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Thailand Infrastructure Report Q3 2009
Market |
Construction |
Report Type |
Market Research |
Country |
Thailand |
Published |
6 July 2009 |
Number of Pages |
78 |
Download |
|
Immediate |
|
Publisher |
Business Monitor International |
Thailand's construction sector is forecast to contract by 4.3% in 2009
We estimate that real construction sector growth in 2008 was -4.7%. The performance of the construction sector in 2009 is likely to be even worse. The Thai economy contracted by 7.1% y-o-y in the first quarter of 2009 and we foresee the economy shrinking by 4.5% in real terms across 2009 as a whole. In this context, we now forecast that Thailand’s construction sector will shrink by 7.0% in real terms across 2009 as a whole. This marks a revision of our forecasts from last quarter, when we were predicting that the construction sector would contract by 4.3% in 2009. However, we anticipate that the construction sector – and the economy as a whole – will resume (albeit modest) positive growth from 2010, with the sector experiencing real growth of 1.1% in 2010 and 1.9% in 2011.
Thailand ranks in lower mid-table regionally for our Project Finance Ratings. The country is placed ninth out of 14 countries, a slip from eighth place since our previous update. Although the country scores moderately well for the Design and Construction variable, it is let down by its score for Commissioning and Operating. In particular, the country is let down by the Outputs variable in the transport, utilities and commercial construction sectors.
In this quarter’s report, we introduce an evaluation of CH Karnchang, Thailand’s second largest construction company. The company is in a strong position, despite the global economic downturn. It maintains a solid pipeline of work, both in Thailand and the wider Asia region, boding well for continued strong net profits in 2009. Solid revenue and profits should enable CH Karnchang to continue servicing its moderate levels of debt reasonably comfortably, assuming that the global economic downturn abates before the end of 2010.
The Thai government is planning to start a light rail service in Phuket, according to Phuket Wan in April 2009. The plan was discussed in a meeting between the governor, the private firm making the proposal, and leaders from the tourism industry. The approval is yet to be given for the project. It has been reported that the complete network is expected to cost as high as THB52bn (US$1.6bn). The route is expected to be 41.4km long. Initial funding to cover the cost of the project would be obtained through private investment, with the return expected from tariffs on the routes.
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