12 BANGKOK MEGACITY
HUGE POTENTIAL OF CONSTRUCTION AND INFRASTRUCTURE SECTORS FOR THAILAND’S AEC HUB ROLE Contributed by Jus Laws & Consult (J&C) Thailand is one of the top 50 economies worldwide and has been ranked third among ASEAN countries in the ease of doing business. According to the Davos World Economic Forum 2016, Thailand is the world’s best place to start a business. Thailand is the gateway to the Association of Southeast Asian Nations (ASEAN) region as its strategic location gives access to a market of more than 625 million people in ASEAN and 2.5 billion consumers in the Asian region. Bangkok is by far the country’s biggest city with a highspending middle class and it is the country’s economic engine. Due to its fast growth, Thailand is seriously committed to developing its key infrastructure in order to enhance sustainable growth in the long term. The Thai construction industry registered a solid annual growth rate (CAGR) of 6.03 per cent during 2009-2013. Furthermore, after Thailand was proposed by the ASEAN Economic Community (AEC) in 2015 as its regional hub, the construction market was projected to grow at a rate of 3.19 per cent, 1
and a number of independent firms have forecast a 9.15% CAGR. 1 Despite some temporary internal political problems, the Government of Thailand has allocated nearly US$ 100 billion for the ongoing infrastructure development plan (2014-2021).2 Thailand’sconstruction industry is expected to increase in value, to reach US$ 19.9 billion in 2019, with construction becoming the second-largest industrial sector. 3 Today, the infrastructure a n d ci v i l c o ns tr uc tio n s e c to r s are experiencing solid growth in Thailand and in the authors’ opinion there are two main reasons that explain this tendency. The first reason is the importance of the tourism and hospitality sector to Thailand’s economy. Basically tour ism makes a contribution of 10 per cent to the country’s gross domestic product (GDP) and it is projected to rise to Baht 4,496.7 billion by 2025. 4 The Government needs to modernize the key infrastructure of the country such as
"Construction in Thailand – Key trends and opportunities to 2018", Research and Markets, November 2015. market in Thailand, 2015-2019”, Technavio, July 2015. 3 “Growth forecast for Thai construction”, Mike Hayes, International Construction, November 2015. 4 “Travel & Tourism – Economic Impact 2015 Thailand” World Travel & Tourism Council, London. 2 “Construction
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airports, ports and motorways in order to prepare for the sheer mass of expected visitors. The regulatory environment is an important factor if the country wants to fully capitalise on its natural attractiveness to visitors from all over the world. The second reason for the solid growth of construction and infrastructure is the policy formed by the Government in May 2014 to consolidate its policy towards modernizing the country. One of the largest infrastructure projects in Asia will begin in 2016, i.e., the double-track railway project that will link China and Thailand. The project is part of the Pan-Asia Railway Network's central route, which will connect the countries of China, the Lao People’s Democratic Republic, Malaysia, Singapore and Thailand. In addition, the Transport Ministry announced that 17 infrastructure mega-projects with a value of Baht 927 billion will be tendered in 2016 and 2017.