The Bangkok Observation Tower Foundation, formed by major private business groups, has notified the Treasury Department of its request to cancel the lease contract to develop the much-touted Chao Phraya riverside observation tower.
The decision stems from a drastic drop in foreign tourist arrivals during the coronavirus crisis, said Yuttana Yimgarund, director-general of the Treasury department.
The tower project is owned and operated by the Bangkok Observation Tower Foundation, which was jointly formed by groups including Magnolia Quality Development Corporation, the property development arm of Charoen Pokphand Group; and Siam Piwat, the operator of Siam Center and Siam Discovery.
Magnolia and Siam Piwat are the joint developers of Iconsiam, a mixed-use project by the banks of the Chao Phraya River that opened in late 2018.
The planned tower was initially intended to be situated next to Iconsiam and opposite the Mandarin Oriental hotel.
Mr Yuttana said the Treasury Department has asked the private business groups to re-evaluate their decision, arguing that the battered tourism industry is likely to see a recovery soon.
The business groups earlier paid a leasing commission fee of 200 million baht to the Treasury Department. The department has the right to confiscate the fee if the development is cancelled.
The land where the tower is supposed to be situated is landlocked and inaccessible to cars. It has been left vacant for several years.
The project has been marred by controversies. In 2017, the cabinet approved leasing four rai to build the 459-metre tower. But the non-bidding nature of the project, whose 30-year lease came with a 70-million-baht price tag, left a bad taste in critics' mouths.
Patchara Anuntasilpa, the Treasury Department director-general at the time, cited a study by an "independent analyst" at Thammasat University to justify the project.
He said the study had found that the return on investment for the 4.62-billion-baht mixed-use observation tower, boasting both a panoramic view of the capital and an exhibition honouring the monarchy, would result in a 600-million-baht loss from planned ticket prices over the leasehold period.
The economic return of the project during that time could reach 46.8 billion baht.
The new attraction was expected to draw 1.1-1.4 million foreign tourists per year, potentially enticing visitors to spend an extra day in Bangkok, according to Mr Patchara.
According to the tower's management plan, foreigners would be charged an entry fee of 700 baht and Thais would be charged 350 baht.