Thailand Infrastructure Report Q2 2012

BMI View: The latest data from the Thailand National Economic and Social Development Board shows that, in real terms, Thailand's construction sector contracted by 5.4% year-on-year (y-o-y) in the third quarter of 2011, compared to real growth of 5.2% y-o-y in the period in 2010. Although we believe that several factors taking place in Thailand (devastating floods, poor fiscal position, slow progress in raising infrastructure financing, pertinent political risks and the downward revision in high-speed rail plans) point to an enduring decline in the country's construction activity in Q411, we believe there could be a modest recovery in 2012. As such, we have revised our forecasts for Thailand's construction sector, with construction real growth reaching 3.2% (previously 2.2%) in 2012, up from an estimated 4.5% contraction in 2011.

Key drivers include:

In December 2011, Japanese construction company Mitsubishi Heavy Industries was awarded a contract to construct a 1600MW gas turbine combined cycle power plant in the Nong Saeng district of Thailand's Saraburi Province, reports power-technology.com. It will be operated by Gulf JP and will receive financing of US$170mn from the ADB. The plant is scheduled to be fully operational by December 2014.

In January 2012, the Thai government announced a THB400bn (US$12.6bn) transport infrastructure investment programme, reports railwaygazette.com. It had identified 128 projects for completion by 2016, with THB230bn (US$7.3bn) set aside for rail development in the north of the country. The largest project is the construction of a new 750km railway line between Bangkok and Chiang Mai. Other projects include the flood prevention schemes, double-tracking of six sections of the railway network and the construction of a new trans-peninsula railway bridge between Songkhla and Pak Bara.

In January 2012, Airports of Thailand has announced that construction of the new terminal at Phuket International Airport will not be completed before 2015. Airports of Thailand vicepresident Prathuang Sornkhom said that the design phase of the US$180mn project will now not be finalised until mid-2012.

In January 2012, UK energy company Smart Green Energy announced that it will construct three new power plants with a combined capacity of 79MW in Thailand, reports nationmultimedia.com. The first facility is a 27MW solar photovoltaic power plant in Chaiyaphum province, which is scheduled to be operational by December 2012. The other two plants are a 12MW facility in Roi Et province and a 40MW facility in Khon Kaen. The total cost of the three projects is THB12.1bn (US$387mn) and Bangkok Bank will provide Smart Green Energy with a proportion of the funding.