The recent resignations of economic tsar Somkid Jatusripitak, the former deputy prime minister, and four economic ministers including former Finance Minister Uttama Savanayana, have ignited concerns about planned big-ticket infrastructure development projects such as the government’s flagship Eastern Economic Corridor (EEC).
The Bangkok Post sat down for an exclusive interview with Luxmon Attapich, the deputy secretary-general of the EEC Office for investment and international affairs, about EEC prospects after the exit of those key economic ministers.
Is there any impact to the EEC development project if the government changes the ministers who oversee the policy?
I am quite confident that this or the next government will continue the EEC development because the project plays a significant role in increasing Thailand’s competitiveness and driving economic growth in the long run.
Three flagship projects of the EEC comprise a high-speed rail network linking three airports, the Eastern Airport City project at U-tapao and the third phase of Map Ta Phut deep seaport. They have all already won the cabinet’s approval and have contracts signed with winning bidders. The agency has yet to change the timeline for those main infrastructure projects that are scheduled to be complete in four years.
The three projects are the government’s key infrastructure development aimed to strengthen economic and social growth and boost the economy of the eastern region.
A Charoen Pokphand Group-led consortium signed a contract with the State Railway of Thailand (SRT) on Oct 24 to build the high-speed train route linking three major airports, which is expected to boost economic development and create more than 100,000 jobs.
The 224-billion-baht rail project will connect Don Mueang and Suvarnabhumi airports in Bangkok with U-tapao airport in Rayong province. The total distance for the project is 220 kilometres, with the specification for trains to run up to 250km per hour.
Eastern High-Speed Rail Linking Three Airports, a consortium led by Charoen Pokphand Group, is ready to start the construction of the high-speed rail, take over the operation of the Airport Rail Link and train new staff for future services.
The government also signed a contract on June 19 with the BBS consortium for the 290-billion-baht Eastern Airport City project at U-tapao.
Should the development be completed, Thailand would have an aviation city, the first of its kind in the country. The project is also expected to be a mega-infrastructure development for the Asia-Pacific region.
This project would generate 306 billion baht for the government, another 62 billion baht in tax and create 15,600 jobs a year in the first five years. All assets would revert to the state after the expiration of the 50-year contract.
U-tapao airport would become the third international gateway in the high-speed train project, linking it with Don Mueang and Suvarnabhumi airports. The three airports would be able to handle 200 million passengers a year.
For the third project, the Industrial Estate Authority of Thailand has signed a public-private partnership contract with Gulf MTP LNG Terminal to develop the third phase of Map Ta Phut seaport, worth 55.4 billion baht, on 1,000 rai on Oct 1, 2019.
The government is expected to make a decision soon for the smart city while the maintenance, repair and overhaul centre is likely to be delayed.
Amid the pandemic, how will the agency promote foreign investment into the EEC?
Officials have kept in contact directly with foreign investors via video conferencing. Target markets include China, Japan, Hong Kong, Taiwan, the US and the EU.
The agency has also kept promoting investment via Thai embassies in foreign countries and foreign ambassadors to Thailand, particularly in target countries.
The pandemic has also created new opportunities for investment in Thailand, particularly in the areas of food, medical supplies and services. Foreign investors are still confident that the EEC can help drive the Thai economy.
How did the EEC Office set the investment application target this year and next year?
The EEC Office still aims to increase investment applications for the corridor by 100 billion baht a year between 2019 and 2021 to a combined 300 billion baht in three years.
For the remaining six months of the year, the government will focus on attracting investment, especially in the food, beauty, medical, aerospace and 5G technology-related businesses.
The government also pledges to try its best to reduce obstacles to those industries, especially in the food and beauty industry, where the regulation and licensing processes need revamping.
Thailand is committed to increasing promotional privileges for five new S-curve industries to make them more enticing for foreign investment.
The Board of Investment (BoI) offers an exemption for corporate income tax for 5-8 years for 12 targeted industries, including five new S-curve industries (robotics; aviation and logistics; digital; biofuels and biochemicals; and medical services).
The BoI recently reported applications for investment in the three EEC provinces (Chachoengsao, Chon Buri and Rayong) in the first five months this year amounted to 74.2 billion baht, down 10% year-on-year.
Investment applications in 10 targeted industries (excluding defence and education development, data for which is still unavailable) for January-May totalled 27.1 billion baht, making up 37% of the total.
Applications for the five new S-curve industries contributed 834 million baht. Those for the old S-curve industries (electrical appliances and electronics; automotive and parts; petrochemical and chemicals; tourism; and agriculture and food processing) made up 26.2 billion baht.
Investment in the EEC is likely to recover in the latter half of the year, driven by higher demand from foreign investors who are expected to rev up relocation of production bases out of China, due to renewed trade conflict and higher confidence in the effectiveness of the government’s outbreak management.