Thailand: Rising To The Challenge

Thailand has weathered its fair share of impacts—economic and otherwise—over the past quarter century, but the country has repeatedly proved its resilience during challenging times as well as its ability to re-emerge into a position of strength.

The pandemic has impacted countries all over the world, and each nation has been faced with its own unique challenges across various sectors. In Thailand, the tourism industry, which usually represents approximately 20% of the country’s GDP, has been hit particularly hard.

Goods and services exports, another of the Thai economy’s cornerstones at about 60% of GDP in 2019, was also significantly affected initially. However, the sector has since recovered, spurred by the weakest baht level in three years, to achieve 43.8% year-on-year growth in 2021—the largest increase in 11 years, according to the Kasikorn Bank Research Center.

In terms of direct foreign investment, supply chain disruptions brought on by the pandemic have encouraged foreign investors to move from China-centric to more regionalized production, and Kasikorn expects inflows to Thailand to increase by 0.7% to 0.8% from 2021 to 2022.

Moreover, in July, the Asian Development Bank estimated that Thailand’s GDP will grow by 3% in 2021 and 4.5% in 2022, so the outlook is improving as the world begins to see light at the end of the pandemic tunnel.

Despite the headwinds of the past two years, some sectors and companies have continued to fulfil their growth ambitions, as this special supplement highlights.

The German digital security company cyan recently chose Thailand as their first step in entering the Asian market, forming a partnership with Thailand’s leading mobile network operator to provide cybersecurity for mobile users.

Thailand’s PTT Global Chemical, meanwhile, has pressed forward with its global expansion, acquiring Germany’s Allnex Holding in a landmark €4 billion (US$4.75 billion) deal that significantly expands the state-owned company’s international reach, as well as its production and product development capabilities.

After a period of global gloom, it seems that a new, and hopefully improved, normal is emerging. Mass vaccination is key to winning the battle against Covid-19, and Thailand is striving to achieve this despite some initial difficulties. As of late August, medical authorities in Thailand had administered more than 28 million doses of the vaccine, and as the supply increases dramatically in the last four months of 2021, the country should be able to reach its goal of vaccinating more than half of its population by the end of the year.

In fact, Thailand’s well developed sense of community served the country well in minimizing the impact of Covid-19 in the first year of the pandemic, bringing the infection rate down to less than 10 per day for more than three months in 2020. Despite the recent uptick in third wave infections, Thailand is ready and able to rise to the challenge, and to step forward confidently into post pandemic prosperity.

A Landmark Deal

With its €4 billion (US$4.75 billion) acquisition of Europe’s Allnex Holding GmbH in July, Thai petrochemical giant PTT Global Chemical has become a competitive and sustainable major player on the international stage.

Kongkrapan Intarajang, Chief Executive Office

Primed for Growth

PTT Global Chemical Public Company Limited (GC) is Southeast Asia’s leading petrochemical and refining company, and a subsidiary of state-enterprise Thai oil and gas company PTT Public Company Limited. The petrochemical division became a separate entity about 30 years ago, and transitioned into its current form as GC in 2011, showing steady growth ever since. The company was ranked 19th in the top 100 Chemical Companies by ICIS (Independent Commodity Intelligence Services) in 2019 and also ranked number one in the world for sustainability in the Dow Jones Sustainability Indices (DJSI) chemicals sector in both 2019 and 2020.

Since 2011, GC has made several domestic and international acquisitions, with an approximate total value of US$800 million. Now, GC is moving ahead with a major international expansion, acquiring European specialty chemicals producer Allnex Holding GmbH through subsidiary company PTTGC International (Netherlands) B.V. for €4 billion (US$4.75 billion) from private equity firm Advent International.

This acquisition has significantly increased GC’s high-value chemical production capability. It also takes advantage of numerous synergies between the two companies, which facilitates greatly expanding their range of products, markets, customer networks, efficiencies, quality of earnings, and sustainability.

