Thailand’s More Aggressive Environmental Regulations
By Suradit (Benjamin) Somjaidee, Waymark Thailand
Published March 20, 2010
Thailand, has attracted considerable foreign investment, in particular during the last 15 years, and while not nearly as large as FDI all over Mainland China, for example, the funds have given rise to industrial development for both local Thai companies as well as foreign multi-national companies. Meanwhile, news stories are also in abundance regarding situations that foreigners and locals alike are continuing to deal with including mass protests, airport closures and persistent rumblings about something that might resemble a military coup. As many locals say, “T.I.T.” as in This Is Thailand, with a voice of slightly humorous resignation – proud of their nation perhaps – but frustrated at third-world issues from prostitution, government instability, corruption, to taxi cab drivers who just cannot resist the effort to neglect using their fare meters, instead trying to negotiate ridiculously high cab fares with unsuspecting foreign guests.
This is an area with newfound industries such as automotive assembly (Ford-Mazda, General Motors, Toyota, BMW, for example), petrochemical, process chemicals, tires, and construction machinery building dotting the landscape. This country was seen as a new Asia-Pacific manufacturing and retail-leisure hub, with an educated workforce and inexpensive labor, and 80% recovery from the 1997-1998 Asian Financial Crisis already in place. The idea has been to help anchor the further development of all of South East Asia, until such time as Vietnam develops more and Malaysia’s political-religious uncertainties can be better understood. Singapore, while the permanent model for all elements of societal development, is small and for the most part filled up to capacity in terms of infrastructure.
In September of 2009, a court in Thailand, sided with the country’s increasingly green movement and suspended $12 billion in investments on the eastern shore – Thailand’s industrial hub in-and-around about a 2-hour drive from downtown Bangkok. This decision surrounds an environmental impact study within the area’s petrochemical zone. The move caught both the government and industry by surprise, perhaps compromising Thailand’s noteworthy 4-5% national growth rate for 2010. As one might expect, this effort has provided new evidence that environmental activists are continuing to gain ground in parts of developing Asia after years of relatively ineffective lobbying. Activists have further enhanced their struggle in places as diverse as Indonesia, Vietnam, and of course, China. And they are witnessing positive results and having an impact on multinational companies’ decision-making concerning future expansion programs in these nations, in particular as Thailand is probably midway in their overall development when compared to China, South Korea, and Singapore.
It is the hope of Bangkok to have in place a new environmental monitoring agency by the latter half of calendar year 2010, for the purpose of assessing and approving new projects, all-the-while keeping foreign direct investment flowing into the country. This is seen as a model for the under-developed Asian economies. However it is also viewed as a deterrent to many companies that are re-evaluating their strategic Asian expansion plans. Many of these companies have what are called “solid green credentials” but are becoming increasingly concerned about the extent of the changes and uncertain Thai-style regulatory environment. Optimism remains high that solutions will be formulated and resolved quickly, so as to make foreign direct investment decisions possible, in a nation already facing a wide variety of urgent national priorities.
The Japanese Chamber of Commerce in Thailand warned earlier this year that some of its members were considering relocating to other countries if these problems persist. And Ford Motor Company, already building autos and vans in Thailand and exporting from this operation to 50 countries, is slowing down their plans for Thai expansion or quite possibly another production facility to be built there.
For decades, Thailand’s industrial zones expanded unhindered by the kinds of safeguards demanded by citizens in more developed countries such as through much of Europe or the United States. Resident grievances due to toxic spills, higher rates of cancer, and quality of life issues were routinely ignored in Thailand by the local authorities. This in spite of the notion that the Thai government says that it followed international standards for pollution control and abatement and environmental protection.