Environmental Technologies Industries
||Environmental Technologies Industries
|Thailand Environmental Export Market Plan|
The Thai Market for Environmental Technologies
The Thai market for environmental technologies and expertise is poised for rapid expansion. High-speed industrialization, rising public awareness, strengthened legislation, and economic growth have sparked the need for environmental action and given Thailand the many tools required to make it effective. U.S. firms can meet Thailand's needs, but the market is increasingly competitive, with strong players from Europe and Japan. Significant obstacles to market entry require patience, capability, commitment, and sound local partners. Firms that position themselves to meet these requirements should find a profitable place in a fast-growing market.
Total Market and Potential
The U.S. Department of Commerce (DOC) estimated Thailand's pollution control equipment and environmental services market at $1 billion in 1995 (table 1). Estimates prepared prior to the 1997 baht devaluation projected demand to grow 15 percent for the next 10 to 15 years. Other estimates place market value as high as $1.8 billion. Over the next 5 to 6 years, environmental infrastructure projects are estimated to reach a total contract value of $13 to 15 billion.
Table 1: Thai Market for Pollution Control Equipment/Environmental Services (US$M)
Source: U.S. Department of Commerce, International Trade Administration.
|Total market size|
|Total local production|
|Imports from United States|
Total market size is difficult to estimate because most environmental reporting does not capture many expenditures for “clean technology” industrial process improvement. The Kenan Institute of Private Enterprise estimated that the total Thai environmental market was growing at 20 to 25 percent per year and would reach $1.5 billion by the year 2000. However, due to the country's 1997 economic crisis, the market is not expected to grow in 1998, and in 1999, growth will increase gradually. Prior to the baht devaluation, this estimate appeared conservative in light of the fact that government expenditures alone were estimated at $600 million in 1996, more than double the expenditure of $250 million recorded in 1994.
With more than 20,000 private sector factories classified as polluting industries, there is considerable opportunity (and fewer difficulties) in working with the private sector. The Thai Board of Investment, a government agency, estimates that private factories spend approximately 4 percent of new invested capital on environmental control equipment and facilities. In 1992, Business International estimated that the Thai private sector spent $210 million on environmental consulting services, pollution control equipment, and waste treatment facilities. The growth rate of private expenditure on environment is hard to predict. Projections depend on the enterprise's profitability, the possibilities for cost savings through waste reduction, the environmental standards demanded of suppliers by foreign markets and manufacturers, public pressure, and the effectiveness of government regulations.
The key variable in determining the growth rate is regulatory enforcement, which has been effective only sporadically in the past, but is improving. Much depends on Thailand's political will to enforce regulations that encourage the private sector to make investments needed to meet existing standards. Although the environment is a key political issue in Bangkok, it was barely addressed by the victorious parties in the national election held in November 1996—parties that drew most of their support from rural voters. Commitment to environmental preservation may decline if the economy continues to slow and companies insist they cannot afford the required improvements. Under pressure because of the economic slowdown, the new government is likely to make economic growth and support for industry a higher priority than environmental improvement.
It is clear, however, that pollution and environmental degradation pose a major threat to the quality of life in Thailand, to agriculture, and even to the sustainability of the polluting industries themselves. The Thai media, particularly newspapers, repeatedly focus on environmental problems. The election of Dr. Bhichit Rattakul, an avowed environmentalist, as Bangkok's governor in 1996 indicates that environmental issues are important to urban voters. Industrial decentralization caused by overcrowding in Bangkok, and strong government incentives to locate industry outside the central provinces may elevate pollution to an important issue in the countryside, particularly if industrial contamination of agricultural water continues to increase.
