Chance on Thailand

16 May 2012

Many, including the World Bank, consider Thailand to be one of the great development success stories, with sustained strong growth and impressive poverty reduction. The Thai economy was one of the world’s fastest growing in the decade ending 1995, with an average rate of eight to nine per cent a year, according to the World Bank. Following the Asian Crisis of 1997-98 the country managed a growth rate of around five per cent a year.

The International Tunnelling Association has taken heed of this success and is hosting World Tunnel Congress 2012 in Bangkok this month. The show is expected to attract the usual high levels of exhibitors and attendees as well as publishing an extensive list of technical papers.

The tunnelling market in Thailand has come in fits and starts. The floods that struck Bangkok in autumn 2011 have spurred investment in huge drainage tunnels for the city. Prior to the floods the Bangkok Metropolitan Administration announced a USD 541M Giant Tunnels programme to prevent large scale floods. Just months before the flood construction completed on the first tunnel, 5km long and 5m in diameter.

The floods caused large-scale loss to businesses and adversely affected investor confidence. This gave further impetus to the project and work was started on a 6.5km long, 5m-diameter tunnel and a 13.5km long, 6m-diameter tunnel, worth USD 68M and USD 153M respectively. Both tunnels are due to complete in 2015, according to the Construction Intelligence Centre (CIC), which is also from T&TI publisher World Market Intelligence (

In line with Thailand's somewhat unpredictable tunnelling sector, Phuket's Patong road tunnel remains on hold. The 3.25km twin bore road tunnel is to cross the hills that separate Patong from the rest of the Kathu region near Phuket. The USD 201M project was put on hold due to costs, but the recent addition of tolling to the plans means the project could be completed in five years.

There are strong opportunities in Thailand's construction market for the coming years. The construction industry was valued at USD 12.8bn in 2011. According to the CIC, the infrastructure construction market comprised 27.8 per cent of the construction industry value, and grew at a compound annual growth rate (CAGR) of 0.61 per cent during 2007-2011. Thailand has a highly export-dependent economy, and therefore the government is developing infrastructure in line with industrial growth. Many of Thailand's leading sectors, such as tourism, require infrastructural support and to this end the government is allocating funds for modernisation.

During 2009-2011, the government announced that the country is to allocate THB 2.1tn (USD 70bn) for infrastructure expenditure and THB 349.6bn (USD 11.4bn) for water management infrastructure. In mid-2009, the Electricity Generating Authority of Thailand (EGAT) announced plans to spend THB 20.6bn USD 644M) on renewable energy projects, mainly hydropower.

The Thai government is planning to launch a series of infrastructure funds, which will drive construction activity over the next five years. One such project is the THB 1.5tn (USD 50bn), 615km Thailand-Laos-China High-Speed Railway Line project.

The State Railway of Thailand (SRT) is to implement substantial upgrades to its existing rail infrastructure with a total investment of THB 176.8bn (USD 5.8bn) for 2010-2014. As a consequence of such developments the market is expected to record a CAGR of 3.90 per cent from 2012 to 2016, according to the CIC.

If you are heading to the WTC this month it is worth understanding Thailand's market and the future opportunities. As the strongest market in the region, Thailand's growth is also aiding neighbouring Cambodia, Laos and Burma to develop, opening up further infrastructure opportunities in hydropower and transportation.