SAT keen on Indonesia, southern China

Somboon Advance Technology Plc (SAT), a listed automotive-parts maker, plans to build a plant in Indonesia as its first overseas investment before expanding to southern China next.

Yongkiat: Partner sought in Indonesia

President Yongkiat Kitaphanich said the plant in Indonesia will be operational within three years to capitalise on continous auto-industry growth in Southeast Asia.

The Somboon group, which celebrated its 50th anniversary last year, also wants to set up a plant in southern China, possibly in the next 10 years, to serve planned investments of automakers such as General Motors, Ford and Toyota in the mainland, said Mr Yongkiat.

With sales revenue of more than 9 billion baht in 2012, SAT exports 20% of its products to Asean, half of which go to Indonesia.

"Thailand has been the production base for neighbouring countries thus far. We plan to have a joint venture with a local partner to set up a factory in Indonesia to serve domestic demand," he told the Investment in Asia Forum last week.

The group foresees major markets in Asean including Thailand, Indonesia, the Philippines and Singapore maturing in the next five years, while Vietnam could take up to 10 years.

SAT is looking at joining with its Japanese and Chinese partners to establish a factory in China, where GDP and vehicle demand have been growing substantially.

"If we are a pioneer there, the opportunity to capture market demand will be ripe," he added.

Also at the forum, Kan Trahulhoon, president and chief executive of Siam Cement Group (SCG), said the regional integration with the advent of the Asean Economic Community (AEC) in 2016 brings enormous potential, citing the substantial GDP per capita of US$5.7 billion for the region.

SCG has expanded aggressively in Asean through both greenfield projects and mergers and acquisitions, with total investments of 84 billion baht over the past two years. Some 10,000 of its 38,000 employees are in Asean outside Thailand.

Over $1 billion has been spent in Indonesia, which employs 6,000 SCG workers, followed by Vietnam and the Philippines, he said.

In 2012, SCG's investment hit a record 50 billion baht.

"Costs in Thailand are rising after the minimum wage hike to 300 baht per day, affecting labour-intensive industries," he said.

The challenges for SCG are to maintain cost leadership in Asean, address cross-cultural diversity and build local staff engagement, added Mr Kan.

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Writer: Nareerat Wiriyapong
Position: Business Reporter