Roongrote Rangsiyopash, President and CEO, SCG: Interview

Roongrote Rangsiyopash, President and CEO, SCG

Interview: Roongrote Rangsiyopash

How would you assess the rate of domestic demand recovery for key industrial products?

ROONGROTE RANGSIYOPASH: The performance and outlook for industrial demand in Thailand has been very mixed in recent years. Over the past decade Thailand has gone through several crises, both economically and politically, with the changes in government resulting in policy instability. For the past three years the current government has been trying to bring back stability by formulating long-term policies. Nevertheless, demand for cement declined in 2014, levelled off in 2015, and in 2016 experienced another drop of 2%. Despite the visibility of public sector spending on infrastructure projects, the government only accounts for around 30% of domestic cement demand, with the remaining 70% coming from the commercial and residential segments, so the growth outlook is still relatively muted. In 2016 the situation outside of Bangkok was of particular concern, with low agricultural production and the slowdown in the economy felt more acutely in these regions. With continued investment in infrastructure, we predict domestic cement demand to increase by 2-3% over 2017-18. In terms of chemicals and packaging, the end users are largely consumers and the export market, so demand will likely grow in line with overall GDP, at around 3% in the same period. One positive note is the increased consumption provided by the tourism industry. We have to keep in mind that Thailand is no longer a low-base country developmentally, so large economic growth figures are unlikely overall.

What opportunities exist for corporations abroad to hedge against slower domestic expansion?

ROONGROTE: Thailand is fortunate that its neighbouring countries are experiencing rapid expansion. Myanmar, Laos, Cambodia and Vietnam have all experienced significant economic development over the past few years. These countries are putting a lot of money into infrastructure, which bodes well for investment opportunities. In Myanmar, for example, construction, infrastructure and industry have both grown at high rates over the past five years, and once the economy has developed further, the residential segment is sure to follow. Taking Vietnam as another example, although the country has gone through several economic crises, industrial development has continued. Over the next five to 10 years the pace of this development is set to accelerate significantly, especially given new infrastructure projects. Thailand has some experience in shifting from light manufacturing to heavy manufacturing, and many Thai investors clearly recognise the opportunities in both economies. In addition, most countries in ASEAN have a relatively young population, which lends itself well to economic growth and opportunity.

To what extent is research and development (R&D) adding value to key industrial segments?

ROONGROTE: Along with regional expansion, increasing product offerings through innovation is at the heart of the Thai industrial sector’s goal of attaining sustainable growth. There is a lot of potential for increased levels of R&D to translate into both better product offerings for customers and a more effective and efficient manufacturing process for producers. Looking at cement, the segment is increasingly investing in things like modular products for both housing and buildings, which help lower the overall cost of construction. In the chemical segment, products are being successfully tailored to customers’ specifications, seen through the provision of high-performance resins to replace metals or other materials, subsequently improving customer productivity. For packaging, new, greener products that have more strength and use lighter materials are being introduced, not only improving performance but also reducing environmental waste. This level of investment in innovative products will ensure that the industrial sector moves up the value chain in asserting its competitiveness, both in the domestic and foreign markets.

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The Report: Thailand 2017

Industry & Retail chapter from The Report: Thailand 2017

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