CHIANG RAI – Muang Ngeun Industrial Estate, a major industrial estate developer in Chiang Rai’s special economic zone (SEZ) has put his investment plan on hold.
Pongake Apiraksayothin, managing director of Muang Ngeun Industrial Estate, said he has suspended his plan to develop the area even though his company had bought land at higher-than-market prices due to speculation on land prices since the government plotted the areas to be promoted as special economic zones.
The move comes after the government decided to let the Industrial Estate Authority of Thailand (IEAT) develop the area and lease the land at cheaper prices.
He said his project was put on hold after the government put his area in the second phase to be promoted.
“We are going to have to change all our business plans,” Pongake said.
The government has selected areas in five provinces — Songkhla, Trat, Tak, Mukdahan and Sa Kaeo — with the potential to grow economically for the first phase.
However, Chiang Rai province, which borders northern Laos and thus can connect directly to southern China, was put in the second phase that will start to be developed early next year.
The government has tried to tackle surging land prices by letting the IEAT invest in developing the areas before leasing them out at cheap prices over a long lease period.
“We have stopped investing on our own and are now waiting for the areas to be developed, and then we’ll rent,” Pongake said.
“It will be more economical if we lease the land rather than buying at high prices and needing to develop it further with a huge amount of money.”
He said his company had already bought 400 rai of land that was about to be developed.
Pongake said land prices in Chiang Rai had jumped to 1.2 million baht a rai from 700,000 baht due to speculation on the government’s SEZ policy to boost the economy in border areas.
That excludes the cost of developing the area to be an industrial estate that is ready to be invested by manufacturers.
In contrast, land leasing prices after being fully developed by the IEAT have been announced by the government as only 100,000 to 200,000 baht a rai.
“Industrial developers cannot survive with such high land prices, as there are other costs of development that will be added to the project such as budgets for infrastructure and water supply in the industrial areas,” Pongake said.