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"Thailand to Take on Singapore With $5.7 Billion Airport Overhaul"


 
Monday, May 29, 2017

Thailand to Take on Singapore With $5.7 Billion Airport Overhaul
By Jeanette Rodrigues 
Bloomberg News


Thailand is seeking to take on Singapore's dominance in aircraft maintenance, 
repair and overhaul with a $5.7 billion upgrade of a Vietnam War-era airport.

Lockheed Martin Corp.'s Sikorsky Aircraft is the latest company to study a 
possible increase in MRO spend in Thailand in the wake of the planned revamp of 
U-Tapao International Airport, said Ajarin Pattanapanchai, deputy secretary 
general of the nation's Board of Investment. In March, Airbus SE signed an 
agreement with Thai Airways International Pcl to evaluate the development of 
MRO facilities at the civil-military airport near Bangkok.

"Singapore is quite tight right now," Ajarin said in an interview at 
Bloomberg's Toronto office on May 25, during a visit to Canada to woo 
investment. "To catch up with the demand of airlines in the region -- 
especially new demand from Myanmar, Vietnam, Cambodia -- and given that we have 
existing strengths with automotives and engineering, Thailand will be the 
second choice to be the MRO hub."

The airport project is part of junta leader Prime Minister Prayuth Chan-Ocha's 
goal of boosting the economy, whose expansion has lagged behind neighbors since 
the military seized power three years ago. It's also a key component of a plan 
to invest 1.5 trillion baht ($44 billion) between 2017-2021 to develop the 
country's eastern seaboard.

Apart from the airport in the Eastern Economic Corridor, the plan calls for 
$4.5 billion investment in high-speed rail, $11.5 billion for new cities and 
$14 billion for industry. The government will control and maintain the airport 
and a port. Other projects will be public-private-partnerships or privately 
held.

"I am confident we can make it," Ajarin said, referring to raising the funds. 
The government has already allocated its budget for 2017, she said, declining 
to provide a figure for the administration's outlay on the corridor or an 
estimate of the MRO business Thailand is targeting.

Foreign-direct investment has revived after sliding following the coup, 
especially in digital and high-technology sectors, Ajarin said.

She gave as an example Toronto-based Canadian Solar Inc., which applied for a 
license in 2015 and opened its Thai factory two years later. Among electric 
vehicles, a "big player -- but not Tesla -- is waiting to come in," Ajarin said.

FDI increased to $8.6 billion in 2016 from $2.7 billion in 2015, according to 
data provided by the Board of Investment.

While the board offers incentives to foreign companies such as tax sops, it 
remains unclear how quickly the Thai government can implement its ambitious 
vision for the eastern seaboard given the scale of the project.

Challenges include a shortage of skilled workers, as well as concern that 
Thailand is prone to harmful episodes of political volatility.

Ajarin acknowledged that the risk of political turmoil is a worry for new 
investors, but argued that companies have weathered past such bouts.
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