Thai construction firms pin rebound hopes on EEC

Slider, Thailand 08 May 2018
Thai construction firms pin rebound hopes on EEC

Construction material producers have high hopes that the government’s flagship Eastern Economic Corridor (EEC) project and the planned general election next year will turn their fortunes around after a sluggish few years.

Nicolas Godet, chief executive for construction products in Southeast Asia at building materials producer Saint-Gobain, said the EEC initiative will be a key driver for the industry’s growth and the general elections next year will create positive industry momentum as investors will be more confident.

The company’s domestic sales have declined since 2016, largely because of tepid sentiment, while the overall construction materials industry in Thailand has been soft.

He said the EEC development’s concept, particularly smart cities, is in line with the company’s products and solutions for smart buildings, with a focus on fast installations, efficiency and environmental consciousness.

Last week the company, as a French firm investing in Thailand, met EEC representatives and had a chance to present its concept — building better, faster and greener projects.

Mr Godet said once the EEC project begins development, the first wave of benefits will go to contractors for infrastructure projects and infrastructure materials like rail lines.

“For building materials like us, it may take longer than 10 years to enter. But by the end it will benefit the industry as a whole,” Mr Godet said.

A second meeting with EEC representatives is expected soon.

Saint-Gobain Group’s product lines include Gyproc gypsum products; tile adhesive, waterproofing and construction mortar under the Gecko brand; and Saint-Gobain glass.

The company has two gypsum plants — located at Laem Chabang in Chon Buri and Bang Pa-in in Ayutthaya — with a total production capacity of 75 million square metres. Half of the plants’ output was exported to Vietnam, Cambodia, Myanmar and Africa.

The company is constructing a second gypsum plasterboard plant in Haiphong, Vietnam in addition to the existing one in Ho Chi Minh City. The new plant is expected to start production by the end of 2018.

“Construction is seeing strong growth in Indonesia, where we are building a second plant, as well as Cambodia, Vietnam and the Philippines. In Thailand, Malaysia and Singapore, it has soft growth as the market is mature. We aim to have a 5% growth for the region,” he said.

Prakorn Makjumroen, chief executive of construction materials producer Shera Plc, said the overall market has remained stagnant since last year up until the first quarter of this year as the country’s economic recovery has not been as healthy as expected.

“The direction of the government’s infrastructure and megaprojects are unclear and have had no impact on the economy,” he said. “We expect the projects will create momentum in the second half and the EEC will boost demand in construction materials.”

Shera aims to have 10% overall growth this year, with 5% growth in domestic sales and double-digit growth in exports. Last year it grew 5%, driven by sales from exports, which it delivered to 40 countries, mainly in Southeast Asia and South Asia.

“Exports can help us diversify risk from sluggish domestic sales,” said Mr Prakorn. “We plan to boost export sales in Indonesia, the Philippines, Myanmar, Vietnam, India and Pakistan, which we expect will account for 35% of total sales, up from 25% last year.”

Kasikorn Research Center estimated Thailand’s construction materials retail market at 465 billion baht in 2017.

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