Quasi-lockdown in capital to cost B140bn

Quasi-lockdown in capital to cost B140bn

A migrant workers dormitory in Bang Chalong market, Bang Phli district, Samut Prakan on Sunday following the announcement of lockdown measures on construction sites and worker camps in Greater Bangkok. Wichan Charoenkiatpakul
A migrant workers dormitory in Bang Chalong market, Bang Phli district, Samut Prakan on Sunday following the announcement of lockdown measures on construction sites and worker camps in Greater Bangkok. Wichan Charoenkiatpakul

The 30-day temporary lockdown of all construction sites and worker camps in Greater Bangkok will cost 140 billion baht and have a ripple effect across all supply chains in the construction and property sector with unpredictable losses.

Sarun Rojlertjanya, deputy secretary-general of the Thai Contractors Association, said losses from the abrupt lockdown order in the construction sector would be larger than the value it contributed to gross domestic production.

"The construction sector's supply chains are large," he said. "It involves plenty of construction materials manufacturers, sub-contractors and transportation services," he said.

Each year, the construction sector contributes 8% of GDP. The one-month freeze will cost 0.66% of GDP or around 100 billion baht from a total GDP of around 15.7 trillion baht, which was the 2020 figure.

Besides deteriorating contributions to GDP, the priority of the sudden lockdown is on the safety at construction sites as several construction jobs might create dangerous situations if not suspended properly such as cementing on high floors or underground jobs.

"It was announced late afternoon last Friday and took effect on Monday. We had very little time left to clear construction sites and prepare them for a long freeze," Mr Sarun said.

"The longest freeze we usually have is during Songkran but we have a few weeks to prepare for the suspension. To make this situation worse, it's now also the rainy season."

Another issue is the fines from construction delays. For private sector projects, they can compromise with each other but for public projects, some government agencies have been reluctant to give an extension period without a fine as they are concerned about breaking government regulations.

"This issue has been a worry since the first wave of Covid-19 last year as the government allowed its agencies that own projects to make their own decisions. The cabinet should issue an official order so that they can follow it comfortably."

Mr Sarun added that a moratorium on delayed fines should be extended longer than the lockdown period of 30 days as some construction jobs need extra time to prepare and restart. It may take time to find new labourers for some small contractors.

Issara Boonyoung, honourary president of the Housing Business Association, said the one-month suspension will cost around 30-40 billion baht of housing transfers in the residential market.

"The property market has a multiplier effect of 2.8-3 times on the economy," he said.

Piya Prayong, chief executive of the country's largest residential developer Pruksa Real Estate Plc, said the one-month freeze will affect housing transfers worth around 3 billion baht. One of them is a condo project worth 1 billion baht.

"To boost the market, the loan-to-value limits should be revoked to allow homebuyers to get units transferred."

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