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Published on February 20, 2008

The budget has been allocated amid concerns about rising inflation that has pushed up prices.

At the same time, there are fears that high oil prices could have an adverse impact on consumer spending.

Central Group's five key subsidiaries comprise Central Retail Corp

(CRC), which operates retail businesses; Central Pattana (CPN), a property firm; Central Marketing Group (CMG), a trading unit; Central Hotels & Resorts (CHR) and Central Restaurants Group (CRG).

Suthichai Chirathivat, executive chairman of Central Group, said the group was also studying investment in markets abroad, including China, India, Vietnam and Dubai.

"We started negotiating with a potential partner in Dubai to join us in projects. Discussions started two months ago," he said.

Domestic investment this year will be based on economic and political circumstances, he noted.

The group also estimates that private sector consumption and investment will start to recover this year, supported by improved confidence and a better political climate.

However, one key risk factor this year comes from a continuous rise in oil prices that could pressure some firms to reduce labour costs, thereby reducing purchasing power and hampering a recovery in private consumption.

Exports may fall as a result of a slump in the US economy, which could trigger a global slowdown.

Suthichai said CRC would spend Bt5 billion this year to complete retail projects such as Central Chaeng Wattana, Zen Tower on Rajdamri Road and Central Pattaya as well as new HomeWork stores in Phuket and Rajapruek.

 CPN will invest Bt6 billion in new shopping malls in Chaeng Wattana and Pattaya as well as renovating existing complexes.

CHR will allocate Bt3.5 billion this year for Grand Hotel at Central World, which will be officially opened midyear, as well as its hotel at Wong Amart Beach in North Pattaya.

Central Group executive director for finance Prin Chirathivat said major sources of investment funds this year would come from the firm's cash flow. He plans to seek new loans and issue property funds if the new government relaxes the 30-per-cent withholding rule.

CPN plans to issue a property fund worth Bt7 billion. CHR also plans to issue its own fund worth Bt4 billlion.

"We aim to achieve a total turnover of Bt103.6 billion this year to show a 9-per-cent rise from last year," said Suthichai.

Central Group recorded sales of Bt90.9 billion last year, representing 5-per-cent growth, which is lower than the 10.4-per-cent target set earlier.

The group had set an investment budget of Bt19 billion last year.

However, only Bt12 billion was spent by subsidiaries as some projects were delayed due to economic and political worries.

The overall economy last year was actually better than in 2006, due to strong exports and higher state spending.

Suthichai said the major cause of under-achieving targets was the higher cost of oil, which spurred inflation, battering the purchasing power of consumers.

Asked if the group would extend a lease with the State Railway of Thailand on its Central Lat Phrao mall that ends this year, Suthichai said the group had not yet received an invitation letter or details from related agencies.

Kwanchai Rungfapaisarn

The Nation