News Room - Business/Economics

Posted on 01 Dec 2009

Thai court to give early industrial estate verdict

Thailand's

Supreme Administrative Court

said on Tuesday it would give a ruling on Wednesday on environmental health concerns that led to the suspension of some activities at the country's biggest industrial estate.

 

The stock market surged 2 percent to a two-week high on optimism that the verdict -- much earlier than expected -- would be positive for companies such as top energy firm PTT (PTT.BK) and industrial conglomerate Siam Cement (SCC.BK) that have operations at the Map Ta Phut industrial estate.

 

"It is widely expected that the verdict due tomorrow will be positive," said Pichai Lertsupongkij, head of sales at Thanachart Securities.

 

The court said in a statement that it would give its verdict at 1:30 p.m. (0630) on Wednesday. A verdict had not been expected until February or later.

 

The central bank has said the dispute could cut economic growth by 0.5 percentage point next year if it dragged on.

 

In late September, the

Central Administrative Court

ordered the suspension of operations worth $9 billion at 76 industrial plants at Map Ta Phut in the eastern province of Rayong, home to the world's eighth-biggest petrochemical hub.

 

The court's injunction followed complaints from locals and environmental groups led by the Stop Global Warming Association against state agencies and several ministers for failing to issue proper operating licences at the estate.

 

Among the projects affected are a gas separation plant, a gas-fired power plant and gas pipeline projects owned by PTT, plus projects belonging to PTT affiliates including PTT Aromatics and Refining PTTAR.BK and PTT Chemical PTTC.BK.

 

Foreign companies have also been caught up in the case, including a Thai unit of Germany's Bayer (BAYGn.DE), India's Aditya Birla Chemicals (ADYA.BO) and Australia's BlueScope Steel Ltd (BSL.AX).

 

At midsession, the main Thai index .SETI was up 1.9 percent at 702.13 after hitting a two-week high of 702.71.

 

PTT shares, which have underperformed the market since the court order, jumped 4 percent to 233 baht, while Siam Cement rose 2.7 percent to 232 baht.

 

Even if the

Supreme Administrative Court

overturns the

Central Administrative Court

's ruling, some analysts said the case had put investment in Thailand at risk as foreign investors would be more cautious about investing in the country.

 

Under the 2007 constitution, companies need approval for new industrial projects that might be harmful to people and the community. That entails an environmental impact assessment (EIA) and a health impact assessment (HIA).

 

Before 2007, industrial plants needed only EIA approval at Map Ta Phut. Most companies complied with EIA rules but failed to abide by HIA requirements because the government had not yet set up an independent organisation to oversee the health impact.

 

The government recently set up a commission, chaired by former Prime Minister Anand Panyarachun, to help resolve the conflict