Investors avoiding Thailand: report

The Nation (15 November 2007)

The International Business Report 2007, conducted by Grant Thornton International, has shown that Thailand has gone through a period of slowing growth this year and is losing investment opportunities to Vietnam and Malaysia due mainly to political turmoil and uncertain economic policy.

Peter Walker, partner of Grant Thornton Thailand, said the survey explored the views of 7,200 business leaders including chief executive officers, managing directors and business-owners in 32 countries which represent 81 per cent of global gross domestic product.

Walker said the survey showed that 30 per cent of Thai business people expressed low confidence in their country's economic prospects compared to the East Asian average of 54 per cent. Political turmoil and policy concerns were the main factors to depress Thai business optimism.

He added that the result of the political chaos affecting business was shown by the slowdown of capital investment because Thai business people had decided to wait for certain economic policy after the election. Moreover, exporters suffered from the appreciation of the baht, which decreased export volume this year.

"Many Thai business persons are adopting a wait-and-see strategy. They hope that business figures will be improved by the outcome of the forthcoming election and the new government's policy actions," Walker said.

From the Grant Thornton International Super Growth Index, Walker said the US was top for the third year running, while Thailand slipped from 18th place to 30th. Nine per cent of Thai companies were classified as Super Growth companies in 2006 but in 2007 only 5 per cent fell into this category. The percentage of Thai companies in the Normal Growth category also dropped from 45 per cent to 25 per cent.

Hong Kong and India have fallen significantly in the number of Super Growth companies, while the Philippines and Russia have both increased considerably.

Walker said the survey also indicated that two constraints for business expansion in Thailand were reduced demand and weak labour skills. The most skill shortages are in IT, finance and customer management.

"Compared with international levels, Thai companies suffer more than others from the loss of skilled workers with a negative impact of 74 per cent," he said.

Walker said other weak points for Thai business were a lack of energy-cost management and lack of attention to risk management. The survey showed that only 37 per cent of Thai companies had assigned senior managers to oversee corporate risk. However, Thai businesses reported they were good at corporate governance.

"If Thai companies do not pay enough attention in risk management, it will be quite a problem for them in the long term," Walker said.

Walker also said most Thai business leaders expressed concerns over China's advantage in low-cost manufacturing, which has a negative impact for companies here.

He said the government should play a leadership role in making clear economic policy and start fundamental economic strengthening. If the policy is clear, foreign investors will have the confidence to inject money into Thailand.

"In the short term, Thailand has lost investment opportunities to Vietnam and Malaysia due mainly to its uncertain investment policy. However, in the long-term, I still believe that Thailand shows a bright outlook and could return to be the most attractive country among foreign business persons, thanks to its strong infrastructure," Walker said.

Advanced Info Q3 profit down 3.9%

The Business Times (15 November 2007)

Earnings worse than expected as number of post-paid customers declines.

ADVANCED Info Services (AIS), Thailand's largest mobile phone operator and the crown jewel of Shin Corp Plc, a company that is majority-owned by Singapore's Temasek Holdings, reported worse-than-expected earnings for its quarter ended September. There was a decline in the number of its post-paid subscribers.

AIS said profits fell to 3.5 billion baht (S$160 million), a 4.1 per cent drop quarter on quarter or a 3.9 per cent drop year on year. Service revenue fell 5.7 per cent year on year.

AIS, which has just over 23.2 million customers out of the 65 million population of Thailand, said revenues were helped by an increased contribution from the sale of handsets.

Selling and administrative costs fell 12.9 per cent year on year due to lower bad debt provisions. Earnings for the first nine months of the year stood at 11.2 billion baht, down 14.6 per cent and only about 68 per cent of consensus market forecasts.

AIS director Vikrom Sripataks said that at the end of the third quarter, the company had generated an earnings per share of about 1.19 baht, which was a decrease from 1.24 baht per share seen during the same period last year.

Mr Vikrom said there were just 513,000 new subscribers in the quarter, down from 1.6 million of new subscribers in the second quarter.

Of total new subscribers, there were 734,200 pre-paid accounts, while post-paid subscriptions fell by 221,200 - something he attributed to the company not promoting as much as it did in the second quarter.

He said in the quarter, there were revenues of 22.41 billion baht, 2.3 per cent up from a year ago due to the growth of subscribers.

The company had generated around 19.08 billion baht in revenues from services in the third quarter of this year, 5.7 per cent up from the same period last year but 2.6 per cent down from the second quarter's 19.6 billion baht.

The proportion of marketing expenses to total revenue decreased to 3.3 per cent in the third quarter from 3.5 per cent a year ago and 3.8 per cent in the second quarter due to low marketing activity for seasonal reasons.

Analysts said that the decline in the earnings was mainly due to seasonal factors, something which was also seen in Singapore and in the results of AIS's Thailand-listed rival, Total Access Communications.

Samart sets up Brain Source

The Nation (15 November 2007)

Samart i-Mobile has set up mobile-phone application company Brain Source to capture the market in Southeast Asia

The subsidiary is expected to generate Bt90 million in revenue next year.

Samart i-Mobile CEO Watchai Vilailuck said the company decided to set up Brain Source because of the growth of mobile content and application services. Started last year as a small research and development unit, Brain Source has developed applications to serve Samart's handset brand i-Mobile.

"We have to create differentiated and value-added features for i-Mobile with content and applications that will help us to boost the sales target," Watchai said.

