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Interview

Vietnam is 'top priority' for Siam Cement in coming years: CEO

Packaging adds to growth while cement and building materials lag, Roongrote says

"Our philosophy is that if our people are safe, then we can service our customer," Siam Cement Group CEO Roongrote Rangsiyopash says on his company's approach to managing crises like the coronavirus pandemic. (Photo by Masayuki Yuda)

BANGKOK -- Siam Cement Group, one of Thailand's top industrial companies, sees bright prospects for growth within Southeast Asia beyond its home market, particularly in Vietnam, CEO Roongrote Rangsiyopash says.

"I think, at this point, Vietnam. Maybe secondly would be Indonesia," Roongrote told Nikkei in an interview when asked about the group's priority markets.

SCG, which expanded net profit by 7% last year despite a similarly sized drop in revenue, expects its cement and building materials business to need more time for a recovery than do the group's chemicals or packaging segments, the chief executive said.

Once a Vietnamese petrochemicals plant comes online, the company anticipates that revenue from Southeast Asia excluding Thailand will rise to 35% of the total from the current 26%.

Edited excerpts from the interview follow.

On which countries SCG is emphasizing:

A: You can see that most Asian countries do quite OK in terms of fighting COVID. And Asia is relatively young. However, Thailand is relatively old.

So my expectation is that the growth of ASEAN markets, ex Thailand, will continue to be better than the Thai market. And you know that there's a trend of localized [production] within the region. That's the strategy we are seeing within this region; that will be the focus for us. For the next few years, I foresee that Vietnam will be our top priority.

Cement still accounts for about 30% of Siam Cement Group's business.   © Reuters

On Southeast Asia's COVID-era economy from the perspective of the materials industry:

A: Obviously, with our businesses, some are impacted and some are really not that much affected [by the pandemic].

Chemicals is about half of our business. Cement building materials is about 30%, and the packaging business is the new one. We just did an initial public offering [for SCG Packaging] last year. That is about 20% of our business.

[In chemicals,] we supply automotive part makers as well. That did not do that well when COVID started. Car sales dropped significantly. You had electrical appliances sales actually drop. So that part is impacted. The part doing well is supplying for hygiene products like masks.

On the benefits of stay-at-home consumption:

A: You see the development of food delivery. They have come up with a lot of packaging. They came up with a box-up type, and then a small one for fish sauce. Then a small one for dry chili, a small one for sugar. Then they have a very small mini box. That one is for chili paste. So that's the part that drove the sales of the chemicals besides all of the hygienic products and so on.

On the outlook for cement and other building materials:

A: That's the one most affected, because with COVID, people are not so sure about their income. The purchase of homes and condominiums actually stopped.

Thailand relies a lot on tourism. Coming with tourists are the investors in property. Chinese investors come in and buy. A lot of the condominium market slowed down because of no pushes from the foreign buyers.

On pandemic-related delays:

A: We have several projects ongoing, some big ones like a chemicals complex in southern Vietnam. That one, fortunately, has had no impact [from the pandemic].

[One project affected was] expansion of recycled paper for packaging in the Philippines. That one got stopped because of a complete lockdown, no work for several months. Now, they resumed. We have a few months of delay. That's expected to be completed in the next six months.

We have been able to manage, partly because our group got lucky. You remember there was flooding in Thailand in 2011. Since then, we have implemented what we call BCM, business continuity management. That part is actually the reporting to me.

Our philosophy is that if our people are safe, then we can service our customer. In order for the company to survive, we have to be able to service the customer.

On when the business will return to normal:

A: That's a difficult question. The pandemic is still around, but I think that we have started to see the light at the end of the tunnel.

The expectation is that with the vaccines, the situation should improve. It might take years before we can vaccinate everyone in the world. But at least we can control the situation.

With this in mind, I will say that it might take a while. But again, it also depends a lot on the industry. For chemicals, I don't think they will be affected that much, vaccines or no vaccines. For packaging, I expect that growth will continue, particularly in the e-commerce area or food packaging.

On Myanmar:

A: We are monitoring the situation on (post-coup) Myanmar closely. We have a factory for cement in Myanmar, but we [have] had an ongoing legal issue with the local partners since last year. So now the factory is temporarily stopped. We hope that we can resume [operations] soon.

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