Thai Court Keeps Projects Frozen on Environmental Concerns

By ORANAN PAWEEWUN and LEIGH MURRAY
BANGKOK -- A Thai court ruled that dozens of industrial projects in the country's east must remain suspended because of environmental concerns, a decision that disappointed markets and may weigh on economic growth and the earnings of two of Thailand's largest conglomerates next year.
The ruling comes after the government appealed a decision by the Administrative Court in late September to issue an injunction to suspend 76 projects valued at 400 billion baht ($12.06 billion) in the Map Ta Phut industrial estate in Rayong province after environmentalists argued that the permits approved by the government violated the constitution.
The Supreme Administrative Court on Wednesday approved 11 projects to proceed, but said that 65 others must remain halted.
The court said all projects being developed by Siam Cement PCL will remain on hold.
The company, Thailand's largest industrial conglomerate in terms of sales, has previously said that along with its partners, it has 106 billion baht worth of projects under suspension at the estate.
A major gas separation plant being developed by Thailand's largest energy conglomerate, PTT PCL, was among those approved by the court, company spokesman Attaphol Lertpiboon said. A Euro 4 emission standard project by PTT Aromatics & Refining PCL will also go ahead, he said.
However, the court ordered most of the PTT Group's projects to remain shuttered.
PTT has 25 projects at the estate valued at 120 billion baht.
The Thai stock market sank after digesting the news, with initial confusion over which projects were to remain suspended. The SET Index closed down 2.3% at 693.51, with PTT shares losing 5.1% to 225 baht and Siam Cement falling 5.1% to 223 baht.
"The ruling is definitely disappointing to the market as well as us," said a senior dealer with a local brokerage firm.
The court said the 65 projects that will remain suspended must comply with Article 67 of Thailand's constitution, which is related to the environment.
They must also seek a health impact assessment, an environmental impact assessment and approval from an independent body.
Both the PTT Group and Siam Cement warned earlier that the suspension will weigh on their 2010 earnings. In late October, the Bank of Thailand said the suspension of the projects could cut 0.5 percentage point off the country's economic growth rate next year.
The court's decision also hurt foreign investor confidence. That prompted the government to establish a special committee to seek a solution.
Write to Oranan Paweewun at oranan.paweeun@dowjones.com and Leigh Murray at leigh.murray@dowjones.com