Overview of Market Characteristics and Dynamics
The Thai environmental market is still taking shape and therefore is marked by rapid change and confusion, which has been exacerbated by the current economic crisis. Regulation alone does not make for an effective environmental market. Entrants to the Thai market must understand a number of associated factors, including the government's willingness and ability to enforce regulations. The latter is connected with political, economic, and technical factors, including the government's ability to attract and retain sufficient, technically trained employees to address enforcement. Market development and American firms’ ability to enter the market will depend on how regulatory enforcement and public bid awards are handled. The most important overall drivers of the environmental technology market are:
- Effective enforcement of existing environmental regulations
- Government spending on environmental infrastructure
- Tightening and development of governmental regulations
- Availability of funding support to private sector environ-mental projects
- Environmental standards for suppliers, set by manu-facturers
- Environmental standards for imports into foreign markets
- Perceived potential for “green marketing”
- Costs of industrial inputs, such as water and energy
- Pace of adopting environmental management standards such as ISO 14000
- Privatization of infrastructure projects
In addition to these basic market drivers, it is important to understand that government jurisdictions involved in the market overlap. It is therefore important to understand how these agencies relate to each other. Power among agencies may fluctuate due to political factors. But because many of the agencies are either new or dealing with particular technologies for the first time, successful market entrants will have to focus on educating officials and establishing a reputation for technical competence.
Information on specific opportunities is a key commodity, but is not always readily or equally available. Information is provided through contacts and personal trust, so it is important for U.S. companies to maintain interaction with officials even if there is no project under way. This also applies to the private sector, where trust and personal relations are as important as a well-known corporate name. As with government officials, many private sector managers are uncertain about the costs and effectiveness of environmental controls. U.S. firms must be ready to educate their potential clients and address the shortage of environmental scientists and engineers in the private sector by providing training, demonstrations, and other support.
It is essential that a U.S. company have a Thai partner, who can deal more effectively with the problems of political understanding, information, and personal relations. As a result, selecting a local partner and building a relationship with that partner are essential elements of a successful entry strategy. An inadequate partner can waste significant time and opportunity and, in the worst case, permanently damage a firm's reputation. Particular effort must be spent with the local partner to ensure that the quality of after-sales maintenance and service is maintained.
Major Infrastructure Projects
The largest and most dynamic element of Thailand's environmental market revolves around major infrastructure projects, including water/wastewater, solid waste, and energy. Thailand's growth has given rise to a strong and growing demand for basic utilities. While the state continues to play a major role in infrastructure development, more of these projects are emerging in the private marketplace. This development holds both advantages and disadvantages for U.S. companies, but U.S. producers of both goods and services must adapt if they are to succeed.
In Thailand, as throughout the world's emerging markets, the relative roles of the government and the private sector in providing basic services and infrastructure are undergoing a profound change, mainly because of the emergence of private funding for public infrastructure projects. This shift in provision takes many forms, including the granting of concessions to private firms to operate basic services such as water or solid waste collection for extensive periods, and the structuring of projects on a build-own-operate (BOO) or build-operate-transfer (BOT) basis. In both cases, the contractor is expected to provide some or all of the financing to build, upgrade, and operate a part of the infrastructure system. A wide variety of financing, regulatory, and ownership structures are possible within these models, based on local practice and negotiation. The shortage of local government and local private sector funding for project development is expected to accelerate the trend toward nontraditional financing.
Thailand ranks in the middle range of countries regarding use of concession/BOO/BOT and related models. Prior to the 1997 crisis, the government was relatively well positioned financially. Traditional construction contracts remained a central feature of the Thai market, but the government was also experimenting with a variety of nontraditional ownership and financing structures to accelerate the extension of basic infrastructure. Not all of this experience has been favorable. Several large projects, such as the expressway-toll road built in Bangkok with private financing, have encountered major difficulties in maintaining momentum during changing governments and economic conditions. In the follow-on to the baht devaluation, some of the most troubled projects have already been canceled.
Because of the Thai Government's increasing use of BOT/BOO arrangements to conduct large-scale infrastructure projects, engineering firms and others seeking a market niche can expect to place progressively less emphasis on selling directly to the government and more emphasis on the complex tasks of developing and financing projects. A BOT concession typically requires the concessionaire to design, build, and operate a project, as well as find appropriate financing. In Thailand, these projects often require that the concessionaire be 51 percent locally owned and have a revenue sharing agreement with the state and that a percentage of the equipment for the project be from local sources. Further liberalization of these restrictions may be a positive result of the current economic difficulties and should be monitored by U.S. firms.
