EASTERN PROMISE
Opinions divided on economic push
When Gunn Tattiyakul, a villager from the Bang Khla district of Chachoengasao, learned that his province was chosen as a development site for the Eastern Economic Corridor (EEC), an ambitious government project, he couldn’t help but worry.
Three decades ago, natural gas was discovered in the Gulf of Thailand, leading then prime minister Gen Prem Tinsulanonda to create the Eastern Seaboard Development Programme in four eastern provinces — Rayong, Chon Buri, Chachoengsao and
Samut Prakan — in 1982.
The project set into motion the industrialisation of Eastern Thailand, marking the “Chote Chuang Chatchawan” era, which means “the illuminated success of the Thai economy”.
The era saw the establishment of the petrochemical industry and a crop of new industrial estates and factories in Rayong, including Map Ta Phut, the country’s largest industrial park.
Industrialisation spread to the surrounding provinces from thereon in.
The programme’s largest port was built in Laem Chabang in Chon Buri, ranked as the 21st among a global index of the cities with
the busiest traffic in
Those who were affected [by the Eastern Seaboard] are now panicking because of the EEC DECHARUT SUKKAMNERD KASETSART UNIVERSITY LECTURER
2015, according to the American Association of Port Authorities.
After the programme was implemented, Gunn recalls seeing his hometown become populated by factories.
That’s also when he recalls the problems started to spring up. Locals complained of growing air pollution after a gas power plant was set up to meet electricity demand.
Limited water supply was also a large issue. People experienced a longer-than-usual period of annual salt intrusion in the Bang Pakong River, a major water source in Chachoengsao, as more water was pumped out of the river by factories.
Friends for the Eastern Region Network, a development watchdog group, reported three years ago that they found an illegal dump site of hazardous waste in over 40 sites in Chachoengsao and Chon Buri, as well as some central provinces, due to industrialisation.
The local outcry against toxic waste spillage, speculated to stem from the Seaboard, seemed to culminate in the 2013 murder of village headman Prajob Naowa-opas — a vocal critic of one Chachoengsao waste treatment facility. His family accused the facility owner of masterminding the murder.
The Court of First Instance ruled in favour of the plaintiffs last year, ordering the death sentence for the facility owner. However, in January, the Appeal Court dismissed the case against the executive due to a lack of solid evidence. Prajob’s family court has re-approached the Supreme Court to try the case.
Controversial as it may be, many would agree that the Eastern Seaboard programme has played a major role in Thailand’s economic growth as well as growing its export industry and manufacturing sector.
In the Seaboard area, around 4,000 factories and 32 industrial estates have been established, with investment averaging around 1.8 billion baht in worth per year.
However, after the initial boom, several industries have faced economic slowdown.
In March, the World Bank published a report titled “Getting Back on Track: Reviving Growth and Securing Property for All”, stating that Thailand’s economy sustained a growth rate of 7.5% from 1960 to 1996.
However, from 2005 to 2015, that figure shrank to an average of 3.3%, meaning that Thailand, a middle-income country for several decades now, is expected to take over 20 years to gain high-income status.
In the meantime, countries like Cambodia and Vietnam are catching up as regional competitors, with average growth rates of 7%.
They are surpassing Thailand in indicators such as innovation, infrastructure, technological readiness, business sophistication, and higher education and training, according to the World Bank report.
The fear of slipping in the ranks as an Asean powerhouse has prompted Gen Prayut Chan-ocha’s government to push the EEC as the second phase of the Eastern Seaboard Development programme — another chance to regain Thailand’s economic footing by focusing on the provinces of Rayong, Chon Buri and Chachoengsao.
The government is now working on an EEC bill to legalise and eliminate investment barriers to the area — the first special economic development zone law in Thailand.
While the government has assured the public that the EEC will benefit everyone, many remain doubtful that the project will make for a more inclusive economy.
“We don’t know exactly what will happen here [in the East],” said Gunn. “But as we’ve learned from 30 years of the Eastern Seaboard, the EEC may not be so beneficial to us.”
“The [EEC] bill is being drafted, but we haven’t had a glimpse of it so far. We think the EEC will be totally top-down project from the state.”
