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The Japan Times WORLD EYE REPORTS  |
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| ©THE JAPAN TIMES |
November, 2000 |
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However slow, the signs of recovery are encouraging. In the year 2000, the baht currency and interest rate have stabilized, and projections are encouraging for the GDP growth rate. In May, US credit rating agency Moody's Investors Service raised its outlook for Thailand's financial institutions to 'positive.' "Moody's is kind of a 'neutral person' who says that the Thai economy is recovering. I think since Moody's raised the credit rating, companies in many industries will borrow foreign money, which will help," "Because the Thai economy is very resilient and very diversified, we weathered the storm," said Staporn Kavitanon, general secretary, Board of Investment. "This is a strength of the Thai economy - the ability to adjust and the flexibility to adjust." Many Thai businesspeople agree. Thai banks, deeply affected by the crisis, are now paying their non-performing .loans and are looking for ways to use new technology to assist their goals. "After the crisis I believe that the Thai banks emerged much stronger than those in other countries in the region. All the medium sized banks have been sold to the foreign banks, creating a very competitive environment for the Thai banks to improve themselves," said Twatchai Yongkittikul, secretary general, Thai Banker's Association. "Thai banks are beginning to lend to big corporations and are hiring consultants to advise them on how to improve their risk management set their new strategy for the coming years." For over 3 decades, Japan has served as the most important investor in Thailand, accounting for approximately one-third of total foreign investment in the country. Thailand has changed from being a market for Japanese products into an important production base for exports. Trade between the two countries continues to increase, as Japan is the largest supplier of imports to Thailand and one of the top destinations for Thai exports. Thailand imports capital goods, parts, and components from Japan, and Japan imports agricultural and consumer products from Japan, creating a strong interdependence between the two countries. Nobutoshi Akao, Ambassador of Japan to Thailand, stated, "The Japanese companies were investing with the objective of producing locally instead of exporting the product. With the rising value of the yen and also with the higher labor costs in Japan, they were shifting labor production overseas, particularly to Thailand." In order to increase productivity and competitiveness in Thailand after the crisis, Japan contributed financial and technical assistance, creating a strong export base and helping to increase the number of jobs. In a way, the economic crisis helped to strengthen the relations between the countries. Putting the pieces together after such a devastating few years will take time and patience. Thai business leaders realize that in addition to the changes that need to take place to move forward, people must learn from their mistakes. When analyzing the banking situation, Kavitanon states, "I have to be very straightforward - we cannot blame all the buyers. We have to blame the lenders too." In terms of policy changes, Kavitanon continues, "We're changing the blame and trying to find the solution. The crisis may have been a blessing in disguise." Other Thai business leaders agree that in order for changes to occur, the past needs to be remembered in order to learn from it. "I think that it is time for the Thai people to wake up, to realize that we cannot keep doing business as usual," said Yongkittkul. "We have to change. In general, if we look back and assess our situation, we all blame it on each other. We have to look at our own government and its process." Despite the slow recovery, Thailand is busy preparing itself to be a leader for the future. "Our strategy is to invite companies to invest here, to use Thailand as their export base. Thailand has a lot of advantages. We don't have internal conflicts, we don't have very different policies between the different parties. Even if we change the government, the main policy is the same," said Suwat Lipthanalop, Minister of Industry. An important factor to economic recovery is for Thai people to have confidence in the market. The future holds many challenges for business and political leaders, and sustaining and increasing growth is important. At this time, Thailand is looking to new industries to help grow its economy, such as the telecommunications and wafer industries, and other industries of the 'New Economy.' Thailand's next wave of development is here. Banks are being analyzed, loans will be paid back, economic and political policies will change, and leaders will look for new ways to improve the business environment. Although this reform will not happen overnight, the groundwork is being laid.
Diethelm & Co., Ltd., a Swiss firm established in Thailand in 1906, is composed of a very diverse group of companies. Diethelm's marketing and distribution activities act as a 'service' pioneer for goods suppliers in emerging markets. Although the travel department is the most high-profile entity, Diethelm is a leading player in many 'behind-the-scenes' industries, such as consumer products and pharmaceutical distribution, engineering, property management, trading, and fashion and apparel. Each of Diethelm's areas is growing quickly. Renato Petruzzi, president of Diethelm & Co., stated, "Since 1997, we have been able to grow very rapidly by acquiring a host of new agencies, which has allowed us to grow the business by more than 20% this year." Diethelm, which is one of the largest suppliers of domestic and foreign-produced products to retailers in Thailand, operates Southeast Asia's best and largest distribution centers. Diethelm's consumer products division ensures that the products of their customers (such as Warner Lambert) will appear on the shelves in grocery stores, gas stations, and other outlets, at the lowest cost to all parties. This division operates with 5 core business groups: Confectionery, Cosmetics, Personal Care, Food and Optical. Food and other special products are quickly distributed throughout the region.
