot medfølgende og passer for deltakere som forventer å flytte hjem til Norge i løpet av 1-2 år. Hoveddelen av kurset vil bli holdt i perioden 18.-26. oktober, med nettverksmøter og oppfølging fra kursleder over e-post i november og desember.

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The Gateway to Asia

by Laurence Civil photo by Jørgen Udvang

A

n international airport is a country’s gateway.

If foreign visitors get a good first impression of the country and its efficient infrastructure the chance are they will return.

During the four years of operation Suvarnabhumi Airport went through initial difficulties, like all new airports. One of the most serious incidents was the illegal occupation of the PAD protestors in December 2008. However throughout the protests during spring 2010 the airport maintained normal operations, while many parts of the city were in effect locked down.

Suvarnabhumi Airport is the gateway to Southeast Asia offering connections to all airports in Thailand, and

most major regional and global destination around the world. Bangkok lies at the centre of Asia, and as such it is a natural transit point as well as a regional hub for several countries in the region. In a globalised economy, this international connectivity helps making Thailand an attractive place to do business.

Some facts about Suvarnabhumi Airport:

• Suvarnabhumi means “The Golden Land” • Started commercial flights in September 2006 • One of the busiest airports in Asia and also a major air cargo hub

• It has the largest single passenger terminal in Asia, handling 45 million passengers

• three million tons of cargo a year • 76 flights an hour • It has two runways both 60 metres wide and respectively 4,000 and 3,700 m. long

• There are 52 taxiways and 51 gates with direct access

to the terminal building and 69 remote parking bays.

Asia and Beyond It’s sometimes said that the distance from Europe to Thailand is longer than the other way around. For those who sit in Europe, it most certainly looks like that sometimes. From Bangkok, most places seem relatively near and easy to get to. With direct flights to almost every corner of the world, Bangkok is surprisingly easy to get to, and even easier to get out of. It’s a paradox that it sometimes takes longer time from places in western or northern Norway to central cities in Europe than the flight takes from Bangkok to the same destinations.

There are many reasons for that. One is that most major airlines fly to and from Suvarnabhumi, making Bangkok a world hub as much as a regional one.

Another is that most of the flights out of Thailand go directly to their end destinations; no stops, no changes of airplanes, at least not as long as the journey ends in a major city. The location helps as well. Bangkok is far enough north for direct flights to more or less anywhere on the northern hemisphere, and far enough east for direct flights to the west coast of USA. Add to all this that more than half the world population lives within five hours from The City of Angels, and the outlook is rather bright.

Laurence Civil, on behalf of Thai Norwegiane Business Review, recently met with three airline managers serving the Scandinavian destinations to ask them how they feel about the new airport, and if Bangkok is back in business? Read what the airlines managers say about Suvarnabhumi Airport on the next page.

Niels Henrik Hansen, Director and General Manager Southeast Asia of SAS In 1949 SAS expanded its intercontinental service to Bangkok via Europe and central Asia. Two years later the service was extended from Bangkok to Tokyo.

SAS operate one departure a day, six times a week and will be increasing to daily flights from October this year. Passengers departing Bangkok on our flight can connect in Copenhagen to more 60 cities in Scandinavia and more than 150 cities in Europe.

On a typical SAS flight from Copenhagen between 25-30% of passengers start their journey in Copenhagen; 60-70% will start their journey elsewhere in Scandinavia or Europee. On arrival 30-40% will end their journey in Bangkok; 40% will travel onwards to another destination in Southeast Asia. We have an average split of 75% of the passenger are travelling for leisure the remaining 25% are travelling on business.”

Jani Peuhkurinen, Finnair’s Director, Sales in Korea and Thailand Finnair started operations on 1st November 1923 and is one of world’s oldest continually operating airlines. Due to Finland’s favourable geographical position; the shortest routes from Europe to the Far East pass through Helsinki, securing a strong position in Asia has been a key part of Finnair’s strategy in recent years. They first flew to Bangkok in November 1976 but then either as a charter or occasional flight basis, a regular schedule service started in December 1985.

“The general trend on a flight into Bangkok is the majority of our passengers on this route originate in Europe and transit through Helsinki and either terminate in Bangkok or fly onwards to Australia with our OneWorld partner Qantas. The majority travel for leisure but we are seeing a strong increase in demand for Business class.”

