Hemaraj Land and Development Plc (HEMRAJ), the SET-listed developer of industrial land and ready-built factories for rent, is eyeing the possibility of building an industrial estate in Indonesia as its first foray abroad.
Nardone: Intrigued, but no firm plans yet
David Nardone, the president and chief executive, said even though the company has no hard plans at the moment, Indonesia is the most interesting market in Southeast Asia for Hemaraj.
Besides being Asean's largest economy, it is the second-biggest automobile manufacturer after Thailand.
Its large domestic market also warrants economies of scale as an export-oriented production base.
The availability of natural gas there means power costs are lower than in Thailand.
For Hemaraj, investment opportunities in some neighbouring countries such as Myanmar and Laos are quite limited.
While Cambodia has been the recipient of investment in some industries including textiles, it is not a market the company is interested in, said Mr Nardone.
With seven industrial estates in operation in Thailand _ six along the Eastern Seaboard and the other in Saraburi province _ Hemaraj has 37,000 rai of both developed and undeveloped industrial land.
"[Compared with neighbouring countries] we're seeing better opportunities in Thailand," Mr Nardone told the Bangkok Post, citing continuous growth of the local automotive industry and increasing arrivals of small and medium-sized enterprises (SMEs) from Japan.
Hemaraj is set to spend 1 billion baht to develop a new 700-rai industrial estate near Chon Buri's Laem Chabang port.
The project is now undergoing an environmental impact assessment, and new land should be available for sale in the fourth quarter, said Mr Nardone.
The company has set capital expenditure of 8 billion baht this year including 1.5 billion for land acquisition, 2 billion for industrial land development and 2.5 billion for factories to rent out.
Hemaraj expects to sell 1,500 rai of industrial land this year after reporting record land sales of 2,317 rai last year.
Thailand, dubbed the Detroit of Asia, produced 2.48 million units of motor vehicles in 2012, ranking it the world's 9th largest after Mexico. China topped the list, churning out 19.27 million units, according to International Organization of Motor Vehicle Manufacturers data.
Notably, Thailand is the world's fastest-growing vehicle producer last year, with a 70.3% increase.
Over the next 3-5 years, the country's annual production is projected at 3 to 3.3 million vehicles.
Mr Nardone said even though the yen has weakened slightly, Thailand remains a cost-competitive investment location for Japanese companies compared with investing at home.
This will prompt more Japanese SMEs to flow into Thailand, mainly in the auto-parts, chemical and packaging sectors.
Hemaraj achieved revenue of 6.4 billion baht last year, up by 54% from 2011, for a net profit of 2.29 billion, up by 327%, thanks to growth in most business areas, particularly industrial estates.
Shares of HEMRAJ closed Friday on the SET at 4.26 baht, up four satang, in trade worth 70 million baht.
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Writer: Nareerat Wiriyapong & Oranan Paweewun