Published on August 24, 2007
Contacted by The Nation, Apichat Chansakulporn, managing director of President Agri Trading group - the country's fourth largest rice exporter which exported 179,000 tonnes of rice in the first half this year - refused to give details.
The Assets Examination Committee earlier launched an investigation into the company, due to the personal relationship between Apichat and former Commerce minister Watana Muangsook.
Watana came under fire when President Agri Trading won an export contract for 1.7 million tonnes of rice when he was in office. President Agri was also investigated for its connection with a company that won a government contract to build houses for the Ua Arthorn housing project, despite its lack of experience in construction.
The company reportedly owes unidentified amounts to many banks such as Bangkok Bank, Krung Thai Bank, Kasikornbank, BankThai, HSBC, United Overseas Bank (Thai), ACL Bank, Islamic Bank and TMB Bank.
Earlier, the Bank of Thailand told the banks to set aside extra reserves against loans to the company, saying the company was carrying huge business risks.
Sumeth Chailertvanichkul, deputy governor of Phichit, said he was informed yesterday by the province's Labour Protection and Welfare Department of the shutdown of President Agri Trading and President Grain Silo, its affiliated company, "due to working capital shortage and the country's economic slowdown".
The closure has put 198 workers out of a job.
The cash-strapped rice exporter will be fined by the Public Warehouse Organisation (PWO) for breaching a rice export contract, won in 2005 for the export of 700,000 tonnes of rice. Under the deal, the company had to remove all rice from the PWO's warehouses by August 17, and failing to do so, was to be fined Bt14 million a day.
A source from the Rice Exporters Association said the company has suffered cash-flow problems for a long time.
"The company expanded aggressively during the past few years because of its close connection with politicians. However, the coup changed everything. It is a pity," the source said, adding the silo was a high-tech operation for Thailand and had only operated for a short time.
Pipat Paniangvait, president of Thai President Foods Plc, said President Agri Trading Group was once its business partner through President Rice Products to form the high-tech rice silo under a 50:50 per cent joint venture.
The joint venture drew the support of President Rice Products to source high-quality rice to encourage its vermicelli production. However, the company withdrew from the joint venture in 2004, because when President Agri Trading exports increased dramatically, they discarded the business ideas of Thai President Food Group.
"It is a shame, because the silo should have helped develop the country's rice business, particularly for farmers, in terms of quality," he said.
Since 2004, President Agri Trading won its biggest share of rice bidding from the Commerce Ministry. It monopolised all rice bidding, totalling 1.7 million tonnes of white rice, in 2004. At the time, Apichat said the monopoly made the company a profit of Bt1 billion from exports.
In 2005, the company also won the biggest rice auction of 1.2 million tonnes, mainly focusing on jasmine rice, and the total rice export volume made the company Thailand's biggest exporter.