A prolonged European
debt crisis and a slower-than-expected US economic recovery could weigh on the
results of the Siam Cement Group (SCG) in the second half of the year.
Kan
Trakulhoon, the president and chief executive, said the situation in Europe has
remained "worrisome", although following the recent elections, Greece
has been able to form a government.
Prospects
for economic recovery in the US dimmed recently, especially in terms of
housing, due partly to the European situation, he said.
The
US and Europe together account for 5% of SCG exports.
However,
the concern is that if the situation in the US and Europe worsens, Asean and
other markets in Asia will be negatively affected.
"What
we have seen is that Europe lacks unity in tackling the financial crisis. We
never imagined the debt crisis in Spain would be so severe."
Rising
concerns over Spains's debt and the state of its banks, which received up to
100 billion (4 trillion baht) of assistance, have brought Spain to centre
stage.
Europe's
troubles have already taken a toll on SCG's petrochemical business, which
weakened in the second quarter, said Mr Kan.
"We
need to look at how the situation develops in the third and fourth
quarters," he said.
Addressing
a luncheon at the Engineering Institute of Thailand, Mr Kan said Thai companies
should expand into new markets to survive the current dynamic business environment.
In
recent years, SCG completed 16 acquisition deals involving 26 companies, mostly
in Asean, allowing the group to expand its regional presence aggressively.
At
present, 52.9 billion baht or 14% of SCG's assets are in Asean outside
Thailand, particularly in Indonesia, Vietnam and the Philippines.
He
also said building a strong brand and differentiating products should be
strategies for companies.
Research
and development (R&D) and the commercialisation of the results are key, and
Thai companies should shift their focus from commodities to high value-added
products after the minimum wage is increased, said Mr Kan.
Thailand's
R&D budget has been relatively flat at 0.2% of gross domestic product,
below the global average of 1%.
In
South Korea, the figure is 3%.
Shares
of Siam Cement (SCC) on the Stock Exchange of Thailand closed unchanged
yesterday at 328 baht in trade worth 646 million baht.
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