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Thailand Petrochemicals Report Q3 2010
Management Report
Published: June 2010
Pages: 63
Tables: For full details, please email keithw@cmsinfo.com
From: GBP 353.33 Buy Now!
Research from: Business Monitor International
Sector: Petroleum
Political instability and the ongoing suspension of some projects in the Map Ta Phut industrial zone will put the future of the Thai petrochemicals industry at risk if these problems are not resolved by the end of the year, warns BMI’s latest Thailand Petrochemicals Report.
Political instability and the ongoing suspension of some projects in the Map Ta Phut industrial zone will put the future of the Thai petrochemicals industry at risk if these problems are not resolved by the end of the year, warns BMI’s latest Thailand Petrochemicals Report.
Disputes over environmental and health regulations lie at the centre of controversy at Map Ta Phut, which is the focus of the expansion of the country’s petrochemicals industry. In 2009, the Central Administrative Court ordered the suspension of 76 industrial projects, many belonging to PTT and the Siam Cement Group, because of the failure of state agencies to comply with Section 67 of the Constitution which requires an independent body to screen new industrial projects classified as potentially harmful to the environment and public health. Subsequent court appeals by some of the project owners brought the number of suspended projects down to 46 by end-April 2010, including some that have been halted voluntarily by the companies. Nine out of 46 projects had received court approval to complete construction, but would need to petition again for approval to begin operations after construction is complete. Another 11 projects were seen as not being subject to the court orders as their environmental impact assessments were approved before the 2007 Constitution took effect and were allowed to go ahead without court permission. The remaining 26 projects were still seeking ways to present evidence to support their petitions to continue.
Meanwhile, Bangkok has seen massive political protests that increase political risk. Thailand’s petrochemicals industry has functioned as normal despite the situation in Bangkok. However, Thailand will need to deal with its long-standing political instability to attract and maintain foreign direct investment (FDI) in the sector. Foreign investors are waiting to see how the political situation in Thailand develops, but if there is no improvement throughout 2010 investor confidence will decline. Dow Chemical plans to continue with its commitment to pursue its investment in Thailand for long-term and sustainable growth. It said it is undeterred by the Map Ta Phut crisis and plans to continue its relationship with Siam Cement Group (SCG). Dow’s only project under suspension as of Q210 was a 220,000 tonnes per annum (tpa) specialty elastomers project. While Dow retains confidence in Thailand, some Japanese companies have indicated they may consider departure from Thailand if the Map Ta Phut issue remains unresolved for an extended period. The Japanese Chamber of Commerce has suggested that if the suspension of industrial projects at Map Ta Phut continues into H210, there may be some relocations to other parts of Asia.
Disputes over environmental and health regulations lie at the centre of controversy at Map Ta Phut, which is the focus of the expansion of the country’s petrochemicals industry. In 2009, the Central Administrative Court ordered the suspension of 76 industrial projects, many belonging to PTT and the Siam Cement Group, because of the failure of state agencies to comply with Section 67 of the Constitution which requires an independent body to screen new industrial projects classified as potentially harmful to the environment and public health. Subsequent court appeals by some of the project owners brought the number of suspended projects down to 46 by end-April 2010, including some that have been halted voluntarily by the companies. Nine out of 46 projects had received court approval to complete construction, but would need to petition again for approval to begin operations after construction is complete. Another 11 projects were seen as not being subject to the court orders as their environmental impact assessments were approved before the 2007 Constitution took effect and were allowed to go ahead without court permission. The remaining 26 projects were still seeking ways to present evidence to support their petitions to continue.
Meanwhile, Bangkok has seen massive political protests that increase political risk. Thailand’s petrochemicals industry has functioned as normal despite the situation in Bangkok. However, Thailand will need to deal with its long-standing political instability to attract and maintain foreign direct investment (FDI) in the sector. Foreign investors are waiting to see how the political situation in Thailand develops, but if there is no improvement throughout 2010 investor confidence will decline. Dow Chemical plans to continue with its commitment to pursue its investment in Thailand for long-term and sustainable growth. It said it is undeterred by the Map Ta Phut crisis and plans to continue its relationship with Siam Cement Group (SCG). Dow’s only project under suspension as of Q210 was a 220,000 tonnes per annum (tpa) specialty elastomers project. While Dow retains confidence in Thailand, some Japanese companies have indicated they may consider departure from Thailand if the Map Ta Phut issue remains unresolved for an extended period. The Japanese Chamber of Commerce has suggested that if the suspension of industrial projects at Map Ta Phut continues into H210, there may be some relocations to other parts of Asia.