The state evaluates BOT proposals based on their technical, managerial, and financial components. The fourth and, some would argue, most important component in the evaluation process is political considerations. The complex network of relationships between the bidders and the evaluators, coupled with less-than-transparent practices, will require U.S. companies seeking a role in this process to place a premium on finding appropriate local partners.
As Thailand continues to liberalize, U.S. suppliers of goods or services for infrastructure projects must understand that most major equipment and systems contracts will come from concessionaires and not from the government. Therefore, it is important for U.S. companies to form alliances with companies or consortia that offer the best chance of winning a concession, or that have already won such contracts.
This basic shift in the marketplace puts U.S. firms at a disadvantage. Whereas U.S. engineering firms are skilled in responding to formal procurement opportunities, they are relatively less well positioned to serve as project developers for major infrastructure projects. The latter role typically requires that the firm take an equity position or, at the very least, recruit the equity holders, and also requires direct involvement in raising financing, determining payment terms, and obtaining insurance or other coverage to allocate associated risks. Project development also entails long-term involvement in managing the facility, possibly over several decades. These criteria sharply contrast with the familiar payment-for-services or payment-on-shipment standards in the United States. European firms, more accustomed to operating in a concession or design-and-build environment, are more likely to have developed the managerial and financial skills necessary for these roles. European firms thus have an advantage over U.S. firms that lack these skills and the financial resources necessary to acquire them.
Despite these obstacles, the infrastructure market remains the best opportunity for U.S. firms in the environmental and energy sectors. The relative financial strength of the Royal Thai Government (RTG) has enabled it to initiate a very ambitious building program to meet infrastructure needs. Presently, and for the next few years, many of these projects will be structured in the traditional contract-for-services mode, financed by the RTG or by the multilateral development banks (International Bank for Reconstruction and Development or the Asian Development Bank). But more and more will take the form of concessions or other structures requiring the contractor to bring a financial package to the table. U.S. firms that do not acquire the necessary skills, resources, and facilities in capital markets will increasingly be marginalized in Thailand, as in other emerging markets.
The baht devaluation will increase the cost of using all international services, regardless of origin. The international partner's ability to bring financing to the table and work with local partners therefore takes on increased importance.
Legal and Regulatory Structure
In Thailand the legal and regulatory structures are key market drivers for environmental goods and services. This section reviews the legislative basis for rapid growth expected in the Thai environmental market. It also discusses key elements of the environmental legislative structure and the regulatory agencies responsible for building effective enforcement mechanisms set forth in the legislation.
Legislation introduced in the past five years has dramatically changed the legal structure for environmental enforcement, creating new structures and mechanisms that are gradually transforming demand for environmental goods and services in Thailand. In 1992, the government of Prime Minister Anand Panyarachun passed several important pieces of environmental legislation, which serve as the centerpiece for this transformation. These reforms laid the framework for a reorganization of the Thai Government agencies involved in environmental policy and protection and established mechanisms for improved coordination and enforcement. Moreover, the legislation demonstrated the government's commitment to implementing a strong environmental policy and put the private sector on notice that the era of lax enforcement was drawing to a close.
Environmental legislation also signaled a change in management philosophy. The “Polluter Pays Principle” (PPP) was adopted as one of the main themes of the legislative reforms. Under the PPP, those who pollute the environment or use services such as waste treatment are charged fees to recover the cost of restoring the environment or preventing degradation.
Additionally, the laws allowed for the establishment of higher environmental standards and significant increases in noncompliance penalties. They also paved the way for establishing innovative incentives that aim to encourage greater compliance from both government organizations and the private sector.
Subsequent administrations extended the policy reforms by developing the environmental management planning process, setting the standards and regulations, increasing support of privatization schemes, and supporting the decentralization of industrial activities away from the congested Bangkok region.
Despite the changes, regulatory enforcement and incentive program implementation remain quite weak. Without substantive changes in Thailand's legal system and society, policies that rely on regulatory enforcement will be ineffective in the near term. As a result, environmental protection agencies are increasing their emphasis on incentives for voluntary compliance, using social pressure and negotiation to fill the gap left by limited political will and regulatory enforcement power.
