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24 August 2009

Thai cement maker postpones expansion in Philippines

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Creditors reined in Thailand’s Siam Cement Group’s 1-billion-peso expansion project in the Philippines, its top executive said early this month, reported Philippine daily BusinessMirror.

“We’ve postponed that expansion because our creditors told us to slow down in view of the erratic market,” Mariwasa Siam Ceramics Inc. president Surasak

Kraiwitchaichareon said at the sidelines of a seminar marking the 60th year of Thai-Philippine diplomatic relations at Chulalongkorn University on August 8.

Surasak said the industrial conglomerate plans to expand its ceramic tile business in a joint venture with the Coseteng family, which has a 54-percent stake in Mariwasa Siam, one of four businesses under Siam Cement.

Surasak told the BusinessMirror they still expect the investment to push through before the year ends but “we are also open for other opportunities in the [Southeast Asian] region” as much as in the country.

Since it started investment in the Philippines in 1992, Siam Cement expanded nearly every four years, by gaining ownership of corrugating and liner board maker United Pulp and Paper Co. Inc. from the Phinma Group; concrete roof tiles manufacturer CPAC Monier Philippines Inc.; and, building materials trader Siam Cement Trading Inc.

The expansion focused on the tile maker’s Santo Tomas, Batangas-based plant that sits on 24 hectares of land. Near Mariwasa is CPAC Monier’s 4.3-hectare operations base. United Pulp and Paper’s plant, on the other hand, sits on a 46.6-hectare lot in Calumpit, Bulacan.

Surasak said the company remains optimistic of business opportunities despite the crisis because the Philippines’s strategic location “would provide wider access to global markets.”

Likewise, Surasak said the increasing population of the Philippines “means a growing potential good market” for its products.

Based on his presentation, ceramic tiles consumption per capita in Thailand has been steady at 1.38 square meter per household (sqm/Hd) while the Philippines grew from 0.35 sqm/Hd in 2007 to 0.38 sqm/Hd last year. But owing to the economic slowdown, Surasak said consumption is expected to dip to 0.37 sqm/Hd this year.

Packaging paper consumption per capita is also expected to drop in the Philippines from 8.68 kilogram (kg) per household to 8.39 kg/Hd while Thailand’s is seen as steady at an annual rate of 35.35 kg/Hd since 2007.

“Consumption per capita in the Philippines is lower than Thailand’s, which means there is room for growth,” Surasak said in his presentation.

He noted that remittances from overseas Filipino workers “help fuel domestic demand and push the economy to grow faster.”

Still, Surasak noted inadequate infrastructure and logistics support as well as high power and energy costs remain two of six challenges they face in the Philippines.

He cited salary levels in the country are higher than Thailand’s P240-daily wage rate while union issues are also major challenges.

“Taxation policy is also quite high and we face stiff competition from imported products.”

Surasak said they are worried over the entry of low-quality ceramic tiles in the Philippine market.

Mariwasa’s plant capacity is at 11 million square meters (sq.m.) a year, generating an annual revenue of P2.3 billion. It employs 640 Filipinos and eight expatriates from Thailand.


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