According to a study by Chula Unisearch, there will be a severe oversupply of glass within three years in Thailand, unless much of the output from three new projects is exported.
The National Board o…
According to a study by Chula Unisearch, there will be a severe oversupply of glass within three years in Thailand, unless much of the output from three new projects is exported. The National Board of Investment has approved investment privileges for Thai Asahi Glass, a subsidiary of Japan“s Asahi Glass Co. and Siam Guardian Glass companies“ expanded production and for Siam Glass“s new factory. Thai Asahi Glass will spend 3.5 billion baht to make 182,500 tons per year of glass. Thai businessmen hold 60% equity and Japanese partners the balance. Siam Guardian Glass will outlay 3.3 billion baht to make 186,000 tons per year of glass. Thai investors will hold a 51% stake and US investors the balance. Siam Glass will spend three billion baht to make 180,000 tons per year of glass. Thais hold a 51% stake and British investors the balance. All three plants will be in Rayong. The demand for glass in 1995 totalled 307,485 tons and is forecast to rise to 322,100 tons in 1996, 358,660 tons in 1997, 378,360 tons in 1998 and 418,365 tons in 1999. If the new projects begin production in 1998, glass output will be 857,900 tons, bringing an oversupply of 470,540 tons in 1998 and 439,535 tons in 1999. However, the study indicated that Thailand would face a glass shortage of 26,000 tons in 1999 if all three projects had been rejected. If the new projects were required to export 50% of their output, the surplus would total 196,290 tons in 1998 and 165,285 tons in 1999. Industry Minister Chaiwat Sinsuwong, explaining why no export conditions were imposed for the three projects, said the Government wanted free competition in the glass industry. Thai Asahi Glass earlier asked the ministry to ban the new projects. Chamnong Panaschutabul, director-general of the Industry Ministry“s Industrial Economics Office, said he suggested that the board should impose export requirements on the new ventures to protect current manufacturers. Glass industry growth would be in line with that of the construction, automobile and furniture sectors of 8-12% per year, he said. Thailand“s annual glass output is now 522,950 tons. Siam Guardian Glass and Bangkok Float Glass Co. are required to export 50% (131,200 tons) of their output per year. Thailand should expand its glass exports as many countries in the region would face a shortage, he said. Annual demand in Thailand, Malaysia, Singapore, Indonesia, the Philippines, Vietnam and China is estimated at 5.8 million tons in 1995, compared with total output in these countries of 4.2 million tons. Thailand exported 80,000 tons of glass in 1992 and 160,000 tons in 1993. The study suggested that the Thai glass industry should gain strength to prepare for tariff reductions under the General Agreement on Tariffs and Trade. Tariffs on glass products are to be cut from 50% to 40% in 1996 and to 30% by 1997. Under the Asean Free Trade Area, tariffs on glass sheets will be cut to 25% and on floated glass to 15% in 1996. Siam Guardian Glass marketing manager Gris Gulnade said his company would complete its expansion within two years at Siam Cement“s industrial estate in Rayong. The company was not worried about the surplus because it would be exported. A Siam Glass source said his company already had a market in mind for its output. Thai-Asahi has also announced plans to build a second plant. Costing some JPY 10 billion (US$ 97.09 million), the facility will also be located in Rayong Province and is expected to come on line by mid-1997. This will double the firm“s annual capacity to 300,000 tons. Its existing plant in Bangkok is already running at full capacity. If the plant operated by Asahi“s other Thai glass venture, Bangkok Float Glass Co. established in 1989, is also included, group capacity will reach 450,000 tons. While Thai-Asahi and Siam Cement battle for the Thai market, imports are becoming a key factor in determining the course of the nation“s glass business.