The 1992 legislation originated from Article 74 of the 1991 Constitution, which, for the first time, requires the Thai Government to “conserve and maintain the environment, the balance of natural resources and substitutes, and prevent and eliminate pollution and plan appropriate soil and water use.” The main vehicle for implementing these broad mandates is the use of Five-Year National Economic and Social Development Plans. These plans set forth the government's investments and established the overall policy framework for other implementation efforts. Because Thailand is less reliant on donor financing than other developing countries, the plans will likely be implemented and therefore are taken seriously by the government and private sector alike.
The Seventh National Plan (1992–1996) cited the environment as one of the most pressing national concerns and set specific targets for improvement. This plan identified water and air pollution, solid wastes, toxic chemicals, and global warming as serious problems; set forth specific objectives in these areas; and formulated the means of achieving these goals. Inclusion of environmental objectives in the national plan committed the Thai Government to take action, regardless of who was in power.
Thailand's Eighth National Plan (1997–2001) further emphasizes the importance of environmental protection. In preparing this plan, the Thai Government acknowledged that past economic development focused on measures to increase monetary income, regardless of the costs to natural resources, the environment, and society. Furthermore, the government affirmed that rapid environmental degradation continued during earlier National Plans, despite the attention given to this issue. The specific projects and overall investment levels in the plan are subject to modification as a result of the changed economic perspective following the 1997 devaluation.
The Eighth National Plan emphasizes balancing the development of the economy, society, and environment. In addition to maintaining and strengthening the standards targeted in the Seventh National Plan, the Eighth National Plan sets three main strategies for improving the environment: (1) rehabilitation of natural resources and environment; (2) promotion of public participation in the conservation of natural resources and environment; and (3) improved management of natural resources and environment.
The first strategy, rehabilitation of natural resources and the environment, covers the control of water pollution in 25 communities along major rivers, reclamation of barren and infertile soil, reduction of air pollution in industrial zones and congested areas, management of solid waste and hazardous waste, and promotion of technological development for solid waste treatment to minimize effects on natural resources.
The second strategy, promotion of public participation in the conservation of the natural resources and environment, encompasses increasing governmental efficiency to support public participation in conserving the environment, developing a system to distribute information regarding the conservation of natural resources, and enacting laws that increase opportunities for the public to participate in managing natural resources.
The final strategy, management of natural resources and environment, incorporates systematic management of water resources, appropriate management of soil resources, expansion of the green zone, support of prevention methodologies for natural disasters, and promotion of the country's role in managing natural resources in the international arena.
Additionally, the Eighth National Plan stresses the need to strengthen the level of scientific education and competent workers in both the public and private sectors. The plan also emphasizes a reduction in bureaucracy and greater private sector and nongovernmental involvement in policy implementation. The 1997 economic crisis has already strongly reinforced government and public sector awareness of the need to strengthen human resource development, particularly in high-skill areas.
More than 50 pieces of legislation deal with environmental matters in Thailand. The central elements of the legislative structure were established in 1992 and include the following:
- National Environmental Quality Act of 1992
- Factories Act
- Hazardous Substance Act
- Public Health Act
- Energy Conservation Promotion Act
The National Environment Quality Act (NEQA) of 1992, which replaced the 1979 NEQA, is the most significant and encompassing law. Its key features and effects are broadening the scope of the environmental and pollution control under its authority, upgrading the National Environmental Board (NEB) to an active policymaking center, creating a more restrictive standard setting system, giving polluters incentives to clean up their activities, imposing criminal sanctions for violating the act, and establishing the Environmental Fund to assist polluters in controlling and eliminating pollutants (Lyman, T&G).
Under the 1992 NEQA, the Ministry of Science, Technology, and Environment (MOSTE), with NEB approval, is to implement the Environmental Quality Master Plan. This plan provides for establishing environmental management systems nationwide, financing pollution control infrastructure projects through the Environmental Fund, privatizing environmental services, and enacting local ordinances for implementation. The effectiveness of implementation depends on the mechanisms for privatization, the allocation of the Environmental Fund, and the degree of coordination and cooperation among the responsible agencies.
