Economic woes not the main concern

Sansiri's president Srettha Thavisin

Sansiri's president Srettha Thavisin

Sansiri’s Srettha says political conflict hurts sector far more

The chiefs of nine of Thailand’s leading property companies have been asked to share their views with The Nation’s readers on how they plan to survive the global economic recession. The series continues today with the second of the nine, Sansiri’s president Srettha Thavisin.

Sansiri’s president, Srettha Thavisin, is confident in the face of economic gloom - confident mainly in the strength of the managements steering the Thai private sector.

We learnt well in the 1997 crisis, and we know how to survive. What Thai business needs now is a stable government that is willing to help, and strong growth is assured, he said.

Are you concerned about how the global economic recession will affect Thailand’s economy and the property market?

Thailand’s economy has been suffering a negative impact from the global economic crisis since the last quarter of 2008, and there has also been a negative impact on the property market since last year.

This year, the negative impact will come when exports from Thailand to the US, to Europe and to other countries in Asia such as Japan, China and India, drop when compared to those of last year. When the export markets drop, that will have a negative impact on domestic earnings, which should also fall.

Thailand’s property market will receive an indirect impact from the global economic crisis when purchasing power to buy falls in line with the lower earnings of the people. Not only will the property sector be affected, but also the auto market and luxury products.

When you see the global crisis having this negative impact on Thailand’s economy and the property market, what is your business strategy for survival and maintaining your business growth?

The company is not concerned about it because we learnt from Thailand’s financial crisis in 1997. We strictly controlled the expansion of our investments after recovering from the 1997 crisis in 2000. We managed our cash flow and limited our borrowing from the bank, so that now, the company’s debt-to-equity ratio remains lower than 1:1.

“I am more concerned about the country’s political turmoil than the economy facing the negative impacts of a global slowdown”Meanwhile, since 2005 we have also had a business strategy of building our brand, to create band-value for our business. When some of the small- and medium-sized property firms have to suspend their business - because they cannot sail their companies through this crisis - we will benefit from it. Since last year, we have already started to see some small- and medium-sized property firms suspending their business. We will benefit because although demand for residential properties should be drop in 2009 when compared with last year, there will be fewer competitors in the market.

With our business structure, we can increase our share of the market by developing residential projects to match our customers’ demand. As a result we believe that our sales will continue to grow by up to 20 per cent this year, compared with 2008.

We have also set aside an investment budget of between Bt1.5 billion and Bt2 billion to buy undeveloped land this year, on which to develop future residential projects.

When purchasing power falls, we plan to adjust our residential projects to match with demand in the market by producing homes costing between Bt3 million and Bt5 million per unit. We plan to launch 16 new residential projects worth Bt10.8 billion in 2009. Three of these will be city condominiums worth Bt7.6 billion, located in Sukhumvit, Soi Aree and Thonglor. Seven will have townhouses worth a total of Bt5.5 billion, to be developed by a subsidiary, Plus Property. The six remaining projects will be single-family homes worth Bt7.6 billion in total.

The company expects to make presales of Bt20 billion next year, booking Bt17 billion of that in its revenue for the year. Our revenue target for this year is between Bt13 billion and Bt14 billion.

What about your business risks? Are you strongly confident that your business will have continued growth?

I am more concerned about the country’s political turmoil than the economy facing the negative impacts of a global slowdown.

At this time, most private firms are financially strong and they have the ability to manage their businesses through the economic crisis because most of them learnt from the 1997 financial crisis. We know what we can do to survive an economic crisis, but we don’t know when the country’s political problems will be solved, although we now have a new government led by the Democrat Party.

If there is to be more political conflict, then that will have a greater negative impact on our business than the economic downturn.

You can see that most businesses in Thailand maintained their growth last year, even though the World economic slump and the political turmoil drove Thailand’s economy down. Still, they recorded growth last year.

In my view, Thailand’s private firms have strong management. They learnt from the 1997 crisis how to drive their business growth, and they also have the key to drive the country’s economic growth, but they never got the government’s support.

2008 proved that Thailand’s private sector has management strong enough to drive the country’s economy, despite it facing both political turmoil and the global financial crisis.

If we get political stability and the government’s economic policies support the business sector, then Thailand’s businesses and property firms will have substantial growth.

About the author

Somluck Srimalee Somluck Srimalee
Somluck Srimalee is a journalist with The Nation, Bangkok's independent English language newspaper and specialises in the property and real estate sectors.
Other posts by Somluck Srimalee ( 34 )
Website: http://www.nationmultimedia.com

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