Thailand Tobacco Monopoly gets go-ahead for B16bn plant in Ayutthaya

Construction News

The Thailand Tobacco Monopoly (TTM) has received cabinet approval to use its own funds to construct a 16.2-billion-baht factory at an industrial estate in Ayutthaya province.

The board of the state enterprise approved the purchase of land in the industrial estate in August last year. TTM so far has spent 679.11 million baht out of an approved budget of 877 million for design consulting fees.

Deputy government spokesman Vachara Kannikar said the cabinet also approved a Finance Ministry proposal to cut TTM’s contribution to the national treasury in fiscal 2012.

At present TTM contributes 88% of its net income to the treasury.

The ministry reasoned that although TTM is profitable, it has limited access to funds since some financial institutions do not want to lend to tobacco companies, and some institutional investment groups have similar restrictions.

Business risk as a result of competition with foreign cigarettes is also a concern of financial institutions.

The Asean Free Trade Area (Afta) required members to cut tariffs on tobacco products to zero in January. TTM still has an 80% share of the local cigarette market.

The government first began talking about moving TTM out of Bangkok in the mid-1990s. TTM has been seeking a location for a new factory since 2007 to replace its existing site in a park-like setting off Rama IV Road, one of the most highly coveted pieces of real estate left in the centre of the capital.

It earlier planned to locate the factory in Chachoengsao but later changed to Chiang Mai, for closer access to raw materials.

But due to its long distance from Bangkok, its major market and distribution centre, TTM management last year decided on the Rojana industrial estate in Ayutthaya.

As of the end of last year, TTM reported 19.3-million-baht assets, 1.65 billion in liabilities, 17.7 billion baht in capital, and 10.6-billion-baht accumulated profit with 5.8-billion-baht net profit.


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