More Dragons for Phuket; Siam Makro expanding

– A daily digest of news about Thailand from around the world, compiled by Gazette editors for Phuket’s international community.

PHUKET: Dragon Air intends to increase services on its Hong Kong-Phuket route.

Cathay Pacific Airways, parent company of Dragon Air, says traffic to Phuket is robust with an average load factor of 90 to 95% over the past seven months.

“The airline is assessing demand and whether to increase [Dragon Air] flights into Phuket. Currently it operates 10 flights a week, after an additional three weekly flights were added a few months ago,” says Yongyut Lujintanon, Cathay’s sales and marketing manager for Thailand.

“We would like to serve the route double daily but we are not going to add another four flights in one step. Services will increase gradually, starting with an additional flight during the the coming winter traffic program.”

TTR Weekly reports this morning that 90% of the passengers on the Hong Kong-Phuket route are inbound, mostly from Hong Kong itself, Europe (connecting from the Cathay Pacific network) and China.

Since Cathay started flights to Moscow in July, the airline has also been flying growing numbers of Russians to Phuket.

Only 10% of the outbound traffic to Hong Kong comes from Phuket, mostly expatriate residents.

The Nation
Siam Makro, which opened its superstore in Phuket six years ago, is upbeat about penetrating further into Thailand’s provincial market next year.

“We’re ready to open stores to cover the country. We haven’t opened outlets in [our] 40 remaining provinces. If those provinces want us to set up stores, we will, but we have to secure permits before starting construction,” chief executive Suchada Ithijarukul said yesterday.

Siam Makro has opened three ‘cash and carry’ branches in the first half of this year, and a fourth will pop up in Nong Khai on September 29, bringing the nationwide network to 48.

But the company is not concerned even if it has no new stores next year, Suchada said. It can rely on the sales of its existing stores, as its new strategy is to focus on the hotel, restaurant and catering (HoReCa) segment.

“We can cash in on food products by adjusting the product mix of this segment. We believe the recovery in domestic tourism is a positive factor for boosting the performance of HoReCa,” she said.

The company posted 15% sales growth for the first half this year. It earned 904.26 million baht, up from 585.70 million in the same half last year.

The 5,500 square meter Phuket store, on Wichit Songkhram Road, was the wholesale giant’s 27^th branch in Thailand.

Nation / Bloomberg
Thailand has witnessed a continued increase in net capital inflows, expected to keep the baht on the appreciation path probably to a level unseen since 1997.

According to the Bank of Thailand, in July, net capital inflows were worth US$2.7 billion (84 billion baht), which went to all parts of the economy, including $987 million to non-bank businesses.

Mathee Supapong, director of the central bank’s domestic economy department, said inflows to the non-bank sector were either foreign direct investment or investment in the stock market. The banking sector attracted only $571 million, mostly short-term financing and some as investment in banking shares through the stock market.

London-based Barclays predicts the baht may strengthen over the next year to levels not seen since 1997, as accelerating growth encourages foreign investors to keep pouring money into the nation’s assets.

The baht could appreciate 1 per cent to 31 per US dollar over three months; 1.8 per cent to 30.75 in six months; and 2.6 per cent to 30.50 in a year, Singapore-based economist Rahul Bajoria writes in a recent research report. In January, he forecast that the baht would advance to 31.75 in a year.

“We expect the baht to enjoy continued trend appreciation, as the external position remains robust,” Bajoria wrote. “Strong inflows into local-currency bond and equity markets, along with current-account surpluses, should generate further upward pressure on the currency.”

The currency is also drawing support from government data showing that growth in gross domestic product in the first two quarters, at 12% and 9.1%, was the best since 1995.

According to the Bank of Thailand, the economy in July kept expanding, though at a slower rate than in the previous month. While private consumption, exports and manufacturing slowed because of sharp growth in the first half, tourism showed continued recovery.

In the month, Thailand welcomed 1.25 million visitors, up 14.9% year on year, while the hotel occupancy rate was 46.9%, compared with 37.3% the previous month.

The Nation
3G wireless broadband service in Thailand looks set to be dominated by incumbent telecom operators, which already have a firm foothold in the market.

Subsidiaries of Advanced Info Service (AIS), Total Access Communications (DTAC) and True Corp have emerged as the only three qualified applicants for 3G-2.1GHz spectrum licenses at an auction due to be held in Hua Hin on Sept 20.

The three are expected to compete fiercely, as the National Telecommunications Commission (NTC) will put only two of the three available 3G licences up for auction.

Four companies submitted applications yesterday, but one was found to be unqualified. AIS subsidiary Advanced Wireless Network (AWN) submitted its application soon after 9am, followed by DTAC subsidiary DTAC Internet Service and True subsidiary Real Move.

Suphan Buri-based natural-gas-for-vehicles car importer Win Win NGV submitted an application mid-afternoon, but it was later disqualified as it did not lodge the auction guarantee deposit of 1.28 billion baht at the same time. It submitted only the application fee of 500,000 baht.

The NTC required all applicants to place both fees on yesterday’s application submission date.

Phnom Pehn Post
Cambodian officials said yesterday that they would reject US$41.2 million in funding for a road project that Thailand reportedly pledged to resume last week as part of an effort to warm relations between the two countries.

Ministry of Foreign Affairs spokesman Koy Kuong said Cambodia would not accept the loan, as it had already financed the road project independently.

“We have not requested this loan, and we don’t need this money,” Koy Kuong said. “We are using our own budget to construct this road and the project is well under way.”

Koy Kuong’s comments marked a change in tone from his remarks on Thai financial assistance the previous day. When asked about the subject on Sunday, he said Cambodia “welcomes all forms of donations without conditions attached”.

Thai Deputy Prime Minister Suthep Thaugsuban said last week that the aid, originally promised last August to extend National Road 68 up to the Thai border in Cambodia’s Oddar Meanchey province, would be resumed in view of the countries’ now-normalised diplomatic relations, the Ban