Stefan Magiera, General Manager, Air Berlin Thailand Air Berlin and its predecessors have been flying to Bangkok for over 30 years.

“Our most popular route with Norwegian passengers is Bangkok to Oslo transiting through our Berlin hub, the key selling point being our attractive pricing.

A significant development for the airline was accepting the invitation to enter the OneWorld Alliance on 28th July this year. It’s expected that Air Berlin will start flying as part of the oneworld in early 2012 just weeks before the opening of the new Berlin Brandenburg International Airport. It will be a new major hub in Europe and will enable us to strengthen the service we offer to Scandinavian transiting passengers.”

Thai-Norwegian Business Review

37

Continued from page 37

“Some people complain about the distance they have to walk after checking in to reaching their boarding gate” says Niels Henrik Hansen from SAS. “SAS park our aircraft in the Star Alliance allocated area. Our gate is always close to one of the six Business lounges at Suvarnabhumi. However as Suvarnabhumi is serving 46 million passengers annually and the airport is under capacity from time-to-time, SAS has to accept remote parking with busses to and from the aircraft.”

“The issue that had caused delays to our flight departure,” he adds, “was the insufficient number of screening points to enter the sterile departure which caused congestion and delayed passengers reaching the boarding gate onetime. SAS supports the system that has recently been introduced for international passengers, after AOT made a study trip to San Francisco Airport, which has a similar layout to BKK. We received positive feedback from our passengers and by increasing the sterile area to include F&B and shopping facilities, flight delays caused by congestion at screening areas prior to boarding have been eliminated.”

“Another of our concerns is that there are three fast track screening areas as part of Suvarnabhumi Premiere scheme,” he continues, “Thai Airways premium

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passengers have one for their exclusive use, with all other airlines premium passengers having to share the remaining two screening areas. We have requested the airport authorities to consider ways to improve this situation.”

“Similarly with the airport processing 750-800 passengers an hour at peak times we are concerned as to how long passengers have to wait to check in.

SAS insists the time taken from arriving at the airport to having been checked in is a key to measuring the world class status of any International airport. Our suggestion is that 7-10 minutes is the acceptable time frame and we are actively encouraging the airport authorities to establish their expectation at Suvarnabhumi.”

“We don’t share AOT’s position of the two low cost carriers Nok Air and Orient Thai should be operating out of Don Muang while all other airlines fly out of Suvarnabhumi. We believe that a one-airport solution is in the best interest of passengers and airlines but do understand why it’s not happening short term.”

By 2011 the volume of passengers Suvarnabhumi will have reached 47.6 million per year,” he says. “Since AOT cannot complete Phase 2 in time, we believe that they need to look for an interim plan between the 1st and 2nd phase. While temporarily Suvarnabhumi would not be a single terminal airport we urgently need a domestic terminal with capacity for 20 million passengers. It was due to start in the third quarter of 2010 and ready by 2013, and should provide sufficient capacity to 2016. Then phase 2 will continue as planned, increasing the main terminal to 60-million.

This should be completed in 2016, bringing total capacity to 80-million, sufficient until 2019.

“When the domestic terminal is completed,” he says, “it will release space to cope with the increase in the number of international passenger in the main terminal. The domestic terminal will connect to the main terminal by a second floor corridor with people mover and passport control for transfer domestic/ international.”

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“Finally Scandinavian Airlines is pleased with Airport Link and Makkasan City Terminal,” Niels Henrik concludes, “which opened on 23 August 2010.

Although we have no immediate plans to checkin passengers at Makkasan we will recommend our passengers to use Airport Link as it is a fast and safe way to travel between Bangkok city and Suvarnabhumi.”

“During the protest in spring 2010,” says Jani Peuhkurinen, “Finnair first of all did all that we could to ensure the high level of customer service as our office and contact centre is located in Silom area.

As a precautionary measure we had some additional

The Airport City and Express Links The airport is conveniently connected to Bangkok and the Eastern Seaboard of Thailand with its many industrial estates via modern motorways. The opening of the Suvarnabhumi Airport’s Rail Link makes the airport even more accessible.

The Express Line operates from Makkasan station direct to Suvarnabhumi Airport in just 15 minutes, travelling at 103km per hour, the fastest rail system in Thailand departing every 30mins.

