Ford May Scrap Up To $1 Billion Of New Thailand Investments

[billaaa777]

Ford May Scrap Up to $1 Billion of New Thailand Investments

By Margo Towie

Jan. 31 (Bloomberg) -- Ford Motor Co., the world's third- largest carmaker, may scrap as much as $1 billion of planned investment in Thai factories after the nation's military-backed government imposed currency and foreign-investment curbs.

``These things make it extremely difficult to do business in a globally competitive environment,'' Steve Biegun, Ford's Washington-based vice president for international government affairs, said yesterday in an interview in Bangkok, where he met leaders including the Prime Minister. ``What we need in our business is predictability.''

Thailand's military seized control in September and installed a government that imposed currency controls and new foreign-ownership laws, shaking investor confidence. A group representing Pfizer Inc. and other drug companies last week said members may cut spending after the Thai government pledged to force them to surrender patents so it can make cheaper medicines.

``Thailand's potential for economic growth and investment liberalization has definitely taken a knocking,'' said Kim Eng Tan, an analyst at Standard & Poor's in Singapore. ``We are seeing an increase in policy risk that may deter investors.''

S&P last week kept the outlook on Thailand's BBB+ rating stable, which means it's inclined to leave the ranking unchanged. The rating is the third-lowest investment grade.

Top 20 Investors

Ford, among Thailand's top 20 foreign companies with about $1 billion already invested, is reviewing plans to build a new plant in the nation with capacity for 150,000 cars and extend existing output by an additional 24,000 vehicles at a 176,000- unit factory it operates with Mazda Motor Corp.

The coup and the measures taken by the government ``have generated a sense of turmoil,'' Biegun said. ``We came to discuss with government very specifically the policies surrounding the auto industry and what should be the expectations of a potential investor.''

Ford will decide where to invest the earmarked $1 billion in ``the first half of this year,'' Biegun said, citing China and India as alternative investment destinations. Ford wants to make sure that Thailand will remain ``a stable place to do business.''

``So far the government is moving in a direction that could keep things together, but they have a monumental task ahead of them,'' said Biegun. Dearborn, Michigan-based Ford, which ranks No. 5 in Thailand in sales, last week reported a record $12.75 billion full-year loss.

Generic Drugs

The Pharmaceutical Research and Manufacturers' Association, which has representatives of Pfizer, GlaxoSmithKline Plc and Novartis AG on the board, said it will assess proposed laws after the Thai health ministry said it planned to force companies to relinquish patents for heart and HIV drugs to cut drug costs because of Thailand's ``limited budget.''

``Forcefully taking property rights simply because of a ministry's budget shortfalls is internationally unprecedented,'' Teera Chakajnarodom, president of the trade group said yesterday. ``We have no objections to generics -- but don't take patented products and allow other companies to copy them.''

``There is a misunderstanding that this government is protectionist and doesn't want foreign investment,'' Thailand's Finance Minister Pridiyathorn Devakula said today. ``I want to repeat again that all the measures are to help domestic businesses be able to compete.''

Thailand's central bank triggered a slump in stocks, bonds and the currency in December when it required local banks to withhold 30 percent of new foreign funds and penalized investments of less than a year. The controls aimed to slow gains in the baht after the currency's 16 percent increase last year undermined exports.

Foreign Loans

The rule was abandoned for equity funds a day later, after the stock market sank the most in 16 years. It remains in place for bonds and real-estate mutual funds. The bank yesterday wound the rules back further, exempting some hedged foreign loans and fund transfers.

``The measures that they've taken are going to result in foreign direct investment outflows, not inflows, in 2007,'' said Tim Condon, an economist at ING Bank NV in Singapore. ``The government seems to be trying to sort out the regulatory framework and the outcome is one that looks investor unfriendly.''

Total foreign investment in Thailand last year dropped 18 percent from 2005, according to Board of Investment data. Investment fell amid a political standoff that ended in the coup ousting the government of Prime Minister Thaksin Shinawatra.

Ford's vehicle sales rose by more than 80 percent in both China and India last year. Ford has invested more than $1.5 billion in China since 2001 and more than $500 million in India since 2005. In Thailand sales fell 18 percent last year.

Consumer confidence in Southeast Asia's second-largest economy fell to a five-month low after Dec. 31 bomb blasts killed three. Prime Minister Surayud Chulanont, a retired army chief installed by coup leaders, blamed them on ``people who lost their political power'' following the military coup.

``One government can give you what you need to develop a successful business plan,'' said Biegun. ``Another coup, another government and you could lose it all.''

To contact the reporter on this story: Margo Towie in Bangkok at [email protected]

[chuchok]

otal foreign investment in Thailand last year dropped 18 percent from 2005, according to Board of Investment data. Investment fell amid a political standoff that ended in the coup ousting the government of Prime Minister Thaksin Shinawatra.

Unbelievable.....

[billaaa777]

And the hits just keep on coming! This is the tip of the iceberg in down turn of the Thai economy as a direct result of the BOT's policies and the military run government. The BOT is getting what it wanted though, less foreign funds flowing into the country. Less foreign investments equals less Thai jobs.

