It plans to make a proposal to Deputy Prime Minister and Industry Minister Kosit Panpiemras next week.

So far, the government has granted only Board of Investment (BoI) tax incentives to steel manufacturers who are interested in investing in blast furnaces here.

Wikrom Vajragupta, the institute's managing director, said steel operators were facing a tough situation, because of rising slab-steel prices.

If Thailand does not accelerate its investment in upstream steel, it may lose this industry to international firms within four or five years, he said.

"Almost all governments in the world realise that petrochemicals and steel are the most important foundations for developing countries," he said. "The government must encourage the steel industry the same way it did petrochemicals along the Eastern Seaboard."

He said the government could play a greater role in supporting upstream steel by developing infrastructure.

He suggested that the western side of the Gulf of Thailand or the Southern Seaboard area was the most appropriate area for developing the steel industry. He ruled out the Eastern Seaboard, because it could accommodate only small-sized mills whose production capacity could not meet demand.

"The development of infrastructure along the Southern Seaboard will bring benefits not only for steel manufacturers, but also for other industries, such as petrochemical," he said.

He also suggested the government give support the same way it supported the oil industry when it formed the Petroleum Authority of Thailand, or it could launch a partnership project with the private sector.

Wikrom said the government in many countries had played a leading role in developing these two industries, such as Japan, South Korea and Vietnam.

He expects the project to be approved in principle during the term of the present government. "The government should speed up considering this project if it realises the importance of this industry for the country," he said.

Wikrom said many giant steel firms had boosted cooperation in making investments and cited the Vietnamese government's policy of building an integrated steel complex in that country.

State-run Vietnam Steel and the Tata Group cooperated in a feasibility study to build a steel complex with total production capacity of 4.5 million tonnes a year.

The Kingdom's demand for steel this year is forecast to remain at last year's level of 12 million tonnes. Demand in Malaysia and Vietnam reached 7 million tonnes each last year.

Chalida     Ekvitthayavechnukul

The Nation