TTM Stubs out Chiang Mai, Shifts Operations to Saraburi

Source from:  bangkokpost.com WICHIT CHANTANUSORNSIRI 08/20/2007

The Finance Ministry plans to seek cabinet approval to scrap a controversial plan by the Thailand Tobacco Monopoly to shift its factory to Chiang Mai. Instead, the state enterprise would invest in a new facility in Saraburi, said Deputy Finance Minister Sommai Phasee. "Within two or three weeks, the ministry will propose to the cabinet to change the TTM plan," he said. The Foreign Ministry would be asked to formally notify the Chinese company China Yunnan Corp (CYC) that the Chiang Mai plant was cancelled. CYC was selected under the Thaksin Shinawatra administration to build a new tobacco factory in Chiang Mai under a 17-billion-baht contract negotiated through a government-to-government barter deal with China. But the contract has been the subject of corruption allegations, with critics questioning the selection of CYC and its relative inexperience in tobacco production technology. The TTM has long planned on relocating its production facilities out of Bangkok, with the current plant off Rama IV Road next to the Queen Sirikit National Convention Center slated for redevelopment into a public park and commercial complex. Mr Sommai said relocating the facilities to Chiang Mai would impose considerable logistics and transport costs on the state enterprise. Saraburi, located just 200 kilometres from Bangkok, offered greater convenience and lower cost in terms of logistics, he said. This will be the third change in policy for the TTM. Before the Chiang Mai facility was proposed, officials had planned shifting the plant to Chachoengsao, a plan that was formally scrapped by the Thaksin government in 2004. Development at the Chiang Mai site, however, was delayed amid lobbying by business groups who wanted the government to restrict the Chinese company to constructing the factory building, with local firms procuring machinery from European suppliers. Of the 17 billion baht tasked for the project, 11 billion was earmarked for machinery and the remainder for construction costs. The TTM is now considering calling for new bids for the Saraburi plant. The Finance Ministry also wants the state enterprise to cut production specifications. Enditem