Purac (Thailand), a leading producer of lactic acid and related products, will shortly finalise its Bt2-billion investment plan for a new lactide factory here.

Lactide and polylactic acid are raw materials for biodegradable plastic and are friendly to the environment as they are made of tapioca starch and other agricultural produce.

The Netherlands-based firm will build its plant at the Asia Industrial Estate in Rayong province later this year.

"We have planned for this investment to increase value for our current lactic-acid products", said company president and CEO Stephan Paauwe.

Construction of the lactide plant will take 18-24 months to complete

Purac has already invested Bt5 billion in Thailand to operate its plant here, with an annual production capacity of 100,000 tonnes of lactic acid and 15,000 tonnes of lactates. The outputs have mainly been supplied to food and cosmetic industries.

He said that business was still good, because the food industry was less affected by the economic crisis in Thailand and abroad than other sectors. About 95 per cent of the Thai plant's output is sold domestically while the rest is exported.

Last month NatureWorks, the world's largest producer of polylactide acids, also expressed its interest in setting up a production plant in either Thailand, Malaysia or China.

Stephan said competition was not a problem because the world still had a huge demand for these high-technology products.

In addition, Purac's strength is in the upstream sector, he said.

"We are very strong in upstream lactic acid, which is the material for producing lactide and polylactide acids. Even though the market still has big room for more expansion, we are confident in our potential to stay competitive," he said.

On Rayong's designation as a pollution-controlled zone, he said Purac was not worried about stricter environmental rules as its plant used the world's best practice in environmental protection.

"I don't think we will be affected by such a designation. It is good that people have more awareness about the environment. However, we hope that the revised regulations from the new pollution-reduction plan will be fair," he said.