Samart i-Mobile targets to sell three million i-Mobile handsets this year, of which one million will be in Indonesia, Malaysia, Vietnam, Cambodia, Laos, India, Bangladesh and Sri Lanka.

Watchai said the company would focus on entering into new developing countries such as South Africa.

Next year it aims to sell five million handsets, with two million in international markets.

Its applications are divided into three groups: business, lifestyle and entertainment.

Subhasiddhi Rakkasikorn, general manager of Samart Multimedia, said Brain Source's applications would be bundled in every i-Mobile handset and some selected brand models including Sony, Ericsson and LG.

"Next year we will bundle our applications into 1.5 million i-Mobile handsets, 500,000 major-brand handsets and 60,000 smart phones. We are also ready to launch applications for international markets," Subhasiddhi said.

Call to increase VAT to fund govt projects

The Nation (15 November 2007)

Value-added tax (VAT) should be increased by one percentage point to help fund social welfare and infrastructure projects, Deputy Prime Minister Sommai Phasee said yesterday.

If the government formed after the December 23 election wants to push mass transit, social programmes and other capital developments, it has to find more tax revenue, he said. Tax collections usually go up 8-9 per cent a year but need to be speeded up to at least 10-15 per cent, he said.

Increasing the VAT by one point would generate tax receipts of Bt30 billion, but the interim government will not raise the VAT from its current rate of 7 per cent, he said.

Raising taxes was not a popular policy since it could squeeze voters, he admitted.

The Fiscal Policy Office has prepared a new tax package and will propose to the new finance minister what types of new taxes should be introduced, he added.

Separately, a source said the Finance Ministry has approved a proposal of the board of Secondary Mortgage Corp to appoint Duangphorn Arpasil, a former deputy managing director of ACL Bank, to head the organisation, which has been plagued with corruption and high non-performing loans.

AIS presses TOT to resolve dispute over access charges

Bangkok Post (15 November 2007)

Advanced Info Service will officially ask TOT Plc to reach a legal settlement on the long-standing access-charge dispute with mobile operators DTAC and True Move as the damage to the state telecom would grow the longer the issue remains unresolved.

The lack of a clear resolution has also prevented AIS from billing the two operators interconnection charges, which will reach three billion baht by the end of the year, said AIS president Wichien Mektrakarn. The company must take action because it wanted to have a clear-cut picture on access and interconnection charges, he added.

AIS signed interconnection agreements with both DTAC and True Move in February, but it has not been able to send interconnection bills to both companies. On the contrary, both DTAC and True Move have sent interconnection bills to AIS, he said.

AIS could not charge the two operators for interconnection fees because the company feared legal action from TOT, which may accuse the leading mobile phone operator of bypassing the state telecom's network to set up direct links with the networks of DTAC and True Move.

Mr Wichien said that so far AIS had expected to collect more than two billion baht in interconnection fees from DTAC and True Move. By year's end, the amount could reach three billion baht as net gains jumped to 400 million baht in certain months, he said.

Although TOT and CAT Telecom are damaged parties, they still have not taken legal action to demand money from DTAC and True Move. Mr Wichien said it was strange that the issue had dragged on for this long, and it seemed that TOT and CAT were not actively seeking a settlement.

Mr Wichien said that both DTAC and True Move rejected to pay access charges since the National Telecommunications Commission introduced interconnection charges to replace access charges last year.

DTAC has booked its interconnection charges as operating expenses, replacing access charges on its financial statement.

Both DTAC and True Move wanted AIS to clear all the billings to put pressure on TOT, which would stand to lose 20 billion baht a year immediately if AIS did so. Mr Wichien also said that AIS would send an official note to TOT stating the reasons why its subsidiary Digital Phone _ the mobile phone network operator of GMS 1800 and importer and distributor of mobile phone stopped paying access charges to TOT five months ago. He hopes the move would stimulate TOT to find a legal solution on access charges.

DPC ceased payments after DTAC and True Move stopped paying access charges to TOT in November last year. The note will say that DPC merely wanted to pressure TOT into resolving the access charge dispute, he said.

Goldstone to launch IPTV in Malaysia, Thailand

From business-standard.com (14 Nov 2007)

Hyderabad-based Goldstone Technologies (GTL), a software technology and services company, will be launching IPTV services in Malaysia and Thailand. GTL has tied up with MOL AccessPortal Berhad of Malaysia to launch the IPTV service in Malaysia. MOL, controlled by Tan Sri Vincent Tan, chairman of the Berjaya Corporation group of companies, specialises in Internet media and e-commerce. It is the largest online gaming aggregator in Malaysia, and has three wholly-owned subsidiaries engaged in media content and online payment service providers. In Thailand, GTL has signed an agreement with Synap Media & Infotech Company, a business group promoted by various media and financial professionals with interests in hospitality industry, to carry out media business including IPTV in Thailand and Hong Kong. Synap is already in the process of launching its hospitality services with 2,000 hotel rooms in Thailand.Goldstone will provide a portfolio of programming through its IPTV service in Thailand. Malaysia has a sizeable Indian population but currently only one Hindi and three Tamil channels are available from the existing service providers."With Goldstone’s IPTV services, subscribers will not only have a option to watch Indian TV channels but will also be able to watch on-demand movies and TV programmes, which are not available currently through any service provider," said MOL chief executive officer Ganesh Kumar Bangah.