On June 28, 2016, the Cabinet of Prime Minister Prayuth Chan-o-cha formally approved the Eastern Economic Corridor development in a bid to make Thailand’s Eastern Seaboard the next major economic zone of ASEAN. The project will be focused around the three eastern provinces of Chon Buri, Rayong, and Chachoengsao, which have long been considered key industrial bases for the automotive, petrochemical, and energy sectors, and represent over 20% of Thailand’s overall GDP. Moreover, given the area’s strategic proximity to neighboring export markets, its strong manufacturing capabilities, and its readiness for huge infrastructure investments, the Office of the National Economic and Social Development Board (NESDB) had been tasked to propose a scheme that could bring the Eastern Seaboard into a new era of value-added production, high-tech industries, and unprecedented regional connectivity.
The initial cost of development is set to be around THB300 billion ($8.5 billion), although Kan Trakulhoon, the head of the EEC working group and former President of the Siam Cement Group (SCG), suggests this figure could rise to a whopping THB1.5 trillion over the next five years as infrastructure developments begin to take shape. Speaking exclusively to TBY days after the cabinet approval was secured, Trakulhoon said, “The government’s infrastructure plans are absolutely crucial to this development as the EEC’s main selling point is indeed its unrivaled access to major airports, sea ports, and trade routes.”
Specifically, these include increasing capacity at U-Tapao International Airport (40km south of Pattaya) to accommodate 5 million passengers annually, as well as expanding sea ports such as Sattahip Commercial, Map Ta Phut, and Thailand’s biggest, Laem Chabang, by over 300,000 TEUs. Furthermore, a special highway connecting Nakhon Ratchasim to Rayong via Laem Chabang is set to be built, while work is also set to commence on the much-anticipated double-track railway from the Eastern Seaboard to Bangkok, and beyond. In addition, a deep-sea port at Chuk Samet will be developed expressly to connect and link cruise liners on each side of the Gulf of Thailand, which Trakulhoon points as evidence that the EEC is “not only focused on industry, but tourism as well.”
While specifics on the infrastructure spending have yet to be finalized, the Cabinet has confirmed that the project will be financed through a combination of government, private, and PPP funding. Most importantly, perhaps, in terms of output, the EEC is on course to revolutionize Thailand’s production basket. According to the Cabinet, “the project will promote 10 target industries, which will become mechanisms for the new engine of growth.” These have been divided in two groups: the ‘First S-Curve’ includes existing industries where Thailand has a great deal of potential, such as next-generation automotive, smart electronics, affluent medical and wellness tourism, agriculture and biotechnology, and food for the future. Second, the government has identified industries for the future, the ‘New S-Curve,’ which should pave the way for tomorrow’s tech-driven, value-added economy, including robotics, aviation and logistics, biofuels and biochemicals, digital, and medical hubs.
Thailand’s Deputy Prime Minister, Dr Somkid Jatusripitak, has been assigned by the Cabinet to explore a range of incentives and promotional privileges over the coming months for investors looking at the Eastern Seaboard. According to Trakulhoon, this could include corporate tax exemption for 15 years and up to a 300% tax break, including 0% personal income tax for lead researchers, for all companies doing R&D in the EEC.
The project is likely also to drastically reshape the property market in the area. Every major real estate player in Thailand expects to boost its portfolio in the three provinces, which are already home to over 1,600 manufacturing plants. Chon Buri in particular, which has some 15 industrial estates, is expected to see a large surge in its residential segment. Over the past four years, 87 condominiums valued at over THB200 billion were launched in the province, a figure that could double by 2020 as businesses begin to expand their presence.