The Environmental Fund, which provides financial services, was set up to encourage industrialists to invest in environmental protection projects. It is primarily supported by the government and contributions from the Oil Fund (which is accumulated from a tax on petroleum products fines, service fees, and donations). The estimated amount of available funds in March 1996 was $292 million. This fund can be expected to continue growing because it is based on a surcharge on petroleum products, a large share of which continues to be imported. The funds are distributed to government agencies and local governments for wastewater or air treatment facilities, as loans to the private sector for pollution control and management, and for approved activities of nongovernmental organizations. Interest rates for loans are subsidized and there is a two-year grace period. Projects must be submitted to the Office of Environmental Policy and Planning (OEPP). The Funding Committee, which is composed of representatives from the major government agencies involved in environmental management, must approve funding.
The Factories Act, enacted in 1992, is the major piece of legislation that governs industrial activities and significantly affects businesses in Thailand. This act empowers the Ministry of Industry to regulate factories for the prevention of disturbances, damages, and danger to the public or the environment (Section 7). It covers factory construction, operation, expansion, safety, and environmental requirements. With the authority to implement this act, the Ministry of Industry passed regulations on wastewater and waste product disposal and on air pollutant discharges from factories. The ministry can, on environmental grounds, refuse factory licenses and shut down factories. The NEQA requires that specific industries conduct Environmental Impact Assessments (EIAs), which must be approved by OEPP, before proceeding with the factory licensing required under the Factories Act. The Environmental Fund can also be used to enable the Ministry of Industry, or another relevant industry, to fund improved environmental control in noncomplying factories. The Factories Act imposes personal liability on individuals (such as architects or engineers) responsible for any violation of laws, environmental or otherwise, relating to the establishment and operation of a factory in Thailand.
In 1992, under the Factories Act, the Ministry of Industry issued regulations on the following: definition of waste management operations, licensing of waste management operations, registration of waste generators, transporters and waste management operators, and standards for the landfill of waste disposal of waste.
The Hazardous Substance Act, enacted in 1992, is a modified version of the Poisonous Substance Act (1967). The modifications include higher penalties; strict liability for accidents concerning hazardous substances; and a different approach to regulating the possession, production, import, and export of hazardous substances. The Ministry of Industry coordinates implementation through the Committee on Hazardous Substances (composed of the Ministries of Defense; Interior; Public Health; Agriculture and Cooperatives; and Science, Technology, and Environment). The Ministry of Industry and the Committee on Hazardous Substances have overall responsibility for setting hazardous substances regulations. Each ministry administers all other regulations concerning safety precautions in handling, treatment, and use of hazardous substances, and the procedures for registration (Hazardous Substance Act, Section 20). In their respective fields, each ministry is charged with identifying particular hazardous substances and setting limitations on those substances. Criminal penalties are the stiffest under any environmental law in Thailand; fines up to 1 million baht (or $ 25,000 at 40 baht per $1) can be levied.
According to the Public Health Act, the government can impose penalties on companies or individuals that undertake activities that may seriously harm the public health. Although the act can be applied to any situation involving health, the areas specified for particular attention are domestic waste and garbage disposal, building sanitation, animal husbandry control, markets and food stores, and street vendors. The Ministry of Public Health and the Public Health Board are the responsible implementing agencies.
The Energy Conservation Promotion Act was passed to increase the efficiency of energy end-users and in turn positively benefit Thai industry and the environment. The act identifies general energy conservation measures for factory and large building owners. The owners of controlled buildings and factories must nominate an energy manager, conduct energy audits, and implement energy saving techniques according to audit findings. The government is setting efficiency standards for appliances, equipment, and materials. Another important component of the act is the promotion of renewable energies. The Energy Conservation Fund was established to assist in implementing renewable energy projects. The National Energy Policy Office (NEPO) under the Office of the Prime Minister is responsible for overseeing the act; MOSTE’s Department of Energy Development and Promotion is the main implementing agency.
Additional legislative standards have been set on air, noise, and water quality; solid waste and night soil quality; and toxic substances.
