Rural 'green' plans big test for industry

Stifling of factory expansion warned

Thailand's manufacturing sector faces yet another big challenge as the new planning programmes in several provinces are aimed at boosting more "green" areas, which would make it harder for future expansion of industrial operations.

This comes at a time when the Board of Investment is changing its policy framework.

Japanese and Thai investors yesterday voiced opposition to the BOI's plan to overhaul the country's investment promotion policy by emphasising high-priority industries.

Industry Minister Prasert Boonchaisuk said yesterday that his ministry had asked the Interior Ministry to review land-use planning schemes in several provinces where investors in manufacturing and other industrial projects will be affected.

A number of provinces have come up with new city plans that include green, residential and other areas, while areas designated for factories will be affected by the changes.

The Interior Ministry has gradually enforced the new plans over the past few years. In Chiang Mai, the second part of its land-use plan is due to be enforced this month, aimed at increasing the province's green area to 92 per cent. Nakhon Ratchasima's plan, to be enforced later, aims to turn 99 per cent of the province into green areas.

The Interior Ministry should postpone implementation of the plans in some provinces, especially those where the new plans are not consistent with actual land use, Prasert said.

Chiang Mai, Chiang Rai, Lamphun and Nakhon Ratchasima are among the provinces affected by new plans.

"The new plans will affect factory, warehouse and other industrial projects in these provinces," the minister said.

Chiang Mai, for example, will have 92 per cent of its area designated for green and other non-industrial uses, while only 1 per cent of Nakhon Ratchasima's area will be specifically designated for industrial use.

Since in these provinces there is already widespread industrial development, the change in land-use policies would have the effect of restricting future growth of the industrial sector. The BOI reported that investors had complained that their projects could not go ahead because of the pending land-use plans.

Arthit Wuthkaro, Industry Ministry deputy permanent secretary, said the Interior Ministry needed to take into account economic and other factors in creating new plans, as land prices in some areas were falling because of green designation.

Meanwhile, Thai and Japanese manufacturers voiced their opposition to the BOI's regulatory change at a public hearing in Chiang Mai.

Though Udom Wongwiwatchai, secretary-general of the agency, said that although the new plan was aimed at more sustainable development of Thai industries from 2013 to 2017, investors were worried the promotional privileges, especially tax incentives, would be affected by the BOI's policy overhaul.

Policy change

Under the policy change, the BOI will scrap the current rules on granting privileges to investors based on the geographic location of projects in three different investment zones. Instead, promotional privileges will be granted according to clusters of industries.

The Chiang Mai hearing is the third to take place around the country, and two more sessions will be held in the northeastern province of Nakhon Ratchasima and the southern province of Surat Thani.

Narong Tananuwat, honorary chairman of the Chiang Mai Chamber of Commerce, said Northern investors were opposed to the scrapping of BOI privileges for certain businesses such as hydroponic farming, reforestation and long-stay tourism.

Shigeru Kamahara, vice chairman of the Japanese business association in the Northern region, said the policy change would hit Japanese investors' long-term business plans, especially those in Zone 3 areas.