The outlook for the industrial-estate sector remains cloudy, with the Supreme Administrative Court keeping 65 projects in Map Ta Phut with combined investment of Bt300 billion suspended over environmental concerns.
In its "Thailand Daily" report on Wednesday, UOB KayHian said 180 industrial projects nationwide were at risk, with non-governmental organisations planning to file similar petitions to halt their investment.
Although the sector has already bottomed out and demand is slowly returning, with capacity use back to 66 per cent in October after a low of 54 per cent in the second quarter, short- to medium-term prospects will remain under pressure without a clear resolution on this issue.
Amid political uncertainty in recent years, Thailand has lost opportunities for foreign direct investment to neighbouring countries like Malaysia and Vietnam.
Lingering risks have exacerbated the negative impact on the investment climate, forcing industrial-estate developers Amata and Hemaraj to revise their earnings and target/fair prices.
"Our preferred stock in this sector is Rojana Industrial Park (buy target: Bt14.40), which will show healthy 2009-10 growth deriving from utilities income and residential business in China rather than the industrial-land business," the report said.
The Map Ta Phut issue will damage the short- and medium-term outlooks. It is now on the national agenda, and all parties involved - the government, relevant state agencies, the private sector and industry experts - must join together to tackle this problem.
A special four-party panel chaired by former PM Anand Panyarachun has been established specifically for this purpose.
Meanwhile, companies are trying to implement the health-impact assessments (HIAs) required under Article 67 (2) of the Constitution for projects that could have an adverse effect on the environment, natural resources and community health.
UOB KayHian said the full HIA process might take 14 months to complete but that the special panel suggested a fast-track process lasting only four or five months. If all goes well, this issue should be resolved by the middle of next year.
Map Ta Phut is located along the Eastern Seaboard in Rayong province and a hub for the petrochemical, chemical, plastics and some energy industries. Problems in that area have directly affected two of Hemaraj's six industrial estates.
However, the negative sentiment has harmed the confidence of potential buyers. Amata's estates, located in Chon Buri and Rayong provinces, are also along the Eastern Seaboard but away from the problem area. Rojana's estate is in Ayutthaya province, north of Bangkok and far from the problem area, and is home to electronics, food and beverage, automotive and consumer-product manufacturers. These have also been affected.
With the return in demand, a new investment cycle will likely start once factories increase operations to 70-75 per cent of capacity.
The Federation of Thai Industries predicts private investment should start to rebound in next year's second quarter. Industries leading the way will be automotive, electronics, foods and alternative energy.
Several auto firms, including Suzuki and Mitsubishi, have already announced they will proceed with their eco-car projects after suspending plans for the past 12 months.
UOB KayHian believes land sales will also grow next year.
