Mr Prachai Leophairatana
CEO of TPI Polene Public Company Limited
The purposes of the Association of Southeast Asian Nations (ASEAN )are to accelerate the economic growth, social progress and cultural development in the region through joint endeavors equality and partnership. Mr Prachai Leophairatana, CEO of TPI Polene Public Company Limited, shares his views on the launch of the ASEAN Economic Community and Thailand's target of 25% of supply from renewable sources.
With the launch of ASEAN Economic Community approaching, how do you see Thailand prepared for regional integration? What will the impact of the AEC be upon Thai business?
The idea and concept of the ASEAN Economic Community is very good, just like the European Union. If we were to establish a strong customs union it would be beneficial for Thailand but unfortunately there are many areas where things are not being implemented properly. First of all, we need to look at the principles of formation. The European Union has been successful by establishing as a customs union, and therefore all member countries benefit from agreements with the United States and other nations outside EU. The AEC will not provide these same benefits as the EU, it is more like the failed European Free Trade Areas (EFTA) lead by the U.K.. As a result Thailand and member nations of AEC will not benefit sufficiently in terms of boosting fair international trades because of insufficient negotiating power.
As you say, the AEC is a very different concept from the EU at present. Do you believe the level of integration required will be delivered over time?
I believe business needs to continue to lobby governments and show the policy makers what is required by business for this to succeed. In Thailand if we currently wish to export to the US we need to pay 15% import duty. However, Singapore, Laos, Cambodia and Myanmar don’t need to pay the same. We can’t say we have an economic union if there is not a level playing field between the member states. The AEC has the potential to be a very significant trading bloc, however we must form an AEC customs union and be on the same standing if it is to succeed.
Lets talk about the story of TPI Polene and the contribution of the company to the development of Thailand over the past decades.
We grew the company to become the biggest fully integrated petrochemical company in Thailand, which it was up until the Tom Yum Goong crisis hit the economy in 1997.
The history of the company went back to 1978, after I returned from studying at the University of Canterbury in New Zealand and U.C. Berkeley California in the USA. I was a lecturer here at Chulalongkorn University in Thailand. At that time Thailand only produced 320 engineers per year and the industrial sector was underdeveloped. It was clear the potential was there to build a leading petrochemical company in Thailand and piece by piece we started to build it.
Nowadays, we are one of the biggest cement manufacturers. Cement production has a negative environmental impact and we therefore need to do something to counter the CO2 emission. We are the leading company in waste management in Thailand. We take the municipal waste, separate it and convert part of it to fertilizer and partly to energy in order to counteract this environment impact. Thailand has liberalized the energy market and we are able to generate electricity and sell it to the grid. We now generate about 90 MW of power from waste.
Are you confident in Thailand’s current level of energy security? Particularly with the country looking to be positioned as the industrial hub, is the supply going to be sufficient to meet demand?
On the surface there would appear to be sufficient supply however we are overly reliant on gas imported from Myanmar. We rely on gas for 60% of our energy supply so if something was to happen to cut off that supply then we would be in trouble. Ideally we should diversify our supply and only rely on gas for 10 or 20%.
Can Thailand achieve the current Ministry of Energy target of 25% of supply from renewable sources?
Yes, we can certainly achieve that. At TPI Polene we already generate significant amounts of energy from waste. Thailand can also generate energy from solar and wind, if the government continues ahead with the current policies and in investing in hydro power we can achieve this target from environmentally sustainable source.
We also want to look at the wider issues affecting investment into Thailand. In your own opinion has the political turmoil of recent years affected Thailand’s attractiveness as an investment destination?
Politicians are just the managers of Thailand, if we look at the country like a company. The boss of that company would be the King. As long as he is there he provides stability even when the managers change over. The business community here always continues unaffected even during the political challenges. Thailand has great potential to grow faster. We have great natural resources, water, wind and manpower to grow the energy sector. Thailand is a prosperous country and can certainly increase growth. Thailand is surrounded by mountains and the sea up front, it has the best fung shui for a country! We have a great geographic location, it really is the best in the world. For trade opportunities, Thailand is positioned very well indeed.
How confident are you in the future of Thailand?
I am 100% confident in the future of Thailand. As I mentioned the geographic location is the best I have seen in the world. If the AEC is set up properly, to behave like the European Union, then Thailand can be the Germany of that economic union and be the hub of the region.