Thailand could lose appeal as petrochemical destination on Government blitz

22-Sep-10

The Government crackdown against this sector could result in Thailand losing some of its appeal as a petrochemicals investment destination. The Thai government has decided to include parts of the sector in a list of 11 harmful industrial activities, putting upstream and intermediate projects at risk. Proposed new projects covered by the list have to face environment and health impact assessments, a public hearing and the approval of an independent body. Existing and new downstream petrochemical activity will not be affected as of now, as adequate supplies from domestic plants will continue to flow, as per Dow Jones. These higher requirements will reduce the attractiveness of these businesses, as investment will take a longer time and costs will inevitably increase. This list has dealt another blow to Thailand's investment status, already damaged by political chaos this summer when a peoples protest lead to astate of emergency which still remains in place in Bangkok. In January-June 2010, upstream net exports were valued at THB9.67 billion (US$313.6 mln), intermediate-sector net exports were THB7.64 billion and downstream net petrochemical exports were worth THB34.46 billion. The Petroleum Institute of Thailand puts the three sectors' 2010 annual output capacity at 11.8 mln metric tons, 6.6 mln tons and 10.8 mln tons, respectively.