Long term impact of 65 projects stalled on environmental concerns by Central Administrative Court order

04-Dec-09

Of the upcoming projects at Map Ta Phut (the world's eighth-biggest petrochemicals hub) that have been stalled since September, 11 major projects have been allowed by a Thai court to resume on Wednesday. However, the remaining 65 projects have been stalled on environmental concerns by an order of the Central Administrative Court in Thailand. The order encompassed suspension of operations at 76 industrial projects (total value of US$12.1 bln) worth US$9 bln at Map Ta Phut. The court ruling allowed temporary resumption at 11 projects with an estimated value of US$1.1 bln, until an independent body is appointed to fully assess the environmental and health impact. With this decision, parameters that allowed investors to predict the financial viability of projects have been changed to their detriment in Thailand. This decision is expected to have a long term impact on current investors, the current economy as well prospects of foreign direct investment into Thailand anxious for a more positive 2010. The central bank estimates that Thailand’s export-dependent economy may see growth cut by 0.5 percentage point from the 5.3% growth projected for next year because of a one-year delay in investments. Also, the process of drafting new rules and laws for the projects to comply with the constitution could take more time than currently anticipated. In 2009, foreign direct investment into Thailand dropped 9% to US$7.7 bln from 2006, during which, foreign investment into Indonesia nearly doubled to US$8.34 bln and inflows to Vietnam quadrupled to US$8 bln. Petrochemical, refinery and electricity projects in Map Ta Phut prop Thai manufacturing and exports, which amount to about 60% of economic output. These projects that have been deferred had passed the environmental impact assessment study required by law. But under the constitution, they still need input from an independent organisation made up of environmentalists, health experts and academics on the environment and health as required by Section 67. The problem is that the organisation has not been formed as yet. The Natural Resources and Environment Ministry that is responsible to form the organisation has failed to do so. In the bargain, it has eroded the confidence of many foreign investors who have decided it might be better to defer investing in Thailand.