Nation's investment regulations

Thai Court lifts ban on industrial projects halted on environment grounds

A Thai court ruled that most of the 76 industrial projects halted last year because of pollution and licensing concerns can be restarted, a decision that may resolve uncertainties about the nation's investment regulations.

The Administrative Court will allow 74 of the projects to proceed, Banyat Wisuddhimark, the senior state attorney, said after the ruling in Bangkok today. It revoked operating licenses for two projects that are included on a government list of "harmful activities," he said.

"From the verdict, only two companies may fall into the harmful list," Banyat said in an interview. "The rest can proceed. These two projects can ask for a license later when they complete the environmental and heath impact assessments."

The projects were halted last year after environmental groups and residents complained about pollution levels and the lack of consultation on new investments at Map Ta Phut, the nation's largest industrial port. Petrochemical, refinery and power projects in the area underpin manufacturing and exports that account for about 60 percent of Thailand's economic output.

"If most projects can move ahead, it will improve investment sentiment and help sustain the recovery in domestic investments," Usara Wilaipich, an economist at Standard Chartered Plc in Bangkok, said before the ruling. It may also ease concerns over policy uncertainty, she said.

SET Index Gains

Thailand's benchmark SET Index advanced 0.1 percent to 920.54, its highest close since Dec. 2, 1996.

An ethylene plant operated by TOC Glycol Co. Ltd. and a vinyl chloride monomer project owned by Thai Plastic & Chemical Pcl remain suspended, said Banyat, the senior state attorney. TOC Glycol is a unit of PTT Chemical Pcl.

Shares of PTT Chemical fell 3.7 percent to 103 baht, after earlier sliding as much as 7.5 percent. Thai Plastic shares dropped 1.6 percent to 18.1 baht.

The industry ministry in January said the stoppage may cause losses of 600 billion baht ($19.2 billion). The most- affected companies were PTT Pcl, Thailand's biggest by market value, and Siam Cement Pcl, the third largest.

Based on today's ruling, PTT's gas separation plant will be able to proceed, said Chainoi Puankosoom, chief executive officer of PTT Aromatics & Refining Pcl, who oversees the PTT operations affected by the Map Ta Phut case. The company will seek an operating license from the department of industrial works, he said.

'Problems Still Exist'

The case is the first to test Article 67 of the 2007 constitution drafted by a military-appointed committee, which bans all projects that aren't backed by environment and health studies and public consultation.

The Administrative Court issued an injunction in September last year, pending today's verdict, to halt work on 76 projects with a combined value of 400 billion baht because the government didn't create a body to evaluate their effect on public health.

"We haven't won yet, because most projects are allowed to proceed," said Suthi Atchasai, leader of the People's Eastern Network, which represented local residents. "The problems at Map Ta Phut still exist. We want to appeal if we can."

The projects, mostly in the Map Ta Phut industrial estate, 220 kilometers (137 miles) east of Bangkok, included plants owned by Dow Chemical Co., the largest U.S. chemicals maker, BlueScope Steel Ltd., Australia's largest steelmaker, and 25 facilities planned by PTT. Some projects were allowed to proceed earlier this year after companies showed evidence they didn't breach constitutional requirements.

Thailand's government has sought to limit the economic damage of the stoppage as the country emerges from recession.

Since the projects were halted, the government has approved several changes to environmental and industrial legislation, and on Aug. 31 it released a list of 11 activities that it deemed harmful to the environment that are subject to environmental and health impact assessments.

(Published by Bloomberg - September 2, 2010)

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