AEC preparation for Thai Businesses

1© SCG 2012

AEC preparation for Thai Businesses

“โคง้สดุทา้ยสู่ AEC… อีสานกบั CLMV จะปรับตวัอย่างไร”

โรงแรมพูลแมน ขอนแก่น ราชา ออคิด จงัหวดัขอนแก่น

8 กนัยายน 2557 14:15 – 16:15

1

Kulachet DharachandraCorporate Planning Director - SCG

2© SCG 2012

Agenda

2

Thailand and CLMV –Opportunities

SCG Growth Stories

Challenges and how we managed…

3© SCG 2012

Agenda

3

Thailand and CLMV –Opportunities

SCG Growth Stories

Challenges and how we managed…

4© SCG 2012

Opportunities in ASEAN and CLMV + Thailand

ASEAN CLMV Thailand ESAN

���� Population > 600M > 170M > 68M > 19M

���� GDP [Bn USD] 2,300 ∼ 220 ∼ 370 40

���� GDP [USD] per capita 3,750 1,270 5,400 2,150

���� GDP growth 5-6% 6-7% 4-5% N/A

4

Thailand will be even more connected to CLMV than before under new infrastructure investment plan

Cambodia- GDP growth (‘14-’18): 7.4%- Population: 15.1 million- Cross border trade:

46,309MB (+19.46%)

Vietnam- GDP growth (‘14-’18): 6.4%- Population: 89.7 million- Cross border trade:

18,131MB (+206.42%)

Laos- GDP growth: 7.9%*- Population: 6.8 million- Cross border trade:

65,205MB (+9.47%)

* Figure of 2013, Trade figure is for Jan-May 2014

Myanmar- GDP growth (‘14-’18): 7.0%- Population: 61.9 million- Cross border trade:

81,544MB (+2.63%)

5

6© SCG 2012

Agenda

6

Thailand and CLMV –Opportunities

SCG Growth Stories

Challenges and how we managed…

SCG Competitive Landscape

Territory

Product

Focus

Domestic

Commodity-based

Cost Leadership

The Old Playing Field

ASEAN

HVA Products & Services

Innovation & Technology, Brand, Green Initiatives

The New Playing Field

7

SCG’s Investment Practice

Strategic fit• Domestic – HVA and New

opportunities in new business• Overseas – expanding our

core businesses to ASEAN

Our Competitiveness• Financials, System,

Operations, Technology• Expertise, Manpower

Market attractiveness• Growth trend• Consumption per capita• Consumer behavior

8

1

2

3

SCG Investment CriteriaAlign with our vision

SCG Investment Steps

- Packaging Paper- Chemicals

Total Assets $1,111 Mil (36,050 MB)Total Assets $21 Mil (697 MB)

Total Assets $228 Mil (7,386 MB)- Paper

- Paper & Packaging

- Chemicals

- Cement-Building Materials

- Cement-Building Materials

- Cement-Building Materials

- Cement-Building Materials

- Cement-Building Materials- Cement-Building Materials

- Packaging Paper

Malaysia & Singapore (1996) Indonesia (1994)

Philippines (1994)

Vietnam (1992)

Laos & Cambodia (1992)

Myanmar (1994)

Total Assets $227 Mil (7,366 MB)

Total Assets $176 Mil (5,713 MB)Total Assets $604 Mil (19,599 MB)

Current update of SCG Presence in ASEANASEAN assets = $2.4 billion (76,811 MB)

(17% of total assets)

Note: As of June 14

9

10%

12%

14%

16%

18%

20%

22%

24%

26%

28%

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

ASEAN Operation

Export to ASEAN

% ASEAN on Sales

SCG ASEAN Revenue and Vietnam operation

10

0

5,000

10,000

15,000

20,000

25,000

2010 2011 2012 2013

VN Operation Export to VN

Sales (MB) % on SalesRevenue from VietnamSCG ASEAN Revenue

CAGR16%

CAGR15%

SCG presence more than 20 years in Vietnam since 19 92

11

2013

Vina Kraft Paper

1992

1996

2004

SCG Trading

Viet-Thai Plastchem

CHEMTECH

2007

2010

2011

TPC VINA

SCG CONCRETE

New Asia

MINH THAI WINDSOR

1998

2006

2008

CPAC Monier

AP PackagingAlcamaxPackamax

2012Cement Buu Long

Tien Phong PlasticBinh Minh Plastics

Prime Group

SCG International Staff: 305 persons

SCG Staff in Overseas Operations: 14,942 persons

As of July 2014* Consolidated basis

Indonesia 6,681Vietnam 6,373

Philippines 1,086

Cambodia 400Myanmar 129Others 273

SCG Manpower: 50,345 personsOverseas staff: 30% of total staff

12

Many dimensions of Vietnam are similar to Thailand

Source: EIU, Deutsche Bank analysis

Vietnam Thailand

KeyHighlight

“3 distinctive regions (North, Central,

South) in culture and dialect with challenging logistic issues

“Familiar market moving toward sophisticated

customer needs”

GDP Growth(2014-2018)

6.4% 4.5%

GDP per capita [USD]

(2012)

1,600 5,400

Population [Million]

90 68

GDP mix

Private consumption

51%

Govt. 10%

Investment22%

Export , 74%

Import, 59%

Private consumption

65%

Govt. 6%

Investment27%Export ,

89%

Import, 88%

13

14© SCG 2012

Agenda

14

Thailand and CLMV –Opportunities

SCG Growth Stories

Challenges and how we managed…

Cross-cultural diversity

Local Staff Engagement

Local Community Concerns

Country Risk

Law and Regulation

Language

FX/Currency

Challenges from Regional Expansion

ASEAN growth are just the first step...

15

Challenges from Vietnam expansion

16

Macroeconomics- Currency and foreign exchange

- VND devaluation in November 2011 and June 2013- High inflation (H1/2014, 4.98%)- High interest rate (H1/2014, 9.0%) and developing banking system

1

Politics- South Sea dispute with China2

Law and Regulation - Periodical change of the regulation e.g. labor law- Local government rule under the master plan of central government

3Environmental and social issues

- Local community concern 4Language

- Vietnamese translators maybe required5

Engage local law firm Engage local community

IC approval by govt- Econ/Industrial zone

Suggested practice

17© SCG 2012 17

CLMV’s economy is growing .

Population is becoming more affluent. .

Regional Game Plan &

CLMV SPIRIT are vital

Thank you

18