• 
• 

The chiefs of nine of Thailand's leading property companies have been asked to share their views with The Nation's readers on how they plan to survive the global economic crisis.

The series continues today with the fourth of the nine, Asian Property Development's chief executive Anuphong Assavabhokhin

High-flying property firm Asian Property Development has entered 2009 in a defensive mood. It has suspended six major projects, will go ahead with other, smaller developments, but is generally waiting to see what happens.

Anuphong Assavabhokin, who regards his company's caution as proper prudence in the light of the suffering world economy, remains confident that business already in hand will see his firm sail safely and profitably through this year and 2010.

Q : How are you planning to manage your business when we face a global economic crisis?

The first thing we had to do was accept what was happening in the real world. Then we had to quickly study and research the situation to figure out whether or not our business would suffer a negative impact from the crisis.

We have accepted that we will have a hard time in 2009 sailing our business through the crisis. We have felt a negative impact since August last year, when we saw demand for residential properties begin to fall.

We began by talking to our staff because we believed that, in order to manage the business through the crisis, our staff had to be confident about their job security.

We also managed our cash flow by suspending the launch of six new residential projects beginning in August 2008, and we will wait and see what the conditions are like in 2009 before deciding whether to resume these projects this year.

We have also decided to focus on residential projects that generate faster returns on investment, rather than those that take time to generate income.

Following our cash-management policy, the new projects we launch this year will be low-rise residential developments such as detached houses or townhouse that take between six and eight months after presale to generate income. Condominium projects would take between one and a half and two years to generate income.

Q : Do you think this crisis will affect Thailand's economy and the property market like the 1997 financial crisis did?

A : In our view, this crisis will have a lesser effect on Thailand's economy than that in the 1997 crisis. When the economic bubble burst in 1997, Thailand's private firms had more debt - both Thai-baht debt and foreign debt - than they have now. In 1997, most of Thailand's private sector faced a debt burden and lost their business.

Thailand's private firms learnt from 1997, and as a result most of them are financially healthy. Most of them have a low debt-to-equity ratio. For this reason, we believe that the global financial crisis will not affect Thailand's economy or property firms as badly as the 1997 crash.

However, we have to accept that a recession is a recession. We have to manage our business to survive, by managing our cash flow and developing projects that generate quick returns on investment, rather than investing huge amounts of money in projects that take a long time to generate cash.

Q : What about your business plans this year?

A : We plan to launch new residential projects worth nearly Bt2 billion in the first half of this year, with a focus on low-rise projects such as detached houses and townhouses, rather than larger high-rise developments.

We have also suspended six new residential projects, including four condominiums and two low-rise projects, which were to be launched this year.

We have to be strict with our investment plans because we cannot estimate whether Thailand's economy will be seriously hit by the global economic crisis or not. We will hold on to our cash and choose to develop only those projects that will make fast returns, rather than those that take time.

Q : Will the launching of fewer projects this year affect your financial results?

Although we plan to make lower investments, this is not expected to affect our 2009 financial results. We have a current backlog of presold residential units that will be booked to revenue after construction is complete and they are delivered to customers. The backlog has a value of Bt15 billion, and this will appear as company revenue in 2009 and next year.

We also have an inventory of residences that are waiting for sale, including condominium units, detached houses and townhouses collectively worth Bt8.6 billion, and this is sufficient to generate this year's total revenue.

Our backlog and our inventory, when combined with new projects worth Bt2 billion, will be enough to give us business growth in 2009 and 2010. We don't need to make more investments this year if Thailand's economy suffers a serious negative impact from the global economic crisis.

However, if Thailand's economy remains healthy this year, with strong growth, we have enough cash to rapidly expand our investments, in line with our strategy of holding on to our cash and waiting for opportunities for business expansion.