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  1. #1
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    Siam Cement, PTT Stoppages May Deter Thai Investments

    Siam Cement, PTT Stoppages May Deter Thai Investments
    Daniel Ten Kate and Douglas Wong

    Dec. 3 (Bloomberg) -- Thailand’s suspension of 65 industrial projects, led by plants owned by Siam Cement Plc and PTT Plc, threatens to deter investment in Southeast Asia’s second-biggest economy as it emerges from recession.

    The Supreme Administrative Court ruled yesterday that construction on only 11 of 76 projects can proceed during a trial in which agencies stand accused of violating provisions requiring environmental and health impact studies. The 76 ventures have a total value of 400 billion baht ($12.1 billion).

    “Damage will be immense, not just to existing investors and the current economy but to prospects for foreign direct investment into a country which was desperately hoping for a more positive 2010,” said Gary Biesty, managing partner of law firm Mayer Brown JSM Thailand/South Asia. “Parameters which allowed investors to predict the financial viability of projects have been changed to their detriment.”

    The injunction highlights the uncertainty that investors face in Thailand two years after a military government introduced a new constitution. The central bank estimates the export-dependent economy may see growth cut by 0.5 percentage point next year because of a one-year delay in investments. PTT and Siam Cement account for 16 percent of the SET index’s market capitalization.

    Between 30,000 and 40,000 construction workers may lose their jobs if construction stops, Deputy Prime Minister Korbsak Sabhavasu said today in Bangkok.

    ‘Severe Impact’

    Eighteen of the 65 stalled projects are being developed by Siam Cement’s chemicals unit and are valued at 57.5 billion baht, the company said in a statement today. Some were ready to start production, it said.
    “This will have a severe impact on SCG Chemicals, as these projects involve U.S. and Japanese partners,” Siam Cement Chief Financial Officer Roongrote Rangsiyopash told reporters in Bangkok today. “The private sector is concerned because the situation isn’t clear. We can’t foresee the future.”
    Projects that will remain suspended include PTT’s $780 million gas separation plant, PTT Chemical Pcl’s polyethylene project and the expansion of an olefins plant by a unit of Siam Cement, according to a list provided by the court. PTT Aromatics & Refining Pcl’s aromatics expansion plan also remains suspended, the court said.

    PTT Gas Plant

    PTT spokesman Atthapol Ruekphiboon said in a statement yesterday that the gas plant can also proceed because it was approved two weeks before August 24, 2007, the date the constitution was promulgated. The company didn’t include the plant in a list of exempted projects that it submitted to the stock exchange today.

    The company only included a wastewater treatment plant associated with the gas separation plant in a list of exempted projects that it submitted to the stock exchange.

    “The impact from the ruling is worse than our expectations,” Paworamon Suvarnatemee, an analyst with Credit Suisse Group AG, said in a report today. The process of drafting new rules and laws for the projects to comply with the constitution may take six months to a year, she wrote.

    PTT, the country’s largest energy company, had its share- price estimate cut 9.5 percent to 247 baht by Credit Suisse. The delays would reduce PTT Chemical’s 2010 earnings by 35 percent and PTT Exploration and Production’s net income by 2.5 percent, the brokerage said.

    PTT rose 0.9 percent to 227 baht, after dropping 5 percent yesterday. Siam Cement was unchanged, after falling 5.1 percent yesterday. The SET index increased 1.9 percent after falling 2.3 percent yesterday.

    Abhisit Scrambles

    Prime Minister Abhisit Vejjajiva, whose administration appealed the decision by a lower court in September, instructed a committee to draft guidelines for industrial projects within two weeks. Last month, the Cabinet approved changes to environmental legislation that would create an organization to oversee projects and require health and environmental assessments to be concluded before construction starts.

    “It shouldn’t take long,” Abhisit said today. “The affected projects can use this channel. Once they comply with the guidelines, they can ask the court to be removed from the suspension.”

    Petrochemical, refinery and electricity projects in Map Ta Phut, Thailand’s largest industrial port, buoy the country’s manufacturing and exports, which amount to about 60 percent of economic output. The central bank, which expects the $261 billion economy to grow 5.3 percent next year, kept its benchmark interest rate unchanged at a five-year low yesterday to help the economy climb out of a yearlong recession.

    ‘Small’ Projects Approved

    “The 11 projects that can proceed are small,” Supavud Saicheua, managing director of Phatra Securities Pcl, wrote in a note today. An independent body to assess investments could be set up by the first quarter of 2010 “if all goes well,” he wrote, adding that it would take longer for the new organization to then approve the 65 projects.

    The case brought by environmental groups is the first to test Article 67 of the 2007 constitution drafted by a military- appointed committee a year after it ousted Prime Minister Thaksin Shinawatra in a coup. The clause bans all projects that don’t have environment and health studies, public consultations and opinions from independent experts.

    Investment Slowdown

    Foreign direct investment into Thailand last year dropped 9 percent to $7.7 billion from 2006, the year Thaksin was ousted. During that time, foreign investment to Indonesia nearly doubled to $8.34 billion and inflows to Vietnam quadrupled to $8 billion, according to Asian Development Bank statistics.

    The Stop Global Warming Association, which filed the lawsuits that led to the injunction, plans to target 181 industrial projects in other parts of the country, the Nation reported, citing Srisuwan Janya, the group’s president. The group says the investments would generate pollution that would hurt public health.

    “These kinds of challenges are likely to multiply unless the legal regime is clear and fair to all,” said Alastair Henderson, a Bangkok-based partner at Herbert Smith LLP.

  2. #2
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    13-07-2019 @ 10:43 AM
    By the flippos and roaming
    Health and environment is bloody important, correct but look at that before giving ok to invest and start building...

    And on the other hand, those big multi are aware enough of what should be done, their plans should be made with ahead of the time security measures taken care off.
    They just like to save a penny here and there, abusing weak systems, just to make more profit and fuck the people who grow around with malformations and cancers...
    Probably not such a bad point for Thailand to take more care of such things...

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