Investment to rise after Map Ta Phut ruling

More foreign direct investment is anticipated particularly next year, as the Central Administrative Court's ruling and the National Environment Board's list of 11 harmful activities last week addressed all ambiguous points which had delayed 65 projects in Map Ta Phut and forced foreign investors to adopt a wait-and-see attitude.

As investment prospects are beginning to brighten, Prime Minister Abhisit Vejjajiva yesterday sought to pacify activists and villagers in the wake of the Map Ta Phut virtual go-ahead, saying the government is adhering to every international standard and certain steps taken for environmental protection had gone beyond constitutional requirements.

"Measures taken have taken into account people's quality of life as the main priority," he said, responding to concerns that a pro-business approach has come back to dominate the government's agenda concerning the Map Ta Phut controversy.

In the face of lingering, yet fading uncertainties, government agencies, like the Board of Investment (BoI) and the Industrial Estate Authority of Thailand (IEAT), are confident they will achieve targets in wooing new investment. They believe that the clarity of rules, which remain contested by villagers in Map Ta Phut, who can file an appeal to the court's ruling within 30 days after September 2, would re-polish Thailand's appeal.

Hirunya Sujinai, investment adviser to the BoI, said the agency is more confident that the value of projects granted privileges would reach the Bt500 billion level expected for this year.

"The investment picture is clearer for these investors. Many were unsure if their projects would be defined as hazardous to the environment. They will soon submit applications to the BOI asking for promotion," she said.

The sentiment is positive not only for investment in petrochemicals but also in other industries. "We're more confident of achieving the target. It's unnecessary to revise the target now."

In the first eight months of this year, approved projects were worth Bt270 billion. The agency plans to disseminate the updated information through BOI offices abroad.

Monta Pranootnorapal, the governor of IEAT, has also become more bullish that industrial estates owned by the agency and private investors nationwide would sell 2,500 rai of land as targeted this year, now that the court has unlocked most of the projects in Map Ta Phut.

"Some investors contacted the IEAT for information after the court's ruling. This is a good sign as investors may decide soon to pour their money into Thailand. Other private industrial estate developers also expect impressive sales figures," she said.

DBS Vickers Securities (Thailand) said in a research note that Amata Corporation was raising its sales target from 900 rai to 1,500-2,000 rai this year. Hemaraj Land and Development, another leading industrial park developer, should also be a prime beneficiary of the trend of increasing capacity shift from Japan and other countries.

Kasikorn Research Centre is convinced that the end of the Map Ta Phut conflict would be a factor buoying domestic investment in the years to come. Coupled with capacity expansion in key industries, public infrastructure projects and investment projects to cash in on regional economic cooperation, Thailand's combined investment could show growth of 8.1-8.8 per cent this year and 7.5-9.3 per cent next year.

"In the past year, not only the 65 projects, but new investment in petrochemical, steel and power has been halted, waiting for clarity. New investment projects should be unveiled next year, also boosted by the export drive," it said.

The strong yen could also push more Japanese investment overseas. Thailand should exploit this opportunity to lure more Japanese investors, it said.

Thai companies should take advantage of the strong baht to improve efficiency by importing capital equipment and should consider investing more overseas.

According to BOI data, in the first seven months of this year, when approved projects totalled 444, foreign projects accounted for 57.1 per cent. The number also increased 27.9 per cent from the same period last year. By value, at Bt108.32 billion, it accounted for 50.6 per cent. The value increased 46.5 per cent on year.

KResearch said Map Ta Phut has also reclaimed its appeal. Investment applications for the area totalled Bt57.5 billion in the first seven months, up 122.9 per cent on year. For all of 2009, investment was only Bt57.8 billion.

Kannikar Chalitaporn, president of Siam Commercial Bank, last week also said the court's ruling would brighten the investment outlook.

Following the court's ruling, Kohsan Electronics (Thailand)'s parent company in South Korea immediately made the decision to invest millions in doubling production capacity, said Pornthip Vachirangkool, the Thai unit's marketing manager. The manufacturer of Scana air purifiers, ventilators and condensing units for air-conditioners will start construction on the existing Rayong plant by the end of this year, and expects the new capacity to go online in the second half of next year, she said.

Kohsan earlier said it might choose India instead of Thailand to serve demand in Southeast Asia and South Asia, due to legal complications. Pornthip said investing in Thailand would benefit the company more than heading to India, as there was skilled labour and infrastructure here. It may be difficult for the company to start up production in India. Investing in Thailand will also help reduce investment, operating and production costs in the long term.

Kohsan is the third-largest South Korean company in Thailand in terms of investment. It has invested US$1 billion (Bt31 billion) in Thailand at the Rayong manufacturing plant and employs 800 workers.