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Thailand Infrastructure investments came to the fore in 2009

Infrastructure investments came to the fore in 2009 because Thailand’s THB1.9trn (US$57bn) four-year stimulus plan is heavily geared towards infrastructure. The government is keen to promote private-sector funds in the infrastructure sector, to complement its own allocations.

Boris Sullivan

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suvarnabhumi Thailand airport

Infrastructure investments came to the fore in 2009 because Thailand’s THB1.9trn (US$57bn) four-year stimulus plan is heavily geared towards infrastructure. The government is keen to promote private-sector funds in the infrastructure sector, to complement its own allocations.

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Several announcements the previous quarter anticipate large scale projects in the sector. Firstly, Thailand’s Ministry of Transport outlined an investment plan of more than THB1trn (US$30bn) for the country’s railways over the next 20 years. Secondly, the Ministry of the Economy is preparing a proposal for the creation of an infrastructure fund through which state-owned companies can invest in infrastructure. Finally, Airports of Thailand, the state-owned operator of the country’s main airports, approved the Suvarnabhumi Airport Expansion Phase II venture that will take place between 2010 and 2016.

In light of revised historical data becoming available from the national statistics agency we have revised our historical data series and as a result our forecasts as well. New data for 2008 indicate that construction industry value was THB260bn (US$7.6bn) in 2008, as opposed to THB251bn (US$7.3bn) published earlier. We were forecasting a contraction in construction industry value for 2009 of THB20bn (US$605mn). Our forecast proved to be slightly bearish; construction industry value over 2009 contracted by THB16bn (US$485mn) according to new data by the national statistics agency.

We anticipate recovery in 2010, with construction industry value growing by 1.5% in real terms reaching an industry value of THB255bn (US$7.8bn). Growth will be fuelled by government supported initiatives for infrastructure spending, primary among them the stimulus plan, as well as smaller initiatives such as the BHT200bn (US$5.9bn) for investments in the provinces’ infrastructure in 2010.

suvarnabhumi Thailand airport

The Suvarnabhumi Airport Expansion Phase II venture with an estimated cost of THB77bn (US$2.3bn) presents some upside to our forecasts, but because works have already been delayed, until the project gets underway we will refrain from revising them. Political risk is the greatest risk in the country’s otherwise stable business environment. With it comes a string of other issues, such as the reliability of policy continuity (especially concerning infrastructure investments and political support for PPPs). BMI’s Country Risk team notes that as long as political uncertainty remains elevated, investment growth will remain anaemic and forecast investment growth to reach 3.0% in 2010, driven largely by low base effects on account of the 8.8% collapse in 2009.

via Thailand Infrastructure Report Q2 2010 – Construction Market Report.

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