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New CEO at SCG seeks surge in region

May 03. 2016
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THE NEW chief executive of SCG, Roongrote Rangsiyopash, wants his industrial group to match or surpass the market growth rate in Asean countries outside Thailand, where the chemical-building materials-packaging group has underperformed in the past.

While maintaining the two main strategies that his predecessor, Kan Trakulhoon, announced a decade ago – to “go Asean” and “go for higher value-added products” – the Harvard-graduate CEO spoke of the need for SCG to hasten the conglomerate’s speed of execution and enlarge its businesses fivefold in Asean markets outside Thailand.

“[SCG] hopes to grow faster than or at least equal to the market, and with quality growth. By [sales] volume, last year we grew by 3-5 per cent, [but] if considering the Asean economies, they expanded by about 5 per cent,” he said.

While Thailand accounts for about 10 per cent of the Asean population, and about 20 per cent in terms of gross domestic product, only 10-12 per cent of SCG’s sales are derived from other Asean markets outside the Kingdom, he added.

“This [contribution from other Asean markets] must become 70-80 per cent. [This means] we have to grow five times [in these Asean markets],” the chief executive said.

In his first formal media interview since taking the helm at the start of this year, Roongrote admitted he was worried about the end of the uptrend cycle for the petrochemical industry, which is expected to come in the next two to three years.

SCG’s chemicals business contributed Bt9.1 billion out of a total Bt13.6-billion net profit that the group reported for the first three months of the year.

“This [the end of the petrochemicals uptrend] is something we should be worried about,” he stressed.

Roongrote said he believed, however, that SCG’s cement and building-materials business could find large room for further growth in the region, which is massively expanding its infrastructure investments.

Moreover, SCG’s packaging business could also grow well in the next five years, thanks to its recent decision to shift focus to end-packaging products and to unlock its material usage from pure paper-based packaging, he said.

Petrochemicals business, meanwhile, can also be developed to grow further with the Long Son petrochemicals complex project in Vietnam, and new capacity expansion and new-product projects to be carried out by PT Chandra Asri Petrochemical, its 30 per cent-owned joint venture in Indonesia.

The neighbouring markets of Myanmar, Laos and Cambodia, which share their land borders with Thailand, possess greater potential than he had previously thought, and also offer a huge opportunity for SCG to expand its logistics services business, Roongrote said.

Siam Global House, in which SCG holds a 30-per-cent stake, will be a vehicle for SCG investments in the region, he added.

The group will also study opportunities to expand to Southern China, which has a larger economic size than the whole of Thailand and where goods can be shipped inland from Thailand through Laos and Myanmar.

On the research and development front, Roongrote said the budget and number of researchers would be less important than the speed and quality of its R&D outputs.

The group’s next move in R&D is to make it become more customer-centric, through engaging more marketing and sales people in the R&D processes, he said.

Since competition in Asean markets has intensified with more regional players and the participation of global players in some of the industries in which SCG operates, the group has to beef up its R&D and its people’s capabilities to become world-class as well, he stressed.

The new SCG chief will have a maximum of eight years in post, as he reaches the retirement age of 60 in 2024.

SCG reported sales revenue of Bt110 billion for the first quarter, a flat year-on-year result due to the slide in petrochemical prices, which came down in line with oil prices.

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