VZCZCXRO7444
PP RUEHCHI RUEHDT RUEHHM RUEHNH
DE RUEHBK #3068/01 3380846
ZNR UUUUU ZZH
P 040846Z DEC 09
FM AMEMBASSY BANGKOK
TO RUEHC/SECSTATE WASHDC PRIORITY 9170
RHEHNSC/NSC WASHDC PRIORITY
RUEHC/DEPT OF LABOR WASHINGTON DC PRIORITY
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC PRIORITY
INFO RUEHCHI/AMCONSUL CHIANG MAI PRIORITY 7369
RUCNASE/ASEAN MEMBER COLLECTIVE PRIORITY

UNCLAS SECTION 01 OF 02 BANGKOK 003068 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ECON EINV ELAB SENV TH
SUBJECT: Court Decides Shut-Down of Map Ta Phut Industrial Projects 
Will Stand 
 
REF: A) BANGKOK 701 B) BANGKOK 1909 C) BANGKOK 2597 D) BANGKOK 2678 
E) BANGKOK 2742 
 
BANGKOK 00003068  001.2 OF 002 
 
 
Sensitive But Unclassified.  For Official Use Only. 
 
¶1. (SBU) Summary: The Supreme Administrative Court of Thailand ruled 
on December 2 to maintain a suspension order for 65 new or expansion 
projects in Thailand's largest and premier Map Ta Phut Industrial 
Estate.  Only 11 of the 76 projects suspended in the September 29 
decision by a lower court are allowed to proceed, as it was 
determined that they would not have a significant impact on the 
local environment.  Environmentalists applaud the decision as a 
victory for civil society, while the business community is very 
disappointed and concerned over the possible financial repercussions 
and the long term effect on the investment climate.  End Summary. 
 
¶2. (SBU) Comment: Both the foreign and Thai companies affected, 
including Dow Chemical, which has a multi-billion dollar joint 
venture petrochemical project on the list of suspended projects, are 
particularly frustrated because the guidelines do not yet exist that 
would enable them to comply with the constitutional mandates for 
environmental and health impact assessments.  The Ambassador has 
weighed in with the Prime Minister and other top leaders to urge 
quick remedy.  Editorial reaction to the court's judgment has been 
diverse, highlighting its importance to communities, 
environmentalists, investors, and the government.  As the court's 
ruling goes against some of the largest and most powerful business 
interests in the country, the most important development may be the 
strengthening of the independence of the judiciary.  End Comment. 
 
¶3. (U) On December 2, the Supreme Administrative Court of Thailand 
upheld, for the most part, the September 29 injunction issued by the 
Central Administrative Court (Ref C).  The September 29 injunction 
suspended 76 projects in the Map Ta Phut industrial area.  The 
December 2 Supreme Administrative Court ruling removed 11 of the 
projects from the list of suspended projects.  The court found that 
the eleven projects would not have a substantial impact on the 
environment and quality of life of the local people.  The other 65 
projects must suspend construction pending a full hearing into 
whether they comply with the requirements in the constitution. 
(Note: As a technical matter, the court ruling cannot directly halt 
the projects.  The Ministry of Industry must issue that order, which 
is expected within a week.) 
 
Ruling Shakes Business Confidence 
--------------------------------- 
¶4. (U) In an erroneous anticipation of a positive ruling for 
industrial firms, stocks rose 3 percent on December 1.  Following 
the ruling in the afternoon of December 2, the SET index fell 2.32 
percent.  Companies with suspended projects took a hit; shares of 
Siam Cement, a joint venture partner of Dow Chemical, were down more 
than five percent.  Shares of PTT Group companies, a major investor 
in the Map Ta Phut area, were down at the close of day on December 
2: PTT Plc. down 5.06 percent, PTT Exploration and Production down 
4.69 percent, PTT Aromatics and Refining down 3.77 percent, and PTT 
Chemicals down 5 percent.  While three projects of the group of 
companies were among the eleven allowed to continue (one each from 
PTT Aromatics and Refining, PTT Plc., and PTT Chemical), 22 other 
projects must halt work. 
 
