Efficient way to get
      out of economic soup

      While the financial crisis has put the
      squeeze on most Thai firms, James
      Fahn reports that some companies
      are responding by becoming more
      efficient and more
      environmentally-friendly.

      People in the noodle business face
      more than one kind of liquidity
      problem. In addition to the ubiquitous
      financial woes, most kuay tiow
      manufacturers also suffer from
      inefficient use of resources,
      particularly water.

      With costs for all types of raw
      materials rising, a group of noodle
      companies are attempting to get out
      of the economic soup by making their
      production lines more efficient, and at
      the same time more
      environmentally-friendly.

      ''It's a matter of survival, really,''
      explains Peeraporn Palapleevalya,
      manager of the Thailand Environment
      Institute's (TEI) Cleaner Technology
      Project. ''The kuay tiow companies
      are facing higher prices for energy
      and broken rice [used to make
      noodles] and of course many other
      industries are coming under similar
      pressures.''

      Along with the noodle manufacturers,
      TEI is also working with
      electro-plating companies who now
      have to pay more for metals like zinc
      and nickel along with imported
      chemicals. For these firms, at least,
      funding is readily available thanks to
      the Danish aid agency Danced, but
      the companies themselves will have
      to bear a part of the costs.

      Peeraporn also notes that there are
      many low-cost ways to make
      factories more efficient, for instance
      by changing wasteful practices or
      simply tightening fittings and valves
      on production lines.

      While reducing costs may be the first
      priority for most businessmen, many
      of the managers who attended the
      TEI project signing ceremony earlier
      this month claimed that helping the
      environment was a major reason for
      their participation.

      ''We want to use our resources to
      their greatest potential,'' says
      Sompob Virojanakul of the Thai
      Watana Rice Product Co Ltd. ''You
      really can't separate the environment
      from economic issues because the
      pollution we emit damages the
      surrounding area.''

      Thai Watana has already reduced its
      waste water discharges by adopting
      recycling methods and a dry
      rice-cleaning process, according to
      Sompob, who says the company has
      gone from using 80 cubic metres (m3)
      of water per day to 50-60 m3, thanks
      to advice from TEI.

      The exporting firm is now set to
      invest Bt500,000 -- 60 per cent of
      which will come from Danced -- to
      build a laboratory to analyse the
      quality of the rice it buys. This should
      reduce the number of sub-standard
      noodle batches produced, and
      reduce waste.

      There are many ways for factories to
      improve efficiency. Jirawat
      Piyatarathibet, managing director Gin
      Gin Foodstuff Co Ltd, will invest
      Bt400,000 in an attempt to save
      energy by re-using warm water and
      installing insulating jackets. Future
      efforts will go into conserving water
      and rice, he says.

      ''What we lose in the system is
      equivalent to losing money, so I think
      the investment will pay itself off in two
      years,'' he adds.

      Echoing the views of many
      businessmen involved in the project,
      Jirawat says he has thought about
      improving efficiency for a long time
      now, but never acted until
      approached by a team of consultants
      led by Kasetsart food technologist
      Warunee Varanyanond.

      ''Kuay tiow
      is an important foodstuff, second
      only to rice in Thailand, but most
      factories are still run as family
      businesses,'' says Warunee, who is
      working with TEI on the project. ''So
      there was a big opportunity to
      improve cleanliness, quality and
      safety.''

      ''The economic troubles have also
      entered our thoughts,'' adds Jirawat.
      ''The cost of rice is rising daily, but
      by reducing other costs we can
      increase profits without having to
      raise prices.''

      One of the larger efficiency projects
      is being carried out by the Sun Sun
      Rice Vermicelli Factory. Managing
      director Boonrak Pattanayindee says
      the firm will invest Bt3 million to
      conserve water and reduce the
      number of poor-quality batches
      produced.

      ''We'll buy equipment to pre-clean
      the rice without using water, and
      then we won't need to wash it so
      many times, so our waste water will
      decrease,'' he said.

      Like Sompob, Boonrak and Jirawat
      also said they had a responsibility to
      protect the environment. For Arak
      Sriskultiew, managing director of the
      electro-plating firm ENC Co Ltd, that
      responsibility was made clear a
      decade ago when the Department of
      Industrial Works ordered his factory
      closed until its waste water treatment
      system was brought up to standard.

      ''Sometimes the nickel we discharge
      causes damage so we want to
      recover more of it and bring it back
      and use it,'' he says. ''We're also
      looking into chemical recovery.''

      ENC will invest Bt1 million in a
      waste recovery system, 70 per cent
      of it from a Danced grant, and Arak
      will expect payback in about three
      years if the economy returns to
      normal.

      ''Metal finishing companies do not
      usually buy technology from abroad.
      It's too expensive and the industry is
      too competitive,'' he said. ''It would
      be good if everyone was forced to
      invest in clean technology.
      Otherwise, as the old saying goes,
      the best investment is no
      investment.''

      Apart from the noodle and
      electro-plating industries, there are
      several sectors that benefit from
      clean production projects which offer
      training and advice at the very least.

      The Federation of Thai Industries
      has received funding from the US in
      the past and is now using Danced
      money to work with textiles and
      canned food factories; the German
      aid agency GTZ has collaborated
      with tanneries, palm oil factories,
      canneries, starch producers and is
      now working with pulp and paper
      companies and non-iron foundries;
      the National Science and
      Technology Development Agency
      funds student auditors to help
      companies identify R&D projects; the
      UN Environment Programme advises
      pulp and paper companies on how to
      seek loans for investment in clean
      production; and the Pollution Control
      Department hopes to begin work
      later this year with plastics
      manufacturers.

      In every case, the same message
      applies: by reducing waste,
      companies can both reduce costs
      and prevent pollution.

      Considering the importance of
      promoting clean production,
      however, there seems to be more
      rhetoric than funding devoted to it.

      The International Finance
      Corporation of Thailand has helped
      companies phase out the use of
      ozone-destroying substances and an
      Energy Conservation Fund has been
      set up to promote energy efficiency.
      But soft loans for more general
      ''eco-efficiency'' projects seem
      scarce.

      ''While there are often moves to
      subsidise waste water treatment
      plants or reduce import tariffs on
      equipment, dealing with upstream
      investment is thornier,'' explains
      Mark Radka, Unep's regional
      industry officer. ''It's harder to
      separate investment intended to
      increase efficiency and protect the
      environment from efforts to simply
      upgrade capacity. This presents a
      moral hazard for donors who don't
      want to simply subsidise factories.''

      As a result, there seems to be more
      funding available for treating
      pollution than for preventing it, even
      though this ''end-of-pipe approach'' is
      more expensive in the long run.

      The GTZ is now working with the
      Ministry of Industry to try and
      implement the Polluter Pays
      Principle so that businesses realise
      the full cost of polluting the
      environment.

      ''Clean production is attractive if
      companies have to pay for using the
      environment so we are trying to
      develop a system of economic
      incentives, fees and charges,'' says
      GTZ project adviser Bernhard
      Meyhoefer. ''There has to be good
      enforcement and fees can provide
      the incentive for that. But Thailand
      will have to modify several laws so
      there is still a long way to go.''

      A new generation of Thai
      businessmen may help Thailand get
      there. Narongsak Suwandalud and
      his sister Nayarwik took over the T
      Prasophol noodle factory from their
      father two years ago and are keen on
      installing clean technology.

      ''Improving efficiency can definitely
      help both business and the
      environment,'' says Narongsak. ''And
      they really should go together. In the
      end, there has to be a balance.''