A FALLING ROCKET
The government has worked hard to sell the appeal of the EEC to the public, as seen in a 10-minute video that they recently released.
“What are you waiting for?” The video asks viewers. “Invest now in the EEC.”
The video projects an EEC where industrial development is balanced with healthy lifestyles, including 3D modelling of high-rise buildings, green parks and clean factories. They call it the future of “perfect lifestyle for investors and all Thais”.
At a public seminar on the ECC early this month, economist and government representative Kobsak Pootrakool responded to the question: “Why do we need the EEC?”
“Because we haven’t made any big development moves in so long,” he said. “Our old opportunities are running out. We have to build new opportunities for the next 20 years.” His answer implicitly referred to the “lost decades” of Thailand following the 1997 crash when economic growth and export rates dramatically plummeted.
Kobsak compares the difficult period to a “rocket falling mid-flight.”
Since 2015, the EEC has been heavily pushed by the military government, approving a plan to develop 10 targeted industries in Thailand to power growth.
Five of these target the Eastern Seaboard’s current industries: cars; smart electronics; affluent, medical and wellness tourism; agriculture and biotechnology; and food processing.
The other five industries are robotics; aviation and logistics; biofuels and biochemical; digital technology; and medical hub.
The EEC project was approved in April last year, setting aside an area of 30,000 rai for industrial estate activity in the three target provinces.
Deputy Prime Minister Somkid Jatusripitak has assembled a team to initiate the EEC from 2017 through to 2021, responsible for investment in infrastructure, urban planning, land use designation and the drafting of the EEC bill.
The plans have kicked off with the government’s latest announcement to improve U-tapao International Airport in Rayong over the next one to two years.
It has also announced plans to build an extension of the Laem Chabang port.
The Royal Thai Navy’s Sattahip port plans to improve itself as a tourist hub by letting ferry cruises travel from the Chon Buri port to Hua Hin instead of going by road.
The government also plains to build a highspeed railway from Bangkok to the eastern provinces so that commuters can go to work in the capital in only one hour.
The National Economic and Social Development Board estimates that the EEC will increase the annual GDP growth rate and introduce over 100,000 new jobs per year.
It is also projected to bring in 10 million new tourists per year and improve people’s lives through more healthcare services and facilities.
A heavy PR campaign by the government has followed the announcement of the EEC alongside invitations to multinational companies to invest in the project.
Chinese e-commerce giant Alibaba Group plans to set up a logistics hub in the EEC for the distribution of its goods to the Asean region, while Airbus aims to establish an aviation maintenance and repair centre.
The government also plans to approach RollsRoyce to set up an aero-engine centre and get other electric automakers to invest in the EEC.
On Monday, deputy government spokesman Maj Gen Weerachon Sukondhapatipak reported that Vincent Lo, chairman of the Hong Kong Trade Development Council, met Gen Prayut to discuss how the EEC could help facilitate Chinese President Xi Jinping’s Belt and Road initiative.
“This is the most stable time in a decade for Thailand because the government has given priority to building political and economic stability,” Gen Prayut has been quoted saying.
Some critics, however, say that the country’s economic slump can be attributed to the political turmoil of the past decade, defined by the power struggle between the red shirts and the yellow shirts.
CONTESTED DEVELOPMENT
Academics and civil society members have emerged as some of the most vocal critics of the EEC.
The leading criticism is the lack of transparency on the drafting of the EEC bill, the details of which have yet to be fully disclosed with the public.
Another hotly contended topic is the land lease term permitting foreign investors to have a 50-year land lease agreement that can be renewed for an extra 49 years following the first term.
In fact, the land lease term is not new. The 1999 Lease of Immovable Property for Commercial or Industrial Purposes Act grants lease term up to 50 years for land used for industrial or commercial purpose. An extension of over 50 years is possible.
However, a vast majority of people were unaware of the law.
They are now frightened that the EEC could take advantage of it.
Gen Prayut’s original bill proposed the creation of an EEC committee that would have semi-independent power over development, tax deduction and other incentives for investors.
However, the proposal has been criticised for lending too much power to the governmentoverseen committee, which would give more priority to investors’ interest than that of locals.
Concerns for the environment and livelihoods surround the EEC.
