Thailand Infrastructure Report Q1 2008

Thailand is home to a fast-expanding infrastructure sector - dominated primarily by small and mediumsized players. In 2006, the Kingdom's construction industry grew 4.01% year-on-year (y-o-y) on the back of state efforts to improve transport and tourism infrastructure. This report forecasts the industry to average an annual growth rate of 5.52% over the 2008-2012 forecast period.

Several large infrastructure projects are currently underway or have been planned for the near future.

These include hotel and resort constructions, roadways and a marine pipeline to transport natural gas from Myanmar. Furthermore, the Thai government has in place a US$14bn transport infrastructure plan spread over the next 28 years - primary among these being the mass-transit electric rail lines under the Mass Rapid Transit Authority (MRTA) of Thailand and the US$645mn Saraburi-Nakhon Ratchasima motorway project.

However, Thailand faces its share of structural risks. Slips in economic growth in any of its key trading partners as well as flaring oil prices pose substantial threats to its domestic economy. On the industry front, there has been a fall in the demand for housing in tandem with a dip in the Consumer Confidence Index. Other intrinsic weaknesses that characterise the Thai construction industry include widespread corruption alongside an acute shortage of skilled labour. A slowdown in the local tourism industry is making its impact felt on the construction industry. Another major challenge is Chinese products which are posing stiff competition to local producers of construction material.

Risks notwithstanding, BMI forecasts indicate that the Thai construction industry will grow in value from an estimated US$6.92bn in 2008 to US$7.80bn in 2012.