What's new in business news: February 10, 2014

Thailand's drought & rising farm produce prices, Macau gambling tycoon Asia's richest man & Central Group growth fueled by foreign acquisitions.

A sign at Kokmatum market in Phitsanulok province gives the price of a lime as six baht, up from four or five baht last month and three baht earlier this year. Chinnawat Singha

AGRICULTURE

Thailand's drought & rising farm produce prices 

Severe drought will probably weaken Thai agriculture for another year, and the phenomenon could derail growth of the country's farm economy. The dry spell present in 18 provinces, mainly in the North and Northeast, could also drive up prices of farm produce. The scarce rains this year have been attributed to unusual heat. 4,105 villages have been officially designated drought-hit areas. The list of villages is expected to grow as the hot season gets underway in the next few months.

Water reserves in major reservoirs nationwide remain sound at 47.7 billion cubic metres or 64% of capacity, with the amount of available water for use at 23.8 billion cubic metres or 47%. But there is concern about depletion at the four big dams — Bhumibol, Sirikit, Khwae Noi and Pasak — that supply water for most of the planting in the country. The department says the water has dropped to 45% of capacity, while water available for use is at just 28%. The excessive use of water for planting second-crop rice was one reason for the depleted water reserves, especially in the central plains where water from dams is used. The drought conditions could cause the farm economy to miss its 3-4% growth target.  The lengthy drought in many parts of the country since late 2012 has been blamed for reduced production of maize, second-crop rice and pineapple. This year, growth is expected to improve with better output of sugar cane, rubber, palm and main-crop rice.

Prices for vegetables and fruits sold at bargain markets like Talad Thai have risen sharply in recent weeks, most notably for tomatoes, kale and limes. A bulk of 100 limes cost 600 baht last week, compared with 500 baht in February and 300 baht in January.

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WEALTH 

Macau gambling tycoon is Asia's richest man

AFP News agency

Macau gambling tycoon Lui Che-woo, the head of Macau casino operator Galaxy Entertainment, saw his fortune rise $3.5 billion this month to $29.6 billion, about $100 million ahead of billionaire Li Ka-shing replacing him as Asia's richest man, according to the Bloomberg Billionaires Index. Lui's family fled war-torn China for Hong Kong in 1934 where he reportedly made money selling food on the streets of the former British colony at the age of 13. He made his first fortune after World War II when he imported construction equipment, left by US forces in Okinawa.

The 84-year-old entered the Macau gambling market with Galaxy after it opened up in 2002, after a four-decade monopoly held by Hong Kong gambling mogul Stanley Ho ended. Galaxy, which saw its shares rise more than 100 percent in 2013, is one of six firms licensed to operate casinos in Macau, the world's biggest gaming hub, which was handed back to Beijing in 1999 and remains the only Chinese city where casino gambling is allowed. Macau's gambling revenue jumped 18.6 percent to a record $45 billion in 2013.

Li Ka-shing started out in business as a plastic flower-maker but now commands a vast empire with global assets in property, telecoms, utilities, ports and retail. The Bloomberg Billionaires Index lists American Jim Walton, founder of retailer Wal-Mart, as the richest in the world, with a fortune of $36.5 billion. He was followed by Amazon's Jeff Bezos with a net worth of $35.7 billion.

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BUSINESS GROUPS 

Foreign acquisitions fuel growth at Central Group 

The 1997 financial crisis shook a number of giant family-owned companies and drove many into bankruptcy. But the Chirathivat family is among the business empires that survived the catastrophe and grew even stronger in both Thailand and the global arena. Back in 1947, Tieng Chirathivat could not have guessed that his very first, small Central Department Store would expand into a huge group of companies with 200 billion baht in revenue 67 years later. For the past several decades the group has branched into many different businesses, including retail, hotels, real estate development, food, wholesaling and more. Recently, the entire organisation was restructured with the appointment of Tos Chirathivat as the new chief executive. In the past Central Group didn’t even let in-laws get involved in the business and importantly, it didn't allow the offspring to split and do their own businesses. It was much later when the company grew enormously that the in-laws started taking part in business management.

The group’s restructuring has divided the business into eight companies: Centara Hotels and Resorts, Central Restaurants Group, Central Marketing Group, Central Pattana Plc, Central Department Store, OfficeMate, Fast Moving Consumable Goods and Hardline. In the next five years, the group's annual growth should stand at 15%, he said. The growth of any giant business will be considered low if it is less than 10%, but it will be an unsustainable growth if the figure is more than 20-30%,”  said the new chief executive Tos Chirathiwat. 

For the past decade, Mr Tos has continued to acquire companies both domestically and overseas to strengthen the group’s retail business. These included the acquisition of shares in Tops Supermarket from a Dutch company in 2004 and a 3-billion-baht investment in the Japanese convenience store chain FamilyMart. The group spent 22 billion baht acquiring Italy’s oldest retailer, La Rinascente, in 2011 and Denmark’s oldest retailer, Illum. The retail market in Thailand, particularly in Bangkok, has become saturated, making overseas  expansion necessary. Besides Europe, the group has continuously expanded its foothold in Asean with a plan to spend more than 1 billion baht this year. The group will co-invest with a local operator in Vietnam to expand its department store, real estate and food businesses in Ho Chi Minh City, while joining with leading cigarette maker Djarum to invest in Indonesia.

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About the author

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Writer: Jon Fernquest
Position: Online Writer