TPIPP chief Prachai pushes environmentally friendly ESG principles for next generation to build up business

From the animal-food and rice export businesses, Prachai Leophairatana and his family ventured into petrochemicals in 1978, driving his business forward to become the first complete petrochemical one in Southeast Asia.

Prachai is the chief executive officer of TPI Polene Power Public Company Limited, or TPIPP.

He said his life in the business field took off when he resigned as a professor at the Faculty of Engineering at Chulalongkorn University, where he was one of the most experienced in electrical control systems.

His expertise gained ground when he received a scholarship to study engineering at the University of Canterbury, New Zealand, in 1961. He also earned a master’s degree in electrical engineering from the University of California, Berkeley.

“After that, my father said that I knew engineering but I had no knowledge in trading, so I resigned to work in the rice exporting business,” Prachai said. “I ventured into exports of corn, cassava and animal food, while also becoming the largest rice exporter in the world at that time,” he claimed proudly.

In those days, his family owned a host of businesses including textiles and food. However, they decided to quit the food business because they were not comfortable with having to kill a large number of pigs.

They decided to start a petrochemical business in 1978 because Japan could not operate a petrochemical one in Thailand. The company that received authorisation had stopped operating a petrochemical business in Si Racha.

Prachai’s family sought authorisation, which was approved by then-prime minister Kriangsak Chamanan because he thought that Thai people must have a pride of place in the industry. He believed they could handle the bsusiness successfully even if the Japanese abandoned it.

“I was 34 years old at that time. My younger brother was the first Thai to graduate with a doctor’s degree in petrochemicals at the Massachusetts Institute of Technology. Both of us decided to start off by importing liquid ethylene. Then-prime minister Prem Tinsulanonda fully supported us and the government announced surcharge measures to support manufacturers in the country.”

After that, then-prime minister Chatichai Choonhavan also fully supported the manufacturers by increasing the tariff barrier to 20 per cent because polyethene plastic was imported at a low price at the time.

The brothers expanded their product lines to other goods and they eventually built an oil refinery. But then came along the 1997 Asian financial crisis and their business was hit.

Prachai even claimed that businessman George Soros contacted them via Goldman Sachs to buy a large number of dollars, but they refused. At that time, Thailand had only $30 billion in foreign exchange reserves, which was expected to run out in a short time if the country allocated $5 billion to $10 billion in investment each time.

“We had enough credit but it was like we were robbing our country, so we refused. They immediately looked at us as the enemy and asked every bank to take money from me, which some big banks did. I then had no money left so I sold our machinery as metal scrap as soon as it reached the port. I was in trouble because many banks did not lend me money. It was the toughest moment in my life. Finally, I got money to build a complete petrochemical business during the crisis. I could do this because of pre-order sales and received good credit, so we gained more buyers. We had more than 10,000 trading partners at that time,” Prachai explained.

He then looked for a way to pay the money back to creditors. He issued “cement tickets” in the same way as government bonds. It took him 10 years under debt restructuring to take his company back. However, his petroleum company TPI had already been seized so he got back only his plastics factory in Rayong, along with a cement factory.

Consequently, he focused solely on profit because he had recently graduated.

After that, he had a new paradigm – corporate social responsibility, or CSR.

Most recently, he had another new paradigm – environmental, social and corporate governance, or ESG, which led to TPIPP focusing on sustainable development.

The past 10 years saw a lot of discussion that TPIPP’s cement factory was emitting too much carbon dioxide, so the company adapted, changing its energy and production in the following ways:

1. Producing hydraulic cement by reducing the proportion of cement and using limestone instead.

2. Producing green concrete by putting 25 kilogrammes of carbon dioxide in each tonne of cement to make it stronger.

3. Using biowaste instead of coal to produce energy.

“We developed our organisation to move in line with ESG principles. We have cut down the use of coal by 40 per cent and reduced our carbon dioxide emissions by 6 million tonnes per year. We also have [one of] the largest waste-to-energy plants in the world and we will develop all our coal power plants to achieve a carbon dioxide emission reduction of 18 million tonnes per year,” Prachai said.

Recently, Prime Minister Prayut Chan-o-cha invited TPIPP to invest in southern Thailand – an area lacking investors because of the state of terrorism there.

Prachai had one condition – that the government sector must be responsible for “carrying out everything related to investment”.

The Cabinet subsequently approved the Chana power plant project in Songkhla. It will be able to generate 3,700MW of energy by using 1,700MW of gas, 800MW of solar power and 1,000MW of wind energy.

However, there has been a problem in the execution phase, especially applying for a permit from related organisations even though the project might support investment in new businesses and solve the electricity problem in the South.

Moreover, the company had planned to develop the oleochemical industry, which would use palm oil for various products instead of only frying oil. This would increase the value of palm oil and be in line with ESG principles.

“I hope the prime minister will allow further execution of the plan as the Cabinet has approved the proposal before, so the project will be completed in 10-15 years. This project will pass the business over to the next generation to operate in line with ESG,” Prachai said.

Previous experience has taught him how to prepare his body and mind. “The mind must be made strong first by meditation, because who reaches dharma will think quickly.” To be physically fit, he exercises by walking regularly and having a balanced diet.

“I will not suffer from Covid-19 because I have already prepared Bio Knox medicine and have wrapped up my work,” he believes.

“As for advice for the business sector, I would say that if you have THB1 million in property, you must also have THB1 million in cash. You should have at least 50 per cent of property in cash so you do not have to take a loan from banks.”

He compared the Covid-19 crisis with the Tom Yam Kung crisis, which hit even the rich. However, the baht had weakened, leading to an increase in exports of agricultural products. About 70 per cent of the population was not affected by the Tom Yam Kung crisis. However, during the Covid-19 crisis, the rich have largely not been affected, but less well-off people have been impacted by the lockdown measures, leading to unemployment and forcing them to use up all or most of their savings.

Now, an easing of lockdowns is helping people go back to working normally, while organisations need to strictly abide by health measures to remain open and move forward.