Dow Chemical to boost its investment in Asia

Dow Chemical to boost its investment in Asia

NEW YORK (Reuter): Dow Chemical Co is on track to invest $200- $300 million in Asia during the rest of the decade and boost its sales in the region to 20 percent of the company's total from 10 percent in 1995.

Andrew Liveris, president of the company's Asia-Pacific operations, said in an interview that Dow viewed the region's currency crisis as a one to two-year adjustment, which would usher in a new "healthy phase" of growth.

"This crisis will result in more opportunities for foreign producers as it is the Asian producers who will feel the effects far more than we will," Liveris said.

Growth rates for Asian economies have been revised down in the wake of a currency crisis in the region.

The International Monetary Fund estimates that Thailand, where the baht currency has fallen 40 percent since June, will show economic growth of just 2.5 percent this year, compared with more than eight percent annually from 1992-96.

In Thailand, it is domestic companies that are feeling pressure from the weakness of the country's banks, Liveris said. "We now see that there are other producers who announced plans but will not go ahead, such as the third National Petrochemical Corp complex," he said.

Liveris said that the startup of Dow's 300,000-ton-per-year polyethylene plant joint venture with Siam Cement Co [SCC.BK] would proceed as expected.

He said the plant was on target and had received strong indications of orders from customers.

The plant uses metallocene technology, which allows for more efficient production and is the first of its kind in the region, which Dow says will give it a huge competitive advantage.

Liveris also said that although Siam Cement had halted new projects, it was committed to existing projects and would be able to fund its share of the 50-50 venture.

Asia is a key region for domestic and international petrochemicals companies. According to a Moody's Investors Services report issued earlier this year, regional imports account for about 20 percent of the world's chemical trade. Much of the planned investment -- some 35 ethylene plants have been announced, which would add 11 million tonnes to regional capacity excluding Japan -- is based on increased projected demand from China, according to Moody's.

Dow's growth plans over the next 10 years include a petrochemicals joint venture with China Petrochemical Corp (Sinopec) for a $3-$4 billion complex in the northern Chinese city of Tianjin.