Public-private partnership opportunities for foreign investors in Thailand
The need for speed on Thailand’s late public-private partnership party
A public-private partnership enables the state sector to outsource public services to the foreign and domestic private sector and private companies to invest and engage in public infrastructure and energy projects. The economic benefit of public-private partnerships for public welfare is disputed, but they can create an attractive business opportunity for foreign enterprises.
Under Thailand’s legislation, a PPP is defined as “Public sector’s investment with the private sector in any form or allowing private sector investment by issuing a permit, granting of a concession or of any form of right”. This covers these PPP model types:
- Build and finance
- Operate and maintain
It is the declared objective of the legislation to promoted PPP investments by standardizations, facilitation, and transparency. Thailand is currently in a rush to successfully realize PPP projects of various scope and size. This opens a particular window of opportunities for foreign investors in Thailand’s infrastructure and energy, but also other industries.
A brief history of the regulatory framework for PPPs in Thailand
PPSU Act 1992: Thailand’s experiences with PPP schemes are mixed at best. Its first legislation, the Private Participation in State Undertaking Act 1992, had no success.
PISU Act 2013: The Private Investment in State Undertaking Act 2013 had the bad reputation to be exorbitant complicated, lengthy and inefficient. Its track record is frustratingly short and too many foreign business opportunities are left unused. Typical time-wasters are extensive project review periods, the EIA environmental impact assessment process, and committee decision-making procedures. In addition, there are gray areas of the bureaucracy, a frightening criminal liability and a lack of transparency.
PPP EEC Track 2018: Under the EEC legislation, a fast track structure has been implemented.
PISU Promotion Act 2019: The new draft PPP law has been approved by the Cabinet and passed by the National Legislative Assembly (NLA) in December 2018. It is awaiting royal approval before being published in the Royal Gazette.
CURRENT STATUS: NOT YET ENACTED
S44IC: Even after the general election, emergency power is used by the National Council for Peace and Order in PPP projects. An example is the BTS Green Line in Bangkok.
Foreign business opportunities under Thailand’s PPP framework
A substantial revision of the PISU 2013 shall speed up the PPP projects process. This shall reduce the time for project approval by the PPP board from an average of 44 months under the current law to about six months.
The prospective PPP developments cover 12 categories of the national infrastructure plan — roads (highways and motorways), railways, airports, seaports, water management, irrigation, energy, telecommunications, science/technology, hospitals, schools and housing for low-income earners.
Not ignoring the initial difficulties for PPP schemes in the past, the latest developments show clear signs of a change for the better. Correctly applied, the new legal and regulatory framework gives well-advised foreign enterprises the chance to participate in Thailand”s PPP ventures not only fair and easy but also successful and sustainable. To be late to Thailand’s public-private partnership party might be a costly experience.
Professional services from Bangkok
PUGNATORIUS Ltd. supports and advises foreign companies to access the Thai infrastructure markets. Huge infrastructure projects are one of the law firm’s areas of competence, long-standing experience, and unique market reputation. A “fit for purpose” legal and tax support of infrastructure ventures for foreign companies, investors, and financial institutions. The law firm offers professional assistance, advice, and support in Thailand regarding these steps:
- Monitoring and short-listing of current government procurement projects
- Purchasing of bidding documents and formal registration of bidder
- Support and assistance in the preparation and timely submission of bids
- Monitoring of the bidding process and Thai developments
- The accomplishment of legal requirements and efficient tax structures
- Overall legal project management in Thailand and continuous reporting
The terms for assigning PUGNATORIUS Ltd. are described at “Legal advice and transaction support for foreign investments in Thailand’s roads, rails, ports, and airports.”