Mekong Eye

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Thai junta aims to make eastern economic hub its legacy

Eastern Economic Corridor projects get fast-tracked as govt envisions it as the heart of Mekong economies.


By Leslie Lopez

Rayong, Thailand, July 21, 2017

Straits Times

With dark rain clouds from the Gulf of Thailand set to make landfall, the coastal U-Tapao airport owned by the Thai Navy hardly fits the bill of an economic game changer.

The departure hall is bereft of travellers. Airport handlers drag their feet to lunch at a nearby canteen before they see a small spike in activity, when the next passenger plane touches down.

Thailand’s military government, however, sees things differently.

The airbase, best known as the staging ground for the deadly sorties over Vietnam by the US Air Force B-52 bombers in the early 1970s, has been picked as the central piece of the country’s most ambitious economic undertaking.

The government is making a US$43 billion (S$59 billion) push behind a plan to quickly expand the economic areas outside Bangkok that will showcase urban centres connected by a high-speed rail network and new motorways.

Thai economic planners also envision industrial centres that will turn the area, better known as the Eastern Economic Corridor (EEC), into the heartbeat of the vibrant Mekong region, which covers Laos, Cambodia, Vietnam and Myanmar.


The EEC covers the already established industrial provinces of Chon Buri, Rayong and Chachoengsao, to the east of Bangkok.

“We are not just selling Thailand, but rather a market of more than 230 million people with economies growing at around 7 per cent a year for the next decade,” Dr Kobsak Pootrakul, Vice-Minister in the Prime Minister’s Office, told The Straits Times. He is the chief architect behind the economic masterplan. “Our story is that we are at the centre of what is perhaps the most economically vibrant region in the world,” he added.

There is much at stake for the military government of Prime Minister Prayut Chan-o-cha, who has made turning around Thailand’s sluggish economy a major priority.

Dogged by persistent political legitimacy issues at home and abroad since taking power in a coup three years ago, the junta has embraced the EEC as a sacred chalice to stamp an economic legacy ahead of a national election, expected later next year, to return the country to civilian rule.

Projects are being fast-tracked under a controversial law popularly known as Article 44 of the post-coup Constitution, which gives the premier absolute powers.

Malaysian businessman Rameli Musa, whose Ingress Industrial Group has been manufacturing auto parts in the EEC since 1998, is upbeat about the area.

“Despite all the troubles, policies here have remained the same and the approach is very business-friendly, which is why we are expanding,” he said.

Mr Rameli is set to list his Thailand operations next month on the Bangkok stock exchange.

Dr Kobsak’s team has laid down strict guidelines to ensure that critical infrastructure projects under the EEC are approved within three months so that construction can take place sometime this year, or in the third quarter of next year, at the latest.

“Our target is to get the pillar projects going before the new government comes in. The EEC projects will have a life of its own,” he said.

He was referring to the construction of an aviation maintenance park around U-Tapao airport, the expansion of the Laem Chabang and Map Ta Phut port facilities, and a high-speed rail network that will connect the U-Tapao area with Bangkok’s Suvarnabhumi and Don Muang airports.

The EEC covers over 13,000 sq km in the three industrial provinces that house some of Asia’s largest petrochemical, automotive and electronic production centres.

Industrial development, however, will first be concentrated in the southern patches covering roughly 1,500 sq km, an area about twice the size of Singapore.

Thailand’s economic planners believe that the plan – which will be financed by as much as US$10 billion from direct state contributions, with the remainder through public-and-private-sector partnership arrangements – will be central to attracting high-end industries such as aircraft maintenance and electronics, and help the area emerge as a hub for building a regional supply chain.

“If they get it right, the greater Bangkok region and the Eastern (Economic) Corridor can become one of the major clusters of economic activity in the world,” said Mr Manu Bhaskaran, chief executive of Centennial Group economic advisers, who recently visited the area on a familiarisation tour.

The Thai economy has been in a funk since the 2014 military coup, which came after more than 10 years of political instability.

The economy expanded by 3.2 per cent last year and is expected to grow by 3.4 per cent this year.

The huge gamble the military government is waging on the EEC and by its use of the Article 44 law – often referred to locally as the “dictator’s law” – is to force its economic agenda.

The move is stirring criticisms that environmental concerns and the rights of local communities are being steamrolled over.

Some economists also argue that it would have been more politically expedient to spend these huge amounts of development dollars in more economically backward regions, such as Thailand’s north-east, where political sentiments against the government remain high.

But Dr Kobsak said that for the government’s economic plan to succeed, it had little choice but to build on the foundations of the eastern region.

“If this was a brand new project, there would be a lot of questions. But the eastern seaboard has been a development hub for more than 30 years. We are building on this success,” he said.


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