REPORT ON FOREIGN EXCHANGE LOSS (1997)

March 3, 1998 The Board of Director Sino-Thai Engineering and Construction Public Company Limited 29th-30th Floor, Sino-Thai Tower, Sukhumvit Soi 21, Asoke Road, Bangkok 10110, Thailand. Dear Sirs, The Recording of the Loss on Foreign Currency Exchange. We have made a review of the loss on foreign currency exchange shown in the financial statements of Sino-Thai Engineering and Constructioin Public Company Limited for the year ended December 31,1997,as requested in letter dated March 3,1998.The loss on foreign currency exchange agrees with the Companys accounting records and has been computed in conformity with the Companys accounting policy. Yours faithfully, ( Nirand Lilamethwat ) Certified Public Accountant Sino - Thai Engineering and Construction Public Company Limited Report on Foreign Exchange Loss For the year ended December 31 , 1997 ( 000 Baht) Foreign Exchange Loss Consolidated The Company Only 1997 1996 1997 1996 Realized 59,029 - 4,978 - Unrealized 2,035,575 - 1,912,371 - 1. Accounting practice to record foreign exchange loss The company and its subsidiaires recorded the whole amount of for eign exchange loss for the year 1997, ended December 31, into the companies 1997 expenses. This practice is according to Accounting Standard no. 30. 2. Policy to manage foreign exchange risk The company have income from main activities in Thai Baht curren- cies. In some cases the company have to import part of materials and equipment and pay in term of foreign currencies, the company will hedging cover on foreign currencies portion by buying foreign currencies at forward rate in advance. In term of US$ loan, the company also plan to fix forward rate at the satisfactory level of spot rate plus reasonable premium. However, timing of hedging deal has to match with loan payment schedule. In order to protect foreign exchange loss in the future, the company will ask for foreign currencies or Baht equivalent to foreign currencies in the portion which the company require to pay for import materials and equipment. Our subsidiaries also apply the same policies to cover foreign exchange loss. 3. Information on forign currencies loan For the Company, Loan Reference rate Maturity Conditions and term US$ 4 mil. Short term loan SIBOR + 1% 1 month Roll over monthly (monthly) US$ 80 mil. Syndication loan SIBOR Oct.16,1999 Lenders have put (semi-annual) option on Oct.16,1998 US$ 5 mil. Bilateral loan SIBOR Nov.12,1999 Lenders have put (semi-annual) option on Nov.12,1998 For its subsidiary, Loan Reference rate Maturity Conditions and term US$ 4 mil. Short term loan SIBOR + 1% 1 month Roll over monthly (monthly) The company are in process for loan restructuring with the lenders for the above mentioned loans. Best regards. Dr. Udomsak Chakreyavanich Director Sino-Thai Engineering and Construction Public Company Limited