The City Line starts from Phaya Thai with a walkway link to the BTS station and stops at six stations before arriving at the airport. There are departures every 15 minutes travelling at 64 km per hour.

Both trains arrive underground at the domestic end of Suvarnabhumi’s terminal building with a system of moving walk ways, escalators and elevators to bring passengers to the departure level.

resources sent to Bangkok to handle the possible situation where our customers may have faced unexpected difficulties due to protest and increased support resources in Helsinki to keep customers and other stakeholders informed about the situation and it’s development. Naturally one important element was the frictionless communication between our top management, Bangkok office and authorities in Thailand so that we constantly stayed tuned and maintained abilities to react soonest possible for the constantly changing conditions. We took a flexible approach to fare restrictions during this period to avoid an inconvenience our customers might have experienced during this difficult time.”

“Thailand, particularly Bangkok,” says Stefan Magiera,” has always been one of the most important destinations of Air Berlin. We landed here in 1977 for the first time using the old brand LTU. In spite of the financial and political crises the demand between Europe and Thailand is still rising. Air Berlin has a great market position right now, and we are confident that we will emerge stronger from this situation. This is the main reason why we have increased flight frequencies for the upcoming winter season. Since 2009 Air Berlin has been the only European carrier offering five non-stop routes from Europe to Thailand. All in all, we will provide our customers with 14 flights a week between Germany and Thailand in the next winter. All four

Nordic countries are connected to Bangkok via Berlin with a fast connection at very attractive fares.”

“During the protests in the spring” he adds, “all flights operated normal and we were able to maintain the full service for our customers. Although our town office had to be temporally closed we moved our customer service team to our airport office and operated at full service level all the time.”

“Surprisingly post protests the traffic was more resilient than we expected,” he says. “Passengers’ losses were very limited. And more encouraging is the fact that traffic is bouncing back very quick. Looking at the bookings for the upcoming months, we feel very confident. Thailand continues to be an attractive destination for Europeans for the quality of its service, the friendliness of its people, and a good tourism product. Also because lots of Europeans who are coming to Thailand are in fact repeat travellers, they know the country very well.”

The experts each have their opinions as to the state of business in Bangkok. But it’s the number of passengers who are now arriving on full flight is the proof that Bangkok is back in business.

Thai-Norwegian Business Review

39

Dusit Thani – after the riots

by Nadia Willan photo by Jørgen Udvang

T

hink of an image of the recent riots and protests in Bangkok’s business district and you might bring to mind the Dusit Thani Hotel. Inadvertently thrust into the centre of the action Thailand’s home grown business success story was featured as the backdrop for what became international and global, headline making news.

Chanin Donavanik, CEO of the Dusit Thani hotel group talks about the affects of being in a no-go conflict zone.

What is the background to the hotel group?

It was started 63 years ago by my mother. We now have sixteen hotels in Thailand and hotels in the Middle East, the Philippines and we are opening in India in 2011, making twenty two hotels altogether, so far.

Have you been surprised by the reaction from guests after the troubles?

A lot of the local and expat regulars came back in really soon after the protestors left, to have a drink and lend their support. I have so many letters and emails from people from all over the world saying positive things about the hotel. We’ve even had guests who stayed here twenty years ago coming back to stay after seeing that we were in the news. The reaction has been positive and very encouraging.

Do you feel there has been enough support to help the hospitality industry get back on its feet?

No if I’m being honest. I don’t. We’ve been encouraged to drop our prices in a promotional bid to bring customers back with some price drops going as low as 50%. This has been the worst crisis for over thirty years. Asking us to drop prices is like asking a bleeding man to give more blood. I haven’t seen enough action in encouraging people to come back to Thailand, to stay at the hotels.

What about the 15,000 baht tax deduction to encourage people to spend more?

I am not sure it helps the hotel here in Bangkok, or other Bangkok hotels who have been hit hard by the troubles. Maybe the incentive is good for hotels outside of Bangkok though but not sure it impacts in any way with those who have suffered the most. I don’t see this as directed help in any way.

The Dusit Thani is a high-profile hotel, how badly affected have you been?

