The Nation : Court ruling poses new economic challenge

The economy faces a fresh challenge after the Supreme Administrative Court yesterday upheld the suspension of 65 industrial projects worth several hundred billion baht in Map Ta Phut and nearby areas of Rayong.

Only 11 of the 76 projects worth a combined Bt400 billion halted earlier by the court were allowed to go ahead.

Japanese investors, who are partners in several suspended projects, expressed concern that the delay of these projects would affect the chemical, steel, plastic and automobile industries.

"Most suspended projects are those in the upstream petrochemical industry, which is the source for many mid- and downstream sectors," said Yo Jitsukata, president of the Japan Chamber of Commerce.

"The court's ruling today will not only affect the 65 projects, but many other related projects nationwide. Those value-chain projects will then have to import feedstock for their domestic production, so costs will be higher.

"I wonder how the government will react to this situation. This is very unfortunate for investors. However, we have to be patient (while waiting for further solutions)," he said.

The court's ruling would inevitably put a brake on foreign direct investment due to increased uncertainty, he said.

Some Japanese projects could go to other countries if developers were not confident in the long-term investment climate here, he said.

Vietnam was one alternative for foreign investment in the petrochemical industry following the discovery of natural gas there.

The Bank of Thailand estimates that if the delay to major investments stretches out by more than 12 months, GDP growth next year would be cut by 0.5 per cent because net corporate profits of Bt94 billion and related investments of Bt43 billion would fail to materialise.

The GDP growth projection for 2010 is 3.3-3.5 per cent.

Among major investments that remain on hold are PTT's US$780 million gas separation plant, PTT Chemical's polyethylene expansion project, PTT Aromatics and Refining's aromatics expansion project, plus the expansion of an olefins plant by a unit of Siam Cement Group.

Related companies witnessed a drop in share prices. The SET Index also fell 2.3 per cent to 693.51 points.

Nandor von der Luehe, chairman of the Joint Foreign Chambers Commerce in Thailand, said the prolonged suspension of projects would also lead to financial problems.

"While the financial risk is increasing, the risks for doing business here are rising as well," he said.

"Today, political stability and credibility are the most important factors for Thailand because this will allow the Thai government to move quickly to address the ongoing problem," he said.

Surasak Dussadeemetha, a senior executive of Kasikornbank, said the credit market would be hamstrung by a protracted suspension of large investment projects as many were in advanced stages or near completion.

Prime Minister Abhisit Vejjajiva said that it should be no problems for the 65 projects to proceed, if they complete the HIA.

The four-party chairman Anand Panyarachun meanwhile noted that the HIA guidelines would be reviewed for implementation within 2 weeks. A similar timeframe is announced for the completion of the independent body structure.

Civil organisations were elated by the verdict. Tears welled up in the eyes of Noi Jaitang, 77, one of the 43 individual litigants, after the court turned down the appeal to stay the injunction against 65 industrial projects.

"I'm overjoyed. But it's a half-way victory, as we're still unsure how government agencies and private companies will proceed in tackling the environmental problems," said the man whose 66-year-old wife suffers from eye cancer and has six relatives who have died of cancer and respiratory complications.

Source: The Nation