Economist mulls murky EEC future
The new post-election government could lead to more Eastern Economic Corridor (EEC) investment but could also result in the cancellation of some key projects, says an economist.
"Government investment so far has been really disappointing in the EEC," said Burin Adulwattana, chief economist at Bangkok Bank. "The government has kicked the can down the road every year and for the past five years the average disbursement rate of investment was only 70% of planned investment, while last year was even more disappointing at 56%."
The next government may speed up the process and come up with a stronger commitment to fully invest in EEC projects through public-private partnership (PPP), Mr Burin said.
The EEC is the military-led government's flagship investment scheme, spanning the eastern provinces of Chon Buri, Rayong and Chachoengsao. The government hopes to complete the EEC by 2021 in a bid to turn these provinces into a hub for technological manufacturing and services connected to Asean neighbours by land, sea and air.
Public expenditure in the first quarter, starting from Oct 1 of fiscal 2019, was valued at 924 billion baht, down 2.2% year-on-year. Full-year expenditure for fiscal 2018 and 2017 was logged at 2.9 trillion and 2.8 trillion baht, respectively.
Despite years of press coverage for the EEC and government promotion, contracts have not been awarded to companies for most of the major EEC projects, including the U-tapao airport expansion, an aviation maintenance, repair and overhaul (MRO) centre and infrastructure development at the Map Ta Phut and Laem Chabang ports.
A consortium led by Charoen Pokphand (CP) Group has been awarded the rights to build the Bangkok-Rayong high-speed train, but the consortium and the government have yet to reach a final agreement.
Obboon Thirachit, director of the Fitch corporate ratings team, said the election may delay some EEC projects and the potential of political instability is a key risk to economic growth and investment.
All major political parties, however, place infrastructure development at the top of the agenda and will likely continue with the previous government's investment roadmap, Mr Obboon said.
"I believe the EEC law is a safe framework going forward," he said. "Expect more delays, but the long-term implementation of major EEC projects should be there."