Kanit Sangsubhan, Secretary-General, Eastern Economic Corridor (EEC) Office of Thailand
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On securing deals during lockdown and planning for the post-pandemic recovery
What impact has the global Covid-19 pandemic had on infrastructure development in the EEC?
KANIT SANGSUBHAN: Covid-19 has not substantially impacted infrastructure development so far, as prior to the pandemic all of our projects were either in the preparation phase or we were looking for investors. Two projects had been approved before the pandemic, namely an oil and gas development that was valued at around $1bn, and a high-speed train link to U-Tapao International Airport, estimated at $8bn. Even during the containment period, we secured a deal for the Eastern Airport City project, for which we received approval from the government at the end of May. We expect to sign this $10bn deal by June 19.
Video conferencing technology allowed us to continue discussions related to these projects during the pandemic. As a result, we are now in the final stages of negotiations for a $3bn deepsea port project, and we expect to seal around $22bn in deals by the end of June. Construction, conversely, has been negatively impacted for the projects that had received approval prior to the outbreak of Covid-19.
Overall, Thailand has managed the crisis quite well: after 40 days of challenging conditions and rising health concerns, the risks subsided considerably. From early May we typically experienced a few new cases per day, but these were primarily identified in persons in quarantine after returning from abroad, largely from the Middle East. We have now had a number of days with zero new cases, so we are hopeful that the country will begin to reopen soon.
Which sectors do you expect to drive investment growth in the EEC once disruption from the pandemic subsides?
SANGSUBHAN: Even before Covid-19, the US-China trade war was leading foreign investors to increasingly consider Thailand. This continued during the pandemic, facilitated by video conferencing. For example, a Japanese firm informed us that they do not wish to expand production in China beyond what is necessary to serve China’s domestic market. Furthermore, Chinese firms themselves know that if they stay inside China their export potential could be limited. Therefore, some Chinese investors – even during the pandemic – have engaged in discussions with us regarding relocating production facilities to Thailand.
There are four specific areas with standout potential for future development in Thailand, all of which were discussed by Prime Minister Prayut Chan-o-cha and the EEC in May. The first is of these is 5G technology: Thailand is pursuing a policy of installing 5G throughout the country and this is a high priority for the private sector. The EEC mandates that 5G must cover at least 50% of the country by the end of 2020, which means equipment installation must commence this year in industrial areas and some big cities like Pattaya. Japanese and Chinese investors know we are moving forwards with 5G technology, and this means our commitment to upgrading the automation systems in Thailand’s industrial areas will be realised. At the same time, we are looking towards other developments related to 5G, including data storage facilities.
The second opportunity is logistics. We are in the process of restructuring logistics systems in the EEC. We currently have an airport and a seaport, and we are developing an electronic system to link together the entire logistics value chain. E-commerce businesses and related delivery services have been growing in Thailand, as highlighted by Chinese giant Alibaba’s plan to start operations in Thailand within the coming months.
The third opportunity is in health care. Covid-19 proved that Thailand’s health system can perform relatively well, so there will be more projects in this area. The fourth opportunity lies in new urban developments. Plentiful green spaces in urban areas can help prevent the spread of viruses, which is seen by examining transmission in other Asian countries with densely populated cities. Cities must, therefore, rise to the standards of the future and this will create many new business opportunities. We have talked with our partners in South Korea, Japan and China about the development of new cities in the EEC. We will present the EEC’s new city development programme in June, with an investment value of around $10bn.
How should Thailand prepare for the recovery phase?
SANGSUBHAN: We expect the business environment to normalise by the first quarter of 2021. We will try to use the period leading up to full normalisation to connect with new businesses as much as possible. This period also provides the government with the opportunity to accelerate training programmes for the advanced industries attracted to the EEC. For example, workers laid off from the automobile industry due to the recent fall in demand should be retrained so that they can return to the workforce with the new skills and expertise demanded by the market.
To view the original interview from Oxford Business Group please click the link below.