“We’ve discussed the problems about the Eastern Seaboard for years,” said Prof Decharut Sukkamnerd, an economics lecturer at Kasetsart University who works in an organisation monitoring the impact of industries in Map Ta Phut town.
“But the problem isn’t just about the environment. It’s also about people’s living conditions. If we’re going to have phase two [of Thai development], we cannot repeat the same problems,” he added.
Reports of pollution, dumping of hazardous wastes and various health problems have steadily streamed in from communities since the launch of the Eastern Seaboard.
Some fishermen have reported declining fish stock and respiratory issues.
“We know that the East has been wounded by development,” said Decharut. “Those who were affected are now panicking because of the EEC.”
Decharut suggested that the government declare the eastern regions areas cultural and environmental zones before implementing the EEC in order to ensure people’s livelihoods can be maintained amid the area’s rapid industrial development.
A CALL TO INVEST
On April 19, Seub Nakhasathien Foundation, a conservationist group, was visited by representatives from the military, government and the police at their office. The group successfully demanded the cancelling of the foundation’s seminar about the EEC bill that was scheduled to be held five days later.
Decharut was a planned speaker at the event. A vocal advocate against the EEC, he has long demanded the details of the EEC bill be fully disclosed with the public.
Meanwhile, economist Kobsak Pootrakool has said that the bill will be released soon for public hearing, promising it will serve as proof of the project’s commitment to transparency.
The EEC bill has yet to be ratified, but the announcement of its impending approval has already pushed up land prices in the three targeted provinces of the project.
The Chachoengsao Chamber of Commerce estimates that land value in the EEC will increase by as much as 50%. Many investors have bought land for future speculation.
Alongside the EEC, the government has initiated Thailand 4.0, a project that since last year has sought to reform the economy through smart farming, the promotion of small and mediumsized enterprises, and gearing the important service sector towards more high-value guests.
Achieving the objectives of Thailand 4.0 will require a large push in infrastructure development and an upgrade of the work force’s skill set, says the Asian Development Outlook report from 2017.
A 2014 survey by the Economic Intelligence Centre showed that a shortage of skilled workers severely constrains business expansion in several sectors.
“The government must open up opportunities for young generations to enhance the EEC as a base for innovation, as well as the digital and high-technology industries,” said Meesak Chunharuchchot, president of the Chon Buri Real Estate Association.
“They must be mindful to engage with the local business sector and community. Effective development involves the integration of good urban planning, and a concern for the community and local way of life.”
A large influx of domestic migrants is expected after the launch of the EEC. Currently, in Chon Buri, it is expected there are over 1.5 million unregistered people living there. Similar issues have been raised in Rayong too.
“In the last 30 years, since the beginning of the ‘illuminated era’, Rayong people haven’t benefited much from the economic growth,” said Noppadol Tangsongcharoen, president of the Rayong Chamber of Commerce.
“Life quality is a major issue. Without investment in infrastructure prior to the launch of the Eastern Seaboard programme, local people have been forced to deal with life quality issues such as traffic jams, competition in school recruitment and packed hospitals.”
Even though the EEC is promoted as green industry, he said, the government need to prepare infrastructure for population growth resulting from rapid industrialisation.
According to the National Statistic Office, provinces in the Eastern Seaboard have doubled monthly household incomes from 1998 to 2015 — Chachoengsao from 14,010 to 27,555 baht, Chon Buri from 14,075 to 27,257 and Rayong from 12,491 to 30,315.
But the gross provincial product (GPP) in the same time period rose between 3.5 to four times in size — Chachoengsao from 87 to 309 billion baht, Chon Buri from 232 to 809 billion and Rayong from 205 to 863 billion — according to records from the Office of National Economic and Social Development Board.
Rayong is currently ranked the second province after Bangkok for having the highest GPP.
The varying growth rates of household income and GPP are raising questions about who will really benefit from eastern development between long-time locals and investors.
In the opinion of Chen Namchaisiri, president of the Federation of Thai Industries, the launching of the EEC is inevitable. He wants Thailand’s lost decades to finally come to an end.
“We’ve been waiting for so long to make this type of move,” he said.
“I don’t see any reasons to hold back. Foreign investors look at this project as their answer.”