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BANGKOK — Thailand’s largest retail property manager believes that business will improve in 2008 because of rising consumer confidence after the election last month that seeks to restore democracy for the first time since the September 2006 military-led coup.
“We’re quite confident of the new year,” said Sakorn Thavisin, senior manager for corporate communication at Central Pattana Public Co., also known as CPN, Thailand’s top retail property developer. “We believe the new government will boost the confidence of the consumer and investment and spending.”
Although retail spending slowed in 2007 as the economy weakened under the military government’s leadership, CPN is pursuing plans to build four retail centers totaling more than 8.6 million square feet on the outskirts of Bangkok at a cost of about $118 million. Retail spending increased between 4 and 5 percent last year, almost on par with growth in 2006, but down from 2003 through 2005.
The company, which manages 23 percent of the retail space in Bangkok, or about 7.4 million square feet, said it expects its 2007 revenue to increase 20 percent, primarily because of the 2006 opening of CentralWorld, a shopping center in the heart of Bangkok’s retail district.
The 6 million-square-foot center is fully rented and is drawing 150,000 visitors daily, meeting expectations, Thavisin said. Holiday traffic last year was 50 percent more than in 2006, he said, and average spending by visitors was about $175. To boost visits, CPN spent more than $1 million in advertising and marketing campaigns in the fourth quarter.
The promotions, which began Nov. 13, included Elle Fashion Week Autumn/Winter, a midnight sale and a Disney promotion. Christmas decorations on CentralWorld’s plaza included a seven-story Christmas tree billed as the tallest in Bangkok. The display clogged foot traffic on the nearby skywalk as Thais and tourists stopped to take photographs.
“Maybe our increased traffic is because of the election, or maybe it’s because of the holiday, but we have a government after a real election and things should get better,” Thavisin said. “We believe the new government knows the rules and next year will be a good year.”
The People’s Power Party, which is closely aligned with ousted Prime Minister Thaksin Shinawatra, won 233 seats in Thailand’s 450-seat parliament. Its leader, Samak Sundarevej, is negotiating with other parties to form a coalition government. Talks were suspended on Wednesday because of the death of Princess Galyani, the sister of King Bhumibol Adulyadej, and the beginning of a nationwide 15-day mourning period.
This story first appeared in the January 4, 2008 issue of WWD. Subscribe Today.
Sundarevej is expected to be prime minister if his party forms a majority coalition. He has said he will pardon Shinawatra of corruption charges made against him by the military government. Shinawatra, who is in self-imposed exile in Hong Kong and London, said he plans to return to Thailand in the spring and recently invited the generals to play a round of golf in a gesture of reconciliation.
However, Somphol Manarangsan, a political economist at Bangkok’s Chulalongkorn University, said the economy won’t improve unless the new government focuses on the economy rather than politics.
“Thai voters are most worried about the economy,” Manarangsan said. “Yet most of the political parties are focused on politics.”
Kobchai Chirathivat, CPN’s president and chief executive officer, said in a statement that the company was looking to expand to India and Vietnam.
“CPN remains confident in Thailand’s economy and infrastructure,” he said. “We believe the economy will begin to pick up [this] year.”
Consumption increased about 1 percent in 2007, he said, compared with growth of 4 to 5 percent the previous year. He predicted consumption would grow more than 1 percent in 2008.
Suttatip Peerasub, a retail analyst with Kim Eng Securities in Bangkok, acknowledged that Thailand’s economy suffered in 2007 under the military leadership.
“With the election, consumer confidence will gradually come back,” she said. “Sentiment has been quite poor and retailing slowed in 2007.”
The Bangkok-based Kasikorn Research Center released a report on Tuesday urging the new government to stimulate the economy by boosting consumer spending and private investment since exports could slow because of sluggish worldwide economies.
The Bank of Thailand tried to manage the lackluster economy in 2007 with two interest rate cuts. Alistair MacDonald, head of research at Macquarie Securities in Bangkok, said there is evidence that the cuts boosted consumer spending. He declined to predict whether the still-forming government would positively influence the economy, but said, “We’re hoping the easing monetary policy and a return to democracy will help the economy.”