The industry has had problems for a few years. In 2008 we had the closing of Bangkok airport, Last April there were problems with protests too. But I don’t think anyone imagined that the streets would be taken over for two months and that we would have to close for 8 days. Despite all of this, it is our 40th anniversary year and our reputation has strengthened even more

Picture of Dusit Thani taken from Lumpini Park. Photo by Kristine Hasle 40

Thai-Norwegian Chamber of Commerce

based on the way we dealt with the situation, the professionalism of our staff and our leadership role within the Thai tourism industry. I am now a regular spokesperson on CNN’s World Business Today and will be a guest again next week.

What was the damage to the hotel at Sala Daeng?

Over two hundred windows were broken during the shootings. It isn’t just the hotel in Bangkok that has been affected. All our hotels in Thailand have suffered. However, there have been no layoffs but we are not hiring any extra staff. I think everyone was surprised how serious things got in the area and I don’t think guests or even the Thai people expected it.

What was the atmosphere like at that time?

It was a dark time for our company and for the country, but there were also moments of great pride and joy with the way our staff handled the situation, their loyalty and passion for their job, and the support from our partners, clients and guests. We also had to defend reports of our hotel being used for military actions, which we had to totally refute, as we condone all forms of violence.

We set up a crisis centre at our Dusit Thani College and Dusit Princess Srinakarin to ensure employees were all safe and our guests were kept abreast of what was happening at all times.

Is there any light at the end of the tunnel?

Numbers are picking up. The price has dropped around 10%. The biggest difference compared to say last year is in the European market which is our biggest area. After the protests there was the World Cup and then the Baht has continued to drop against the GBP. It is 20% more expensive to come here compared with last year. However, Thailand has a healthy economy. There is little debt and Thailand has a lot of potential in area of food production, technology, manufacturing and of course in tourism.

Chanin Donavanik, CEO of the Dusit Thani hotel group. Photo by Jørgen Udvang

What is your belief in the future for the Dusit Thani?

Even when we moved our corporate offices to a different location, our message has always been that we will be okay and we would rebuild Thailand tourism as we believe this is our leadership commitment. I have faith in that, as well as the Thai people and in the support from all around the world for Thailand too.

Thai-Norwegian Business Review

41

Map Ta Phut: Creating a Fair Playing Field

by Eric Baker

C

hainoi Puankosoom wants people to know the industries operating in the Map Ta Phut industrial estate will do whatever is required of them to meet health and environmental standards. They just want to know what the standards are and make sure they don’t change after businesses meet the requirements.

Mr Chainoi is president and CEO of PTT Aromatics and Refining (PTTAR), as well as vice-chairman of the Federation of Thai Industries, which represents several of the firms involved in the year-long standoff.

Map Ta Phut is in Rayong, and in June of 2009 42 villagers from the area and the non-governmental organisation (NGO) Stop Global Warming

Association filed administrative charges against state agencies and officials for failing to follow the 2007 Constitution’s Section 67. This section requires projects seen as harmful to the environment and people’s health must hold public hearings and conduct environmental and health impact assessments endorsed by the National Environment Board.

The plaintiffs asked the court to revoke the operating permits and suspend operations of 76 industrial projects for failing to comply with the Constitution.

The Central Administrative Court ruled on Sept 29, 2009 to suspend the 76 projects pending its decision at a later date. Over the last year, 11 projects have been allowed to restart operations after operators proved they did not violate any of the section’s requirements.

The court is set to give its final ruling on the legality of the operating licences on Sept 2.

Some businesses don’t have any problem with these requirements, according to Mr Chainoi, they just want to know what regulations they are supposed to follow so they don’t feel like they are shooting at a moving target. Part of the problem is that Section 67 does not specifically spell out what supposedly harmful projects should do, or what constitutes a harmful project.

As Mr Chainoi points out, some companies such as PTTAR were running environmental and health impact assessments even before any suits were filed.

The 2007 Constitution was written with heavy regard for community rights after a series of coups left Thais wary of excessive centralised power, he said. Concerns about Map Ta Phut and some other projects led to Section 67, which prescribes people’s rights to protect their health and quality of life, as well as Section 303, which prescribes community rights.

Mr. Chainoi Puankosoom 42

Thai-Norwegian Chamber of Commerce

Because of these concerns, Deputy Prime Minister Kosit Panpiemras set up a special task force of the Ministries of Energy, Industry and Natural Resources along with local authorities and NGOs to come up with a solution that dealt with health and the environment. Their recommendation was called the 80-20 plan, meaning any new projects have to reduce emissions from existing facilities by an additional 20%.