[eljeque]

... and a weaker currency (from now) will lead to more expensive oil. Even if the dollar continues down against other world currencies, oil will respond by becoming more expensive. That will not make the people of Thailand with their excessive number of automobiles versus their income very happy.

[cclub75]

And the hits just keep on coming! This is the tip of the iceberg in down turn of the Thai economy as a direct result of the BOT's policies and the military run government. The BOT is getting what it wanted though, less foreign funds flowing into the country. Less foreign investments equals less Thai jobs.

Stats of BOI :

SUBMITTED

Nb of project Total Amount (billions THB)

2003 : 956........... 304

2004 : 1 023........... 637

2005 : 1 321........... 673

2006 : 1 357........... 514

More interesting are the "approved projects" :

APPROVED

Nb of project Total Amount (billions THB)

2003 : 839........... 283

2004 : 1 226........... 600

2005 : 1 254........... 571

2006 : 1 220........... 375

http://www.boi.go.th/english/about/statistics.asp

Of course, we would need monthly stats, to gauge the "4th quarter 2006 effect" (coup + FBA + BOT). Of course, we won't have it...

I guess, the next stats will be published in june, for the first semester... Now, this one will be very interesting.

[meom]

Ford May Scrap Up to $1 Billion of New Thailand Investments

Dearborn, Michigan-based Ford, which ranks No. 5 in Thailand in sales, last week reported a record $12.75 billion full-year loss.

``One government can give you what you need to develop a successful business plan,'' said Biegun. ``Another coup, another government and you could lose it all.''

With 12.75 billion loss I guess he has to re-write his business plan anyway

[johnnyk]

Ford is on the ropes.

They might want to look at making cars people want to buy. Samesame GM.

These clowns are still churning out dinosaur guzzlers while Toyota is already producing luxury hybrids.

[backflip]

Ford could be honest, and announce: "for the past decade, the Ford executive management team, including William Clay Ford, have destroyed the company, and we need to save every dollar. We can't afford to expand our operations anywhere". Although accurate, it doesn't sit well with the investment community. To save its corporate face (and a$$), they claim the investment rules in Thailand are ambiguous. They could have just as well blamed the military takeover of the government, or the baht-to-USD exchange rate. They could also be using this as a ploy to get a favorable government ruling - no taxes for a decade, free employee traiing, tax credit for the hiring of locals.

[samran]

Ford could be honest, and announce: "for the past decade, the Ford executive management team, including William Clay Ford, have destroyed the company, and we need to save every dollar. We can't afford to expand our operations anywhere". Although accurate, it doesn't sit well with the investment community. To save its corporate face (and a$$), they claim the investment rules in Thailand are ambiguous. They could have just as well blamed the military takeover of the government, or the baht-to-USD exchange rate. They could also be using this as a ploy to get a favorable government ruling - no taxes for a decade, free employee traiing, tax credit for the hiring of locals.

Of course they are simply posturing to get some hand outs from governments.

People bang on about welfare cheats, the biggest welfare cheats are big business.

In OZ, GM continually cry poor, and after decades of 'industry assistance plans/adjustment plans' they are still play the same game every 18 months. And they get their way, as the plans are in a couple of marginal seats which can help swing federal elections.

[LaoPo]

Isn't this a double topic ?

http://www.thaivisa.com/forum/index.php?showtopic=104183

LaoPo

[sriracha john]

Same, Same topic started earlier in Thailand News Clipping Forum:

Ford May Stop Thailand Investment

[Old Man River]

Ford is doing no different from the other majors. When GM was looking at Thailand, it played the Philippines against Thailand to get the best tax incentives it could (GM is in both countries now). They all do this, whether they are in the black or in the red.

The real question is how will the Thai government respond? In the past, Thai governments fell over themselves trying to attract foreign direct investment (FDI). It is the reason the BOI was set up. The current government has been saying it wants FDI, but are they willing to do what it takes similar to previous governments? Ford is its first big test.

[thaihome]

And the hits just keep on coming! This is the tip of the iceberg in down turn of the Thai economy as a direct result of the BOT's policies and the military run government. The BOT is getting what it wanted though, less foreign funds flowing into the country. Less foreign investments equals less Thai jobs.

Stats of BOI :

SUBMITTED

Nb of project Total Amount (billions THB)

2003 : 956........... 304

2004 : 1 023........... 637

2005 : 1 321........... 673

2006 : 1 357........... 514

More interesting are the "approved projects" :

APPROVED

Nb of project Total Amount (billions THB)

2003 : 839........... 283

2004 : 1 226........... 600

2005 : 1 254........... 571

2006 : 1 220........... 375

http://www.boi.go.th/english/about/statistics.asp

Of course, we would need monthly stats, to gauge the "4th quarter 2006 effect" (coup + FBA + BOT). Of course, we won't have it...

I guess, the next stats will be published in june, for the first semester... Now, this one will be very interesting.

BOI projects are not all foreign investments. Virtually all major projects get BOI approval (the import duty on the equipment alone would make them non-viable) and many are Thai companies.

PTT alone as several billion dollars worth of projects going on now.

TH