Court order suspends US$9 bln worth operations in Map Ta Phut : creates investment risk for Thailand

A Court order on September 29th , has suspended over environmental and health issues, US$9 bln worth operations in Map Ta Phut, housing the world's eighth-biggest petrochemicals hub. The ruling has fuelled concerns about legal certainty and government effectiveness in a country previously considered a safe haven for big business and has raised doubts about the ability of Thailand's shaky government to protect investors. The dispute at Map Ta Phut is over the failure of companies there to carry out environmental impact assessments (EIA) and health impact assessments (HIA). The projects, which include Germany's Bayer, India's Aditya Birla Chemicals, Australia's BlueScope Steel Ltd, and 25 companies belonging to Thai energy giant PTT, have completed only the EIA, because HIA laws came into force in 2007, when most operations were already underway. Despite 76 affected projects that have resumed operations after an appeal was lodged; the credibility, and future, of the pro-business government is at stake if it fails to act fast. If these projects are unable to go ahead within a certain timeframe, investor confidence will be shattered. Prior to the court ruling, Citigroup had forecast the kingdom would receive $7 billion of foreign direct investment next year, far more than rival economies in Southeast Asia, such as Indonesia, Vietnam and Malaysia, some of which are offering incentives to lure foreign businesses. This step comes at a time when other neighboring countries are also trying to attract foreign investment. This step by the Thai government could urge new investors to consider other countries as investment options. Thailand is climbing out of its first recession in 11 years and with an intractable political crisis showing no signs of abating.
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