If a plant was going to emit 80 units, 100 units had to be reduced. This plan was better than having an independent party monitor the environment, said Mr Chainoi, and it was working. Some 227 billion baht had been allocated to the 80-20 plan last year when charges were filed, he added.

Companies with projects at Map Ta Phut appealed after the court’s suspension of operations on grounds that pollution had actually decreased after adopting this plan, said Mr Chainoi.

“If you go to Map Ta Phut, you will see that the environment there is better than in Bangkok,” he said.

“This has been really damaging for investment. People I talk to in other countries think Map Ta Phut sounds really bad because of the environment, and I have to tell them that it’s really an administrative issue.”

Billions of baht have been allocated to construction projects at the estate that lie dormant. Investors, both local and abroad, are skittish about allocating more money to a country that has uncertain laws.

Perhaps most grating of all is the fact that this process has taken over a year to work out. The government set up a four-party committee with representatives from industry, the government, local authorities and NGOs and academia, and still their work is not done, said Mr Chainoi.

“The government can do something quickly and then plan more studies later,” he said. “The industry sector is a major contributor to GDP in this country, but it does not receive the proper respect from this government.”

PTTAR has been lucky because they are not a new company and they do a lot of business with banks, so the lenders haven’t come calling yet, he said. “So far, we’ve only had to pay more interest than normal. If we need more money because construction costs increased in the interim, then we can take cash from other projects. But other firms are not as fortunate.”

The four-party committee recently submitted its list of what constitutes a harmful project to the environment or public health. The committee’s list had 18 types of activities, and the National Environment Board whittled that list down to 11 activities because it felt some were covered by other laws.

The Industry Ministry issued its own list in 2009, but the court ignored it in its ruling, said Mr Chainoi.

PTTAR also completed health and environmental impact assessments and had public hearings, but the plaintiffs complained that it didn’t allow enough time for the public to study and comment on the process, he added. So PTTAR redid the assessments using international best practices.

In 2009, the annual average of six volatile organic compounds were under national limits: vinyl chloride, dichloromethane, chloroform, trichloroethylene, 1,2-dichloropropane and tetrachloroethylene, he said.

But for three carcinogens in 2008, the annual average exceeded Thai standards, mainly because they are the most stringent in the world, even more restrictive than developed countries such as Japan and the United Kingdom, he added. Table 1 below displays this.

Mr Chainoi’s simple plea is for the government to set a fair law so companies can meet its requirements and move on.

“We are not concerned about the toughness of the law.

Just tell us upfront what the rules are and don’t change it in-between. We are prepared to entertain more input from the public sector, because if we damage the public, our company would not last.

“We are quite certain all of our investments are not causing damage to the environment, and we will gladly comply with Section 67.”

Table 1: Volatile Organic Compounds in Ambient Air, 2008 Volatile Organic Compound Benzene 1,3-Butadiene 1,2-Dichloroethane

Thai Standard 1.7 0.33 0.4

Actual range

Location

International Standard

1.6-3.8 0.16-0.57 0.2-1.7

Maung Mai Ta Guan Maung Mai

Japan 3, UK 5 Japan 2.5, UK 2.25 Japan 1.6, Netherlands 4.8

Source: Pollution Control Department Thai-Norwegian Business Review

43

Ragnar Nielsen

A Captain of Thai Industry

by Nadia Willan photo by Jørgen Udvang orway, with its long coastline, has a world renowned maritime and shipping history and it is no surprise that one of the leaders in Asian cargo transportation by sea has its ties in Scandinavia. Thoresen was first established in Hong Kong over a hundred years ago, providing shipping services to Norwegian companies operating on the cost of China and Asian businesses trading between China and Siam.

After following the path of many fellow Norwegians, Ragnar spent a few years at the Royal Norwegian Naval Academy before sailing a few years as a naval officer in the Navy. Although he found his sea legs quite easily he decided he could travel further with career opportunities on land and his days at sea are now limited to his 20 foot fishing motor boat at his summer home in Grimstad on the South Coast of Norway. After a 15 year stint in Singapore which encouraged the industry with tax incentives he is now based in Thailand and has big plans for the already successful Thoresen. “SEA is a really interesting region.