Regarding Thailand, Petruzzi stated, "Thailand is a good place to do business. Even if the government changes, the policies are predictable, which is good for a business. The workforce is motivated and willing to work hard, and the laws concerning labor are very pragmatic and very good for both sides." The property management (Diethelm manages a commercial building on Bangkok's prestigious Wireless Road) and apparel areas (focused on the marketing of the Levi's brand of casual wear) are other sectors that Diethelm has a strong stake in. In addition, Diethelm Trading covers many areas of products and services, from animal health products to building materials. This diverse unit helps to recognize business trends and developments for Diethelm's other divisions. As stated before, Diethelm's more high-profile area includes travel and tourism. As the largest and most innovative tour operator in Thailand, Diethelm understands that high-end tourism in the country is a competitive market. Recently, Diethelm has been concentrating on promoting travel to Thailand's neighbors, such as Myanmar, Laos, and Cambodia, using Thailand as the springboard for these regions. The 'Tropic Asia Tours' focuses its efforts on developing special tours for 'sophisticated' clientele, tailoring excursions throughout Thailand to meet individual desires. In addition to these services, Diethelm recently published a guide titled, 'Golf In Asia,' geared toward those who take their vacations on the golf courses in Asia. "The reason why each single division of Diethelm is successful and growing independently and enjoying profit is because our business units are virtually stand-alone units, or a company within a company - no charges from the center." Because of this, hiring employees with strong skills and knowledge in their field is of highest importance. Petruzzi continues, "Since we are a service provider, we hire top managers who will be in charge of our business units, and each must have experience, competence, know-how and good managerial skills in that particular field to maintain the existing business." Investing in high-level employees pays off. "The product is the service we provide, and the service is very closely related to the team who provides it. This helps to presents new business opportunities, and gives us the respective reputation in the marketplace to attract and keep very good people working for the company," he said.
Auto manufacturers in Thailand have just emerged from a pit stop. After a dry spell in domestic sales for the past few years, Toyota Motor Thailand Co. Ltd., has plans for change. They also have a major asset to achieve success - their 38 years of experience in Thailand. As with many companies, Toyota faced problems during the Asian economic crisis. As a result of sagging domestic sales, Toyota began to service more export markets. Now that the economy in Thailand is recovering and is enjoying a more stable exchange rate and low inflation rate, Toyota is focusing on increasing sales in the domestic market. This is a good position for Toyota, for Thailand has established itself as the 'Detroit of Asia' for car manufacturing and assembly. Toyota, the market leader in the total car market with an approximate 30 percent market share, continues to remain faithful to the Kingdom of Thailand. Mr. Yoshiaki Muramatsu, president of Toyota Motor Thailand Co., Ltd., is positive that Toyota will develop renewed growth in domestic automobile demand and increase the amount of local content for parts distributed to other areas in the region. "My goal is to achieve 100 percent local content for parts and raw materials. The Soluna, manufactured in Thailand, serves as an example of this commitment and how realistic this goal is by using more than 70 percent local content," stated Muramatsu. Reports from 1999 state that consumers had confidence in Toyota - car sales increased 51.5% from 1998. As a result, Toyota reciprocated this confidence in the domestic marketby increasing the registered capital of its Thailand operations from 520 million baht to 4.52 billion baht. Another way Toyota is committed to Thailand is to adhere to its 'Thai-nization' policy. 'Thai-nization,' a term coined by Toyota, describes their efforts to increase the number of Thai nationals to senior executive positions within the company. This business organization and management style achieves Toyota's Global Vision for the 21st Century, known as the 'Harmonious Growth' principle. "Our goal is to maintain and expand our market share, and we have a lot of competition," states Muramatsu. With Thai-nization, last year's large increase in sales, and a steady stream of parts to suppliers, Toyota will continue to race to success..
Tri Petch Isuzu Sales, the sales arm of Isuzu in Thailand, has developed a very strong market share for their vehicles in the country, selling a total of 52,110 units last year with the number one share in the commercial vehicle market for 17 consecutive years. Goro Shintani, president of Tri Petch Isuzu, predicts that the auto market will not recover to 1996 levels, where car market in Thailand exceeds 600,000 units a year, until 2004. Shintani states that, "everybody has learned a good lesson from the crisis; Thai and international businessmen have become wiser, so this will not happen again." Shintani asserts that political stability, higher education levels, sound legislation, and a government representing the people are major factors drawing renewed investment to Thailand. The Isuzu group is in a strong position for growth in Thailand, catering to both domestic and export markets by manufacturing a wide range of vehicles, such as SUVs, pick-up trucks, as well as medium and big trucks. To secure sales in the domestic market, a strong sales network boasts a showroom in every province. Spare parts for their vehicles are available nationwide and Isuzu customers now have a 24-hour customer relations hotline to offer a constant forum for feedback. "Supported by the growth of the nationwide workshops and showrooms, and very well established brand equity, Isuzu resale values are higher than those of all other brands," Shintani remarks. The people of Thailand will always remember Isuzu's commemoration to His Majesty the King's 72nd birthday. Isuzu erected a 72 meter long 'Golden Dragon' which was paraded through many of Thailand's provinces in honor of the King's birthday celebration. The Golden Dragon, symbol of power and fortune, has been associated with the Isuzu pickup called the 'Golden Dragon' since the launch in 1988. Isuzu has been the market leader in this important automotive category in Thailand ever since. Isuzu and their golden dragon is firmly established as a key player in the Thai automotive market..
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Suwat Liptapanlop, minister of industry
