Thai court upholds suspension of industrial projects – Part 1By Bangkok Pundit Dec 03, 2009 7:30AM UTC
The Bangkok Post:
The Supreme Administrative Court on Wednesday ruled that 11 of 76 projects at the Map Ta Phut industrial estate frozen by a lower court injunction because of pollution concerns could proceed.
Judge Kasem Comsatyatham said work on the 11 projects could continue as planned because they would not have an environmental impact.
The court upheld temporary freeze on the other 65 industrial developments
BP: As the article notes some big players, PTT and Siam Cement are affected. The list of the 11 projects who have been given the green light is available from The Nation.
First, some brief excerpts from the media on the importance of Map Ta Phut.
Hopes for the pending projects now rest on a committee chaired by Anand Panyarachun, former prime minister, which is expected to deliver its recommendations in the first quarter of next year.
The government had warned that the closure of Map Ta Phut could knock 0.5 percentage points off Thailand’s gross domestic product.
The petrochemical, refinery and electricity projects in Map Ta Phut, Thailand’s largest industrial port, buoy the country’s manufacturing and exports, which amount to about 60 percent of Southeast Asia’s second-biggest economy.
“We are a one-strategy economy, and that is industrialization using Map Ta Phut,” Supavud Saicheua, managing director of Phatra Securities Pcl, Thailand’s third- biggest brokerage, said before the ruling. “Growth could drop quite precipitously” without the investments, he said.
btw, this is a long post with lots of details, but if you want a quick and dirty summary, just read the Bloomberg article for the basics.
The remaining 65 projects worth an estimated $8 billion will be halted during an investigation by a government-appointed commission, a surprise decision that triggered a 2.3 percent drop in Thai stock prices.
“While we respect the court’s decision, it is definitely going to erode investors’ confidence in Thailand,” Nandor von der Luehe, chairman of the Joint Foreign Chambers of Commerce, which represents 10,000 foreign companies in Thailand, told reporters.
The ruling “also puts the financing of these projects at risk. The cost of doing business in Thailand is definitely going up after this ruling. We definitely hope that the government will find a quick solution,” he added.
Japanese investors, who are partners in several suspended projects, expressed concern that the delay of these projects would affect the chemical, steel, plastic and automobile industries.
“Most suspended projects are those in the upstream petrochemical industry, which is the source for many mid- and downstream sectors,” said Yo Jitsukata, president of the Japan Chamber of Commerce.
“The court’s ruling today will not only affect the 65 projects, but many other related projects nationwide. Those value-chain projects will then have to import feedstock for their domestic production, so costs will be higher.
The court’s ruling would inevitably put a brake on foreign direct investment due to increased uncertainty, he said.
Second, some background information on the history of Map Ta Phut and the legal case. Most of the below information is a summary of this draft UNESCO report (PDF), but some additional information from other resource is included with links.
The Map Ta Phut Industrial Estate is located in the Rayong province and consists of 117 industrial plants which include 45 petrochemical factories, eight coal-fired power plants, 12 chemical fertilizer factories and two oil refineries. Operations began in 1990
About 25,000 people live in the Map Ta Phut municipality. In 1997, the pollution came to public attention when 1,000 pupils and teachers at a local school suffered from illnesses after inhaling toxic emissions and had to be hospitalized. A independent test carried out in 2005 demonstrated that airborne cancerous toxic chemicals released by Map Ta Phut Industrial Estate exceeded safety standards of developed nations by 60 to 3,000 times. In 2007, tests conducted on 2,177 Map Ta Phut residents between June and August showed that more than 300 of them had unusually high levels of benzene. Tests on water resources in the area surrounding the estate show contamination.
A number of locals (“plaintiffs”) in the area surrounding the Map Ta Phut Industrial Estate brought a case against the National Environmental Board (NEB) in October 2007. The NEB consists of Prime Minister is the Chairman, Deputy Prime Minister Suthep, Natural Resources and Environment Minister Suwit and a number of other Ministers – see section 12 of the Enhancement and Conservation of National Environmental Quality Act B.E 2535 (1992) (“Enviroment Act”) for the full list.
The reason the lawsuit was brought was that under section 13 of the Environment Act, the powers and duties of the NEB include:
- To submit policy and plan for enhancement and conservation of national environmental quality;
- To prescribe environmental quality standards;
- To supervise the enactment of regulations and laws relating to enhancement andconservation of environmental quality; and
- To give approval to plans such as the Environmental Quality Management Plan and the Provincial Action Plan for environmental quality management.
The plaintiffs claimed that the NEB was negligent in failing to designate the area a “pollution control area” as required by section 59 of the Environment Act which states:
“In case it appears that any locality is affected by pollution problems and there is a tendency that such problems may be aggravated to cause health hazards to the public or adverse impact on the environmental quality, the National Environmental Board shall have power to publish notification in the Government Gazette designating such locality as a pollution control area in order to control, reduce and eliminate pollution.” (emphasis added)
For more information about the designating an area a “pollution control area”, please see the Pollution Control Department website who have a flowchart and explanation.
In March 2009, the Rayong provincial administrative court found that the NEB had not complied with section 59 of the Environment Act by failing to designate the Map Ta Phut municipality as a “pollution control area”. The court ordered that the NEB clean up the polluted industries within Map Ta Phut Industrial Estate, and to declare the areas around the estate a “pollution control area” within 60 days.
To BP’s view the court has engaged in a merits review of the decision (ie putting themselves in the position of the decision maker and making a decision) because section 59 simply states the NEB shall have the power to designate instead of shall designate (i.e implication that they have discretionary powers). Nevertheless, from what BP understands administrative courts in Thailand regularly engage in merits review of the decision.
In its ruling, the court relied on a report provided by the Pollution Control Department stipulating that the air in Map Ta Phut Estate contained carcinogenic compounds in amounts that violate the permitted standards up to 693 times. The court also cited statistics prepared by the National Cancer Institute demonstrating that the cancer incidence rate in Rayong was five times that of other provinces. There is a higher incidence of leukemia among villagers of the Map Ta Phut region (7/100,000) as opposed to other regions (3/100,000). See this Bangkok Post article for some other statistics.
The NEB did not appeal the administrative court decision in relation to the requirement to designate the Map Ta Phut municipality as a “pollution control area”
At the time, Democrat MPs from Rayong urged the government – well the PM chairs the NEB – not to appeal the decision. It should be noted that Rayong has 4 constituency MPs and according to an Election Commission statistics, all 4 are Democrat MPs.
Details of the second lawsuit (ie the current case) to come…