This section reviews the main government agencies responsible for implementing the environmental legislative framework. These agencies are often involved directly in procurement for government-managed activities and parastatals, and in drafting implementation regulations. They are a main source of contact for potential U.S. exporters. Full contact information is provided in appendix IV of this report.
The 1992 NEQA, reformed Thailand's environmental management structure to strengthen the government's ability to improve the environment. Most prominently, the NEB was upgraded to an active policymaking center at the cabinet level, and a new ministry, MOSTE, was created from the Ministry of Science, Technology, and Energy.
National Environmental Board
NEQA gives NEB broad authority to coordinate government environmental responsibilities in an effort to implement the country's environmental measures. NEB is authorized to prescribe environmental quality standards; approve action plans; make recommendations to the cabinet regarding policy measures for implementing NEQA; prescribe measures to foster cooperation among government organizations, state enterprises, and private companies; supervise the management and administration of the environmental fund; and supervise, oversee, and expedite the enactment of royal decrees and ministerial regulations relating to the enhancement and conservation of the environment (NEQA, Section 13).
The standards set by NEB are the minimal acceptable standards. Other government agencies are free to impose standards higher than NEB’s. NEB has the authority to issue higher environmental standards in pollution control zones, environmental protection areas, specific planning areas, building control zones, and industrial estates.
The Prime Minister serves as chair of NEB and the Minister of Science, Technology, and Environment as vice chair. All major ministries (Industry, Defense, Interior, Education, Public Health, and Agriculture and Cooperatives) are represented on the board.
Ministry of Science Technology and Environment
MOSTE and the Prime Minister are jointly responsible for executing NEQA. MOSTE is responsible for developing and managing environmental legislation and policy. This task involves appointing pollution control officials and other competent authorities, establishing emission and effluent standards, and setting fee rates for wastewater treatment and waste disposal. The ministry also manages the Environmental Fund on behalf of NEB.
Besides MOSTE, other national and local governmental organizations also take on regulatory roles in their respective fields. Consequently, the scope of activities and regulations often overlap. Additionally, there are some inconsistencies among various agency standards. In such cases, MOSTE standards prevail unless otherwise specified by NEQA.
MOSTE’s work is hampered by a lack of qualified engineers. In the private sector, engineers may receive four times the salary of a government official, making it difficult to attract and maintain qualified government staff. Consequently, work is often contracted out to meet technical needs.
The following departments in MOSTE have specialized roles in setting and implementing regulations.
Office of Environmental Policy and Planning (OEPP). OEPP is responsible for drafting the National Environmental Quality Management Plan for approval by NEB. OEPP cooperates with other state and government agencies on the environmental aspects of their operations. It must review and approve all provincial environmental plans. If proposed environmental standards are considered insufficient, then OEPP can require provinces to change their plans to reach the prescribed standards. The office also coordinates management of natural resources and sets guidelines for and coordinates international environmental activities. Another important OEPP role is to review, evaluate, and approve EIAs submitted by project owners. EIAs are often required before a license or permit is issued for new project development or expansion.
Pollution Control Department (PCD). PCD is emerging as the lead agency for environmental remediation investments. It is responsible for monitoring and enforcing environmental regulations in Bangkok and the pollution control zones, which currently include the five provinces surrounding Bangkok, as well as key locations such as Pattaya, Phuket, Songkhla, Pi-Pi Island, and Hat Yai. Additionally, PCD may be required to inspect environmental activities in other geographic areas. PCD also provides technical assistance, such as recommendations and prescribed standards, to OEPP and other agencies. PCD often becomes involved when the Environmental Fund finances a project that must meet environmental standards higher than those followed by other ministries and agencies. PCD is attempting to set higher standards for environmental compliance and developing methodologies and systems for better management of water, air, and waste. PCD has targeted stringent standards for water, air, and solid and hazardous wastes to be met by the beginning of the Ninth National Plan (2002). For example, to reach specific goals, the Air Quality and Noise Management Division is undertaking extensive monitoring activities to provide the basis for developing plans and standards for ambient air quality.
Department of Environmental Quality