THAILAND: Solvay gears up for more investment in Thailand

The Brussels-based chemical company has spent 18 billion baht here over the past four years, mainly to build two production lines, making it the largest Belgian investor. "Thailand is an important base for Solvay in Asia along with China and South Korea," Jean-Pierre Clamadieu, the French chief executive of the 150-year-old firm, told local press reporters in Bangkok on 20 Mar. 2013. "We have a good base in Thailand and will continue to develop here."

Solvay is one of more than 100 Belgian companies on an economic mission to Thailand this week. Thailand now houses four industrial plants of the group, which ranks among the world's top 10 chemical companies. In 2011, Solvay's joint venture with the US-based Dow Chemical Co. started up the world's largest hydrogen peroxide plant in the Map Ta Phut area at a cost of 120 million euros (4.51 billion baht at the present exchange rate). Last year, an epichlorohydrin plant began operations under Vinythai (VNT), the Stock Exchange of Thailand (SET)-listed polyvinyl chloride producer and a joint venture between Solvay and PTT Global Chemical Plc (PTTGC).

Production in Thailand and South Korea is mainly for export, while 16 small factories in China mostly make specialty chemicals serving that country's huge domestic market, said Mr Clamadieu. "It is not so easy to source petrochemical raw materials in China. Thailand has a much smaller domestic market but easier to access to raw materials and is an excellent hub to export in Southeast Asia," he said. "We have had a success story in Thailand and will continue to look at new investments opportunities here in the next couple of years."

However, Mr Clamadieu pointed out concerns about doing business in Thailand. "Electricity is very expensive in Thailand ... the most expensive for us in the world. The Thai government should be concerned," he said, adding that energy security is also a worry since Thailand depends hugely on natural gas.

Logistics should be improved further, particularly maritime logistics. Solvay must now transport products from the Map Ta Phut factories to the Laem Chabang deep-sea port for export, said Mr Clamadieu.

Meanwhile, Solvay is looking at investment opportunities in Indonesia and Singapore. The company has earmarked 900 million euros for capital expenditure this year, half of it for maintaining and developing existing plants. The other half will be used to build new capacity, the vast majority of which will be for Asian markets. "We want to be in Indonesia to have access to the domestic market. Energy costs there are competitive," he said.

Source: Daily "Bangkok Post", Bangkok; 21 Mar 2013

(Syed Rashid Ali, Karachi, Pakistan)