A Blueprint for Success

According to GC’s CEO, Mr. Kongkrapan Intarajang, the acquisition process began a few years ago. “We looked at mega-trends in the chemical industry and what sectors would be beneficial to go into. It was clear that, over the next 20 years, products will have to fit into a different set of needs related to urbanization, renewable energy, and many other future factors. Our products going forward had to have a good future.”

He continues: “With GC’s commodities background, the obvious targets would be specialty chemicals, where there are fewer players, more barriers to entry, higher margins, and more stable prices than commodities. A prospective company for GC would have to be strong in product development, technical knowledge and co-creation with customers.”

As GC narrowed its search, they looked at high performance polymers and coating resins producers. allnex was not only the world’s number one global producer of coating products, it also had a solid track record of growth, more than €2 billion (US$2.37 billion) in annual revenue, and had weathered the pandemic very well. The company has 33 manufacturing facilities, two dozen research and technology support centers and joint ventures in five continents—which would considerably expand GC’s current reach.

“allnex was also feasible to acquire,” Mr. Kongkrapan said. “The owner was a private equity firm that had spent eight years building it up, so it was time for them to sell and move on. It is an excellent match. We occupy different spaces in the market and there is zero competition and duplication, so our coming together creates synergies across the board. allnex is contented to join us, and they have already received excellent feedback from their customers.

“With €2.7 billion (US$3.2 billion) in cash reserves, having just sold a 12% share in PTT Public Company Limited’s subsidiary power company Global Power Synergy Public Company Limited (GPSC), and a debt-equity ratio of 0.3, GC is in an excellent position for such a large purchase.

Three Steps to the Future

GC has a clearly formed vision for its future. The company’s approach boils down to a three-step strategy: 1. Step Change, 2. Step Out, and 3. Step Up.

“Step Change” involves enhancing competitiveness and continued investment to create high-value-added products.

“Step Out” concerns the company’s global expansion, targeting better quality earnings, fewer competitors, and more specialized products—which is where allnex fits in very well.

“Step Up” means constantly pushing forward with GC’s already successful sustainability practices.

“These are integrated into all aspects of our business. We have been ranked number one in the world for sustainability these past two years, but we can see that the future will demand more to maintain our position as a leader in sustainability, so we have to stay ahead of the game. It is a major goal, for example, for us to work toward zero carbon emissions by no later than 2050,” Mr. Kongkrapan said.

“We have to balance between economic, social, and environmental factors—a challenge in the chemical industry. So we have embarked on the ‘circular economy’ approach of making more durable or, conversely, biodegradable products for reuse and recycling, using fewer resources in production, and offering cleaner options to our customers and consumers while still being predictable to stakeholders,” he said.

Creating a Sustainable Legacy

For the next decade, the company’s goals are to create a more resilient portfolio, to move away from reliance on commodities production, and to develop a much larger international footprint. Acquiring allnex has more than doubled the company’s global presence, which spreads its eggs throughout many more baskets.

“We will continue to be a leader in sustainability—this is very important to us. We will commit to a practical and aggressive net zero plan and announce details in the near future,” Mr. Kongkrapan said. “It is one thing to say this, but it takes effort and focus to set in motion. In the next ten years, we must leave a legacy that our successors can embark on and continue to implement into a long-term and sustainable future.”

A Leader In Cybersecurity For Mobile Devices

Frank von Seth, CEO of cyan, explains why the company’s partnership with Thailand’s leading mobile network operator is important for their Asian ambitions.

Creating Peace of Mind

Smartphones have become an integral part of not only our daily lives but also our identities, defining the way we communicate, store valuable data, and receive information. It is therefore vitally important that our devices are secure and protected from cyber threats such as malware and phishing.

One of Europe’s leading cybersecurity providers, cyan Security, is at the forefront of safeguarding mobile devices and their users from digital threats. Since launching in 2006, cyan has built an enviable reputation for giving its customers competitively priced peace of mind online.

The company achieved a new milestone recently when it secured a partnership with one of the fastest growing mobile network operators (MNOs) in Thailand. Under the partnership, the MNO and cyan, along with cyan’s representative in Thailand, Dr. Reckendorfer & Partners (DR&P), will work together to provide cutting-edge cybersecurity solutions to the Thai MNO’s customer base.

