The Nationthailand

Add to Home Screen.

SATURDAY, June 10, 2023
Analysis: EEC mega-projects have stalled under Prayut administration

Analysis: EEC mega-projects have stalled under Prayut administration

FRIDAY, May 05, 2023

Prime Minister Prayut Chan-o-cha has been governing the country for two terms, but during his time in office he failed to get the private sector to invest in the mega-projects designed to transform the Eastern Economic Corridor (EEC) into a global powerhouse.

These include the construction of a high-speed railway, the expansion of Laem Chabang Port, and the development of U-Tapao Airport.

Prayut has been pushing for the development of the EEC since he came to power as the head of the military government. The aim was to further develop the eastern region of Thailand and promote it as a single massive economic zone.

The EEC was officially launched in 2018 after the passage of the Eastern Economic Corridor Act, which was a project Prayut had been pushing for since he first came to power after the 2014 coup.

However, five years later, there are still no projects that private-sector partners can start building, primarily due to problems with land allocation.

A change of ministers overseeing the EEC has also caused delays and setbacks in support for development.

During Prayut's second term, Somkid Jatusripitak was appointed to oversee the development of the EEC. However, a major resignation in July 2020 resulted in the ministers in Somkid's faction responsible for the EEC being removed from their positions, including Finance Minister Uttama Savanayana, and Kobsak Pootrakool, a minister attached to the Prime Minister's Office.

The task of overseeing the development of the EEC was then handed over to Deputy Prime Minister and Energy Minister Supattanapong Punmeechaow.

The delays in various projects are, therefore, his responsibility. Supattanapong oversees the Eastern Economic Corridor Development Policy Committee and chairs the Eastern Economic Corridor Management Committee.

More delays came from negotiations with private partners on several projects, both before and after signing investment agreements, including the high-speed railway project.

High-speed railway

It aims to link three airports – Don Mueang, Suvarnabhumi, and U-Tapao – and was the first project opened to private-sector investment in October 2019.

It hit a snag, preventing construction from starting for more than three years.

Asia Erawan Co Ltd – the contract partner of the State Railway of Thailand (SRT) – cited the impact of the Covid-19 pandemic as the reason for the delay and requested government assistance to mitigate its impacts.

Consequently, the investment agreement had to be revised.

Private sector developers have submitted proposals to the SRT to clear all obstacles in each area for the handover of land. The SRT is in the process of demolishing and relocating public utilities and reclaiming land between Don Mueang and Suvarnabhumi airports. The section between Suvarnabhumi and U-Tapao has already been handed over to the private sector.

The Eastern Economic Corridor Office of Thailand previously estimated that the handover of land to the private sector would take place in 2022, and the private sector would be able to begin construction work in early 2023.

However, the construction cannot begin because negotiations to amend the investment agreement have not been concluded.

Eastern Airport City

A joint investment agreement was signed between the government and the private sector on June 19, 2020 for the development of the U-Tapao Airport and the Eastern Airport City.

The Royal Thai Navy signed the agreement with U-Tapao International Aviation Co Ltd, but little has been accomplished besides revising the master plan.

The size of the passenger terminal building was reduced due to the impact of the Covid-19 pandemic, which pummelled the aviation industry.

There has also been a delay in transferring the contracted land to the private sector, even though the 6,500 rai (about 2,570 acres) area belongs to the Royal Thai Navy .

Construction of a second runway at the U-Tapao ran into budgetary problems. The government could not allocate funds for construction. This forced the Finance Ministry to seek 16.2 billion baht in loans for the project. Despite the joint investment agreement being signed almost two years ago, U-Tapao International Aviation has yet to start construction.

Aircraft maintenance centre

The project to build an aircraft maintenance, repair and overhaul centre at U-Tapao has also stalled. The government assigned Thai Airways International to lead investment in the centre project. However, due to the impact of the pandemic, Thai Airways had to focus on a recovery plan for its own operations.

Coupled with the aviation industry being stagnant for the past year, the proposed centre is struggling to attract domestic and international investment.

Laem Chabang

The plan to develop Phase 3 of Laem Chabang Port aims to allow it to handle larger vessels and accommodate rising demand for sea transportation.

The Port Authority of Thailand signed an investment agreement on November 25, 2021 with GPC International Terminal Co Ltd.

The project has been delayed because the government's investment in dredging has not been completed. As a result, the Port Authority of Thailand has not been able to deliver the area to GPC. As a result, GPC can negotiate amendments to the investment agreement.

4 trillion baht

Prayut has said that his government believes the EEC can generate 4 trillion baht in revenue for the country within three years.

This includes new investments in industries such as electric vehicles, smart electronics, and digital infrastructure, such as data centres and cloud services. Several companies have already invested in Thailand, including Amazon Web Services, Google, and Huawei.

The 4 trillion baht number is attractive. Progress on the stalled mega-projects could make it feasible, or at least appear so.