¶5. (U) Analysts warn that the ruling could dampen Thailand's 
investment climate.  The Joint Foreign Chambers of Commerce in 
Thailand have long expressed their concern that the suspension of 
the projects will have significant implications for foreign and Thai 
investor confidence in Thailand's investment regime and will alter 
the perception of the investment environment.  Working with the 
American Chamber, the Joint Chamber is preparing to issue a new 
statement to urge quick remedial action.  In addition, economists 
warn that long delays for Map Ta Phut projects could reduce the GDP 
growth by as much as a half of a percent from the forecasted 3 
percent growth in 2010. 
 
Environmentalists Praise Verdict 
-------------------------------- 
¶6. (SBU) Environmental activists applauded the court ruling, saying 
that it was a message that the law must be followed.  Srisuwan 
Janya, president of the Stop Global Warming Association, which filed 
lawsuits against eight government agencies that lead to the 
injunction against the 76 projects, publicly stated that this 
verdict has encouraged his organization to pursue more battles 
against the government's negligence - he plans to make a move 
against 181 industrial projects located in other parts of the 
country.  Sutthi Atchasai, a coordinator of the Eastern Peoples' 
Network, told us that he is quite happy with the ruling and that he 
will continue to monitor the situation to ensure that the 
Constitution is followed. 
 
 
BANGKOK 00003068  002.2 OF 002 
 
 
Concerns of Major Investors 
--------------------------- 
¶7. (SBU) Dow Chemical's multi-billion dollar petrochemical expansion 
was among the 65 which were affected - even though the company's 
environmental standards exceed those required under the law.  On 
December 3, the company told the Commercial Counselor that if they 
must suspend their expansion plans now well underway, 6000 workers 
will be let go and 4000 new workers would not be offered employment. 
 Given the potential losses it faces, Dow may be forced to file a 
claim against the government for damages.  (Note: Two environmental 
upgrade projects of Star Petroleum and Refinery Company, a Chevron 
subsidiary, were among those allowed to proceed.  End Note.) 
 
¶8. (U) The Federation of Thai industries led a large delegation to 
meet with the Prime Minister on December 3.  The group expressed 
concern that billions of baht in potential investment could now move 
outside of Thailand given the uncertainties that remain for new 
investment in Thailand.  The business representatives also asked for 
clarification on procedures that would bring projects into 
compliance with the Constitution, allowing the projects to proceed. 
 
 
¶9. (SBU) The Ambassador has already raised concern about the Map Ta 
Put dilemma in meetings with Prime Minister Abhisit, Deputy Minister 
Kobsak, the Transport Minister and the Thailand Trade 
Representative, stressing the need to protect the large U.S. 
investments by putting in place the procedures for companies to 
establish compliance with environmental and health standards. 
 
¶10. (SBU) In a December 3 discussion with the Econ Counselor, the 
Japanese Economic Counselor expressed concern that this decision 
could badly affect several Japanese companies.  He said that his 
embassy is seeking a meeting with Deputy Prime Minister Korbsak to 
discuss the situation and he hopes that the Thai government will 
work quickly to mitigate the damage resulting from the court ruling. 
 Given the role of Solvay as one of the joint venture partners for 
Dow, the Belgian Ambassador has raised concerns about the situation 
to the Thailand Trade Representative, the Ministry of Finance and 
the Ministry of Foreign Affairs.  The EU has also been actively 
lobbying on behalf of other European firms. 
 
RTG Reactions Mixed 
------------------- 
¶11. (U) Immediately following the court's ruling, the government 
pledged to do what it can to allow stalled projects to move forward 
as soon as possible.  Prime Minister Abhisit instructed cabinet 
ministers to assess the potential damage and to find ways to ease 
the impact of the decision.  Abhisit has also urged those working to 
solve problems at the industrial estate to speed up their efforts. 
In a press event late December 3, however, Abhisit stressed that the 
ruling represents an important lesson in the role of the courts in 
society, and that industrial development cannot continue without 
taking into account environmental and social sustainability. 
 
¶12. (SBU) Prior to the court decision, the Government established a 
four-party panel to seek a compromise on how to balance industrial 
development with local community interests.  On November 19, the 
committee, chaired by former Prime Minister Anand Panyarachun, held 
its first meeting.  Since the ruling, Anand announced that he would 
speed up the work of the committee.  Membership of the committee 
includes environmentalists, community activists, representatives 
from the business sector, and government officials.  Sutthi 
Atchasai, coordinator of the Eastern Peoples' Network and a member 
of the committee, is very pleased with the set-up of the committee 
and told us that he is confident that the committee will be 
successful. 
 
JOHN