According to cyan’s CEO Frank von Seth, this MNO is the perfect partner for cyan because it has a strong focus on providing innovative products to a young, successful, urban demographic in Thailand. “As a technology leader in cybersecurity, this is a fantastic opportunity for us to launch in the Thai market with a successful operator that cares about the security of its users,” von Seth says.

Thailand Digital Market Focus

As a fast-growing digital hub, Thailand is one of the most tech-savvy markets in Asia, with a smartphone penetration rate of over 73% and a flourishing market for high-end mobile devices, with more than 16.5 million smartphones sold in 2020. It also ranks high in terms of social media usage and the volume of digital transactions processed each day.

Currently, Asia is the smallest revenue contributor to the group, reveals von Seth, but this is expected to change over the next five years. “Asia is a very significant market for us with immense growth potential. The region is expected to contribute about 40% of the group’s revenue in five years, followed by the US [35-40%] and Europe [20-25%],” he says.

“Modern Asians are tech-savvy and understand the need for cutting-edge security solutions that they can trust and rely upon. A protective ‘digital armor’ from Europe is exactly what they’d choose,” he says, adding that the latest Thai MNO partnership is an opportunity for the company to strengthen its presence in Thailand, and therefore in the Asia market.

“Together with our partner for the ASEAN region, Dr. Reckendorfer & Partners, we closely monitor the landscape and have established ongoing contacts in the region. In fact, we already have a few deals in the pipeline,” says von Seth.

A Mass Market Solution

As von Seth explains, cyan began targeting mobile carriers a few years ago, a strategy that enables the company to penetrate a huge addressable market. Mobile carriers from around the world that have already partnered with cyan to protect millions of mobile users from cyberthreats include Deutsche Telekom, Orange, and Claro Chile, a member of the América Móvil Group.

Cybersecurity solutions tend to be large and complex, says von Seth, but cyan has designed its offering in a way that allows mobile carriers to easily deploy the service and protect their customers seamlessly.

One of the key reasons cyan wins the trust of telecom companies is the simplicity of its solutions. With the Thai MNO for example, the cyan security solution will be integrated into the MNO’s existing app, which customers already have on their smartphones. The users therefore don’t need to download any additional applications, and can easily activate the security system in just a few clicks. “Our mission is to simplify complex cybersecurity solutions and make state-of-the-art technology available for the mass market at an affordable price,” says von Seth.

The cybersecurity partnership between cyan and telecom companies usually comes in two stages. The first stage sees cyan providing customers with protection from online threats whenever they are on the carrier’s network. The second stage involves providing protection to customers’ devices— even when they are not on the carrier’s network—at an affordable subscription fee that is shared between cyan and the carrier.

“We believe in the market potential in ASEAN and are ready to invest further. It’s a win-win-win situation based on a profit-share model,” says von Seth.

“With offices in Singapore, Hong Kong, Thailand, Vietnam, Taiwan, and other ASEAN regions, we provide industry insights and local market support, 24/7,” adds Wolfgang Reckendorfer, Chairman of Dr. Reckendorfer & Partners.

Expanding Beyond Telcos

As part of cyan’s growth strategy, von Seth knows that it cannot be solely reliant on one industry or sector. It needs to have a more diverse pool of partners and customers.

Therefore, besides geographical expansion, cyan is looking at other growth areas such as Internet of Things (IoT), automotive, insurances and more. Another aspect of their growth strategy includes the development and market introduction of their own security app for end-users.

“Today, anything and everything that comes with a SIM [subscriber identification module] card can be prone to cyberattacks. We believe our solutions can play an important role in the future of protecting all of these devices,” says von Seth.

“In the past, most of the attacks were targeting companies and organizations. Today, we are seeing an increasing number of attacks against individuals. By just mistakenly pressing a button on a harmful website, cybercriminals could have full access and control to your phone, and the only way you can gain back control of the phone is to pay a ransom,” he says.

“Yes, the internet has potential dangers, but we are here to shield you from those, so you can have a worry-free digital experience.”

Jump to an article