22 Dec 2016
Thai Building Management Sector Boosted by New ASEAN Opportunities
Although hampered by rising labour costs, the Thai facilities and property management sector has been bolstered by new government initiatives, growing eco-awareness and the huge opportunities opening up across the wider ASEAN bloc.
This year's Building Maintenance & Asset Management Expo (BMAM) showcased the latest technologies and innovations available in the facilities and property management sector. Among the many exhibitors making their way to Bangkok for this year's event were security, mechanical and electrical maintenance specialists, factory and machine maintenance companies, waste and pest treatment consultancies, experts in workspace management and an array of business service providers.
In a bid to jumpstart its becalmed economy, Thailand's government has implemented a number of far-reaching reforms, as well as introducing several hefty expenditure programmes, all of which are showing clear signs of having a positive impact on the property management sector. With urbanisation also a priority across the region, demand for buildings – as well as the ancillary products and services that support their construction and management – has increased. Understandably, then, the mood of the majority of exhibitors attending this year's event was somewhat upbeat.
One clearly optimistic attendee was Thanong Roke-ngamderm, Business Development Manager of Happyland International Security, a Thai security company. Acknowledging the positive impact of the government's policies, he said: "These state-run programmes are helping us to become more globally competitive. As more sectors have been stimulated to grow – and as more overseas businesses have set up offices in Thailand – we have seen increased demand for our services. This is particularly the case with government offices, universities and condominiums, which account for the bulk of our business. Although some organisations prefer using in-house staff rather than outsourcing their security and cleaning needs, overall demand still remains high."
Fitting out new buildings and upgrading older ones with state-of-the-art communications systems is also proving lucrative. With Thailand having one of the highest numbers of commercial and residential buildings in the ASEAN bloc, competition is fierce in the sector. According to the Thailand Facility Management Association, one of the lead sponsors of this year's event, Thailand is home to more than 140,000 factories and 50 industrial estates. In Bangkok alone there are more than 10,000 buildings with an area in excess of 1,000 square metres – all of which require upgrades to their technical infrastructure.
Explaining why so many buildings now need extensive refurbishment, Phuwadol Lertkarom, a Sales Engineer with PlanetComm Asia, a Thai provider of telecom services, said: "The digital economy has changed the way everyone does business. To remain competitive in the increasingly globalised marketplace, there's pressure on every business to go digital and to replace obsolescent systems.
"As a provider of digital data communication systems and high-speed internet to the corporate, government and enterprise sectors, we have seen demand grow hugely. Despite this, as competition is getting tougher, although our sales volume is increasing, our profit margins are reducing. Overall, though, there are opportunities out there and business is good."
Additional opportunities are also being spurred by the introduction of tighter regulations and a general need to deliver on cost savings. Expanding on this, Thatchawee Suwanpanya, a Sales Executive with Thyssenkrupp Elevator Thailand, said: "Due to the limited availability of space, buildings are now subject to far stricter requirements in terms of appearance and design. This trend towards higher quality, smart buildings – equipped with energy-efficient systems – has resulted in a number of new opportunities for us.
"While traditionally, for instance, every elevator installation required the provision of a machine room, in order to save on space and building costs we have created elevators that have no such requirement. This has proved a hit with architects and building specifiers as it simplifies their tasks. Many of our newer models are also quieter, safer and easier to maintain than the majority of their predecessors."
Thailand has not been exempt from many of the challenges facing property developers across the world, with both governments and consumers expecting high standards of ecological responsibility and sustainable planning, although not willing to pay a premium to secure them. One company confident that it can meet these expectations is Pacific Forest Products, a Singapore-headquartered producer of environmentally-responsible furniture products.
This year, the company was pushing its Onewood product line, a range constructed using a composite timber composed of natural fibres sourced from plantation trees, which is said to match the properties and technical specifications of tropical hardwood. Suitable as a substitute for natural wood, it comes impregnated with fire retardant chemicals and is also said to be termite-resistant.
Explaining just where its range fits into the market, Sharon Chang, the company's Business Development Executive, said: "Our products are not the cheapest, so we don't get involved in low-cost projects. In the construction industry, however, it still often comes down to costs, although demand for sustainable solutions is admittedly also on the rise.