Owned by a Norwegian family the company evolved before being sold and became a listed company in 1995. Whilst the family connections may have long gone there is still a Norwegian captain of industry at the helm here in Thailand with newly appointed Managing Director Ragnar Nielsen steering the business into the lucrative waters of South East Asian trade.

There’s a lot of trade between countries here with raw material, semi finished products such as steel and finished products,” explains Ragnar. “Historically Asian countries received goods from Europe and USA but today there are more and more products being produced here in Asia and being exported back to the old country.”

N

Mr. Ragnar Nielsen, Managing Director of Thoresen & Co. 44

Thai-Norwegian Chamber of Commerce

Thailand is the world’s biggest rice exporter and agricultural products and steel are also boom exports.

“There has been a big spurt in population and development in a lot of Asian countries and with that comes a greater demand for electricity and water, power plants and greater access to oil and gas.

people here in Thailand. I have enjoyed the cultural mix throughout Asia. There is a lot of development too. A lot of the car industry has moved here, especially from Japan and the workers here in Thailand have learnt a lot of new skills to a high standard. It bodes well for the future.”

There is a lot of trade, especially as production costs are relatively low in Asia.” Despite intending to one day return to Norway which Ragnar sees as home and where he can breathe in the fresh air and be around forests and mountains, he has found a firm footing in Bangkok and is optimistic about the business future here. Arriving just four months ago to the ongoing political dramas unfolding in the capital and beyond, with an office based in the business district, Ragnar is full of praise for the attitude of the Thai people and optimistic about the future of the country. “I feel at home working with a different culture and I like the

Thoresen owns 29 ships in Thailand. Although a lot of the trade is with other Asian countries, particularly India, the plans are to set sail all over the world more often. Carrying mainly dry cargo, the capacity for each ship is between 17,000 and 57,000 tonnes. At 67 years young, Ragnar has a strong background in shipping and a background in working in Asia too.

The fact that he is Norwegian too just adds to his credentials perhaps, as shipping is part of the country’s psyche and cultural heritage too. A culture, that mixed with the development of Asian business culture should steer Thoresen through calm but interesting waters.

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Thailand’sEconomy EconomyatataaGlance Glance Thailand’s

0

0

15.0 10.0 5.0 0.0 -5.0 -10.0

6 5 4 3 2 1 0 -1 -2

Stock Exchange Index (SET) 7.00

900

6.50

800

0

2

4

Exchange Rates

1,000

THB/NOK

6.00

700

5.50

600

5.00

Manufacturing Index 2000=100 250 225 200 175 150 125 100

1007

1004

1001

0910

0907

0904

0901

0810

0807

4.50

400

Bilateral trade 2009 Import 847 (1,348) MNOK Export 1,950 (2,112) MNOK

600 400 200

Thai-Norwegian Business Review

Clothing

Computers

Cars

Electronics

Food

Org. chem

2005 2006 2007 2008 2009

Thai-Norwegian Chamber of Commerce

Paper

0

Basic Figures: BOI. Comparisons: Wikipedia.

GDP/Capita and Thai Population: Wikipedia. Thai GDP and CPI: Bank of Thailand. Quarterly GDP: NESDB. SET: Stock Exchange of Thailand. Exchange Rate THB/NOK: x-rates.com. Manufacturing Production Index: Thailand’s Ministry of Commerce. Bilateral Trade: Statistics Norway. Petrol and BigMac prices as of 17 September 2010

62

-2

Fish

6.05 12.72 14.42 40.00

-4

Thai Consumer Price Index

Thai GDP Growth (%)

Oct09 Nov09 Dec09 Jan10 Feb10 Mar10

67.0 mill 4.9 mill 9,100,000 586,860 71/75 78/82

Mill

2005 2006 2007 2008 2009 2010p

2

500

Other bits and pieces Petrol/litre (95 E10) NOK: TH Petrol/litre (95 Octane) NOK: NO McDonald BigMac price NOK: TH McDonald BigMac price NOK: NO Sources:

4

20

0501 0507 0601 0607 0701 0707 0801 0807 0901 0907 1001 1007

Demographics Population TH: Population NO: Population Bangkok: Population Oslo: Life expectancy M/F TH: Life expectancy M/F NO:

