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Thailand’s infrastructure outlook remains positive in 2021 despite COVID-19

Ploy Ten Kate Brand, Clients and Markets Director, PwC Thailand

Thailand’s infrastructure outlook remains positive in 2021 despite COVID-19

BANGKOK, 10 March 2021 – Thailand’s overall infrastructure outlook remains positive with untapped opportunities to further upgrade the country’s infrastructure and increase its global competitiveness, according to PwC’s “Thailand’s Infrastructure Market Update and Outlook 2021”.

While the pandemic has caused some delays or re-prioritisation of projects, recent infrastructure developments have helped drive the government’s infrastructure agenda, particularly along the Eastern Economic Corridor (EEC).

The Thai government has already signed long-term concession agreements with the private sector for three of six flagship EEC Public-Private Partnership (PPP) projects. It has also initiated plans to develop the Southern Economic Corridor (SEC) and connect the region with the EEC to optimise the value of those investments.

Apart from the EEC and SEC, progress has also been made on transport sector projects such as urban rail systems and intercity toll roads.

Evolution in PPP Models

Gary Murphy, Capital Projects and Infrastructure Partner for PwC Thailand, said PPP has become a well-established and important method of infrastructure procurement in Thailand.

“The market has seen an evolution in PPP models, with several new players expanding beyond their core businesses and entering the infrastructure market.

“We have seen the positive impact of more innovative transaction structures offered by the government, which has helped to attract more private investment for recent infrastructure projects,” Gary said.

Infrastructure projects have the potential to provide reasonable financial returns if properly structured, while also providing synergies and value capture opportunities for existing core businesses, such as property development, he said. The ongoing participation of these players will lead to more competition in future bidding rounds, especially for large-scale projects.

Infrastructure outlook

Thailand’s infrastructure market in the next two to three years will remain focused in the EEC and transport sector, with the government continuing to rely on PPP as primary model to deliver new infrastructure projects, the report shows.

Mark Rathbone, Asia Pacific Capital Projects & Infrastructure Leader for PwC Singapore, said there’s plenty of room to further progress PPP policy as the PPP becomes a more important source of funding of infrastructure for the Thai government in the future.

“The key consideration for the Thai government will be to strike a balance between managing its own fiscal constraints and offering PPP structures that attract and facilitate private investment.

“There are still untapped opportunities for the PPP method to be used on other infrastructure sub-sectors apart from transport, such as social housing and hospitals.

“To further facilitate private investment, the government may consider policy and regulatory changes that streamline the process and allow for greater flexibility in project development and implementation,” Mark said.

Post-COVID-19 recovery

Over the longer-term, infrastructure development can play a key role in the post-pandemic recovery. The Thai government and private sector are already introducing several polices initiatives in the areas of transit-oriented development (TOD), electric vehicles, smart cities, renewable energy, power trading and 5G, which will support green recovery and digital transformation.

“Infrastructure has a vital role to play in the post-COVID-19 recovery.” Mark said.

“With digital acceleration and the climate change crisis, there are still untapped opportunities to further upgrade infrastructure in Thailand to increase the country’s competitiveness in the post-pandemic world,” he said.

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