"It is ultimately down to the architect and developer to decide where their priorities lie, but budgetary constraints tend to overrule everything. During the construction process, it is not unusual for notions of sustainability to fall by the wayside. In order to help address this, we are now encouraging businesses to build factories, invest in machinery and produce Onewood locally. This will make it less costly for everyone involved."
Another important driver of change in the industry is rising labour costs, which have partly been spurred by a number of government training initiatives that have raised the skills – and wage expectations – of many workers. Clearly struggling with the downside of a number of government progammes, Shashank Mesvani, Technology Manager of Singapore's Frontline Security, said: "One thing that is clearly having a huge impact on the market right now is the Progressive Wage Model. This was recently introduced by the Ministry of Manpower and has been enforced by the Police Licensing Regulatory Department.
"This initiative resulted in the creation of additional categories of security officer, while also introducing new qualifications that staff members must obtain in order to be employed as, for example, a Senior Security Officer. Naturally, the higher qualified an individual becomes, the higher compensation they expect. Inevitably, officers are now motivated to continually upgrade their qualifications. While this is clearly good for the industry as a whole, it does make things more difficult for us.
"We now have to source highly-qualified officers in accordance with each new standard and these are still in very short supply. As a result, we've had to revise our entire pricing structure. Fortunately for us, we've been able to meet our requirements, although some of our competitors are really struggling."
This rise in labour costs and demand for higher skills, however, has actually resulted in new opportunities for some companies, most obviously those offering cost-saving, non-labour-intensive technical solutions. The situation has clearly benefited Pegler Yorkshire, for instance, a UK-headquartered company specialising in the provision of heating and plumbing systems.
Keen to explain the advantages of using Pegler's product range, Joshua Collins, the company's Regional Sales Manager, said: "While much of the plumbing material and technology currently in use is quite basic, the installation times can be quite long, resulting in high labour costs. Our systems, though, have been developed to be time-saving and can easily be installed by relatively unskilled workers. This is why we see the steady rise in labour costs across Thailand and the rest of the ASEAN bloc as creating real opportunities for us."
"One problem for us, though, is that many of our competitors in the region are based in countries that enjoy free-trade agreements with China. As we are a UK manufacturer, we're disadvantaged to a certain extent. We try to get round this by highlighting the higher quality of our range in comparison to China-made products."
Another consequence of the overall drive for increased cost efficiency and improved staff performance has been increased demand for intelligent planning as a means of optimising the use of office work space. One of the relatively few specialists operating in this sector is People Space Asia, a Bangkok-based subsidiary of a long-standing British operation.
Jeeramart Isarankura, the Operations Manager of the Bangkok office, said: "A key problem for businesses is getting the most productive set-up possible in any space they have. This has seen increased emphasis placed on the effective use of resources and smart innovation, as well as strategic workspace planning and utilisation. Implemented properly, this all saves money, increases efficiency, raises productivity and delivers a higher level of employee satisfaction. A number of the larger multinationals, including Nestlé and Hewlett-Packard, have already recognised this and are already working with us."
For a number of exhibitors, part of Thailand's appeal lies in the access it offers to many of the other fast-growing ASEAN markets. Clearly aware of the potential benefits, Lertkarom said: "At present, we have clients in Malaysia, Vietnam and Laos, while Myanmar is our fastest growing market."
Pegler, too, is looking at the potential of the wider regional market, with Collins saying: "Aside from Thailand, our target markets are Malaysia, Myanmar, Cambodia and Vietnam. With all of these countries implementing major construction projects, we've hired more people to cover the region and have raised our local marketing budget by 50%."
Mesvani, too, believes that the wider region still has huge untapped potential, saying: "The Philippines' economy is booming, so we're looking there, while we're also looking to enter Malaysia, Indonesia and China. Thailand, though, is still a great market, which is pretty much why we are here."
The Building Maintenance & Asset Management Expo Asia 2016 was held from 21-23 September at Bangkok's IMPACT Exhibition Center in Bangkok.
Geoff de Freitas, Special Correspondent, Bangkok