40

Engineering

2

6

0804

2

60

Male Female

Fertilisers

Geography Geographic Area: TH 514,000 sq. km Geographic Area NO: 385,199 sq. km Highest peak TH: Doi Inthanon 2,565 m Highest peak NO: Galdhøpiggen 2,469 m Inland water areas TH: 2,230 km Inland water areas NO: 16,360 km Coastline TH: 3,219 km Coastline NO: 25,148 km

8

Thai Population 2008

80+ 70-74 60-64 50-54 40-44 30-34 20-24 10-14 0- 4

0801

Some comparisons

80

Q2/09 Q3/09 Q4/09 Q1/10 Q2/10

Top 10 Exports 1H/10 %/value USD bill.

EDP equipment 10.0%/9.3 Cars and automotive 9.17%/8.5 Precious stones/jewellery 6.4%/6.0 Electronic integrated circuits 4.1%/3.8 Rubber 3.8%/3.6 Refined fuels 3.3%/3.0 Rubber products 3.2%/3.0 Polymers etc.

3.1%/2.9 Chemical products 2.9%/2.7 Iron, steel etc.

2.7%/2.5

10

MY TH CN ID PH VN IN LA KH MM

10-30% 10-15% 7% 0-37%

100

US NO SG KE TW

Corporate income Tax Withholding Tax Value Added Tax Personal income Tax

GDP/Capita (TUSD)

2006 2007 2008 2009 2010p 2011p

Export Growth 2009 y-o-y -13.9% Export Growth 2010 projected 22.5% Trade Balance USD 19.4 bill Current Account Balance USD 20.3 bill International Reserves USD 138.4 bill Minimum wage (Bangkok) Baht 206/day

Mar10 Apr10 May10 Jun10 Jul10 Aug10

Basic Figures Thailand (2009)

47

DNV was established in 1864 as a ship classification society, but has diversified into a multi-faceted certification and consultancy organisation, spanning 130 countries on all continents. DNV is one of the world leaders in all its enterprises and takes great care to earn an image of high-tech, deep competence and uncontested integrity. DNV performs statutory ship surveys on behalf of 130 maritime administrations and is accredited by over twenty national accreditation bodies for management system certification.

Classification and statutory certification of ships and other floating installations - 17% (137,2 million GRT.) of world fleet in class as of early 2010.

- 19% of ships ordered in 2009 - 70% of maritime fuel testing market Certification of materials components, equipment, systems, machinery, pipelines, process plant etc.

Certification of oil & gas offshore installations, pipelines Risk management consultancy and assessment Asset integrity management and risk based inspection programming Certification of management systems to standard like - Quality - ISO9001 - Environment - ISO14001 - Occupational health and safety - OHSAS18001 - Information security – ISO/IEC 27001 - Automotive – ISO/TS 16949 - Food safety – ISO 22000 As of early 2003 DNV has more than 8% of world market for management system certification and more than 80 national accreditations and 70,000 certificates issued worldwide.

In the forefront with new and innovative assessment and certification services, such as Risk Based CertificationTM, as exclusive approach to management system certification.

Fact & Figures

Year Established: Norway 1864, Thailand 1988 Number of Employees : Worldwide 8,700 Det Norske Veritas (Thailand) Co., Ltd.:

No. 1, MD Tower, 9th Floor, Room A, Soi Bangna-Trad 25, Bangna, Bangkok 10260 Tel : +66 2 3618288-90 Fax: +66 2 3618291

DNV Corporate Address:

Det Norske Veritas AS, NO-1322 Hovik, Norway Tel. : +47 67 57 99 00 Fax : +47 67 57 99 11 www.dnv.com

An employer of thousands.

Built around equality, opportunity and people like us.

At Telenor Group, we believe that being at the forefront of telecommunications isn’t just about technology. It’s about people.

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Wherever they are based. To find out more about how the Telenor Group works hard at being ‘built around people,’ please visit www.telenor.com

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Telenor Group is a global provider of high quality telecom services with operations in 13 markets around the world.

To find out more about how we put people at the heart of our business, visit www.telenor.com Telenor Group has telecom operations in these countries: Norway, Denmark, Sweden, Hungary, Montenegro, Serbia, Ukraine, Russia, Pakistan, Bangladesh, Thailand, Malaysia, India.

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