Thailand Clears Projects Worth $11.75 Billion for Permit Approvals

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Researched by Industrial Info Resources (Sugar Land, Texas)--The Industry Ministry of Thailand has cleared projects worth $11.75 billion for permit approvals. The move, supported by Prime Minister Abhisit Vejjajiva, is expected to bring much-needed investments into key industrial sectors.

Heeding the advice of the Council of State, the public-private partnership committee, headed by the prime minister, has directed state agencies to approve permits for investment projects that have completed environmental impact assessments. Projects awaiting approval include 13 ventures from the Industrial Works Department (IWD) and 23 projects from the Industrial Estate Authority of Thailand (IEAT), a state enterprise responsible for industrial development.

The projects routed through the IWD include 10 power plants, while the IEAT projects, worth $9.49 billion, are in the power, petrochemicals and steel sectors. Ventures routed through IEAT are hoping to obtain construction and operation permits at IEAT's industrial estates in Rayong province. The Euro4 diesel refinery, promoted by PTT Aromatics and Refining PCL (BAK:PTTAR) (Bangkok, Thailand), is also a part of the IEAT's projects pipeline.

Although about 55 projects had earlier secured environmental approval, permits were delayed because of vague interpretations of the permit guidelines. Despite the ruling from the Council of State directing authorities to approve permits on the grounds of existing guidelines, the authorities were still not clear on the legal aspects of doing this, since the existing permit regulations did not include comprehensive guidelines to deal with industrial ventures deemed harmful to the environment. Permit guidelines for the respective industries are required to conform to Section 67 of the country's constitution, which is aimed at protecting the health of the community and the country's ecosystem.

In order to facilitate the approval process, Thailand's Ministry of Industry has identified 15 industries as potentially harmful to both the environment and the local community. Ventures involving nuclear power plants, production or management of radioactive substances, and management of hazardous waste are part of this list. Seaports with gross capacities of 10,000 tons and above, capable of storing or handling hazardous air pollutants, commercial airports with runway lengths of 1.5 kilometers, dams, irrigation projects, and genetic-engineering ventures have also been identified as harmful projects. Underground mining operations, including zinc, tin and manganese mining, upstream steel ventures, midstream and upstream petrochemical units, and power plants also fall under the category of harmful industries.

Greenfield investment ventures in any of the aforesaid categories will have to wait for permits until new guidelines have been formulated for enforcing Section 67 of the 2007 Constitution adopted by Thailand. However, subsequent to the prime minister's decision, projects already in the pipeline will be processed on the basis of existing permit guidelines.

Meanwhile, several ongoing industrial projects have been suspended based on a Rayong court ruling, according to which an industrial zone has been declared as a pollution-control area under a debatable environment law. This situation cost Sahaviriya Steel Industries PCL (BAK:SSI) (Bangkok) $88.2 million in preliminary expenses incurred on a $14.69 billion steel furnace project.

On the political front, the People's Eastern Network has threatened to oppose the government in case the cabinet endorses the decision to clear permits based on current guidelines, since provisionally the decision would violate the 2007 Constitution.

Formulation of guidelines for the 15 new harmful project categories is still not a time-bound process. Any lag on the part of the government to finalize necessary regulations related to these sectors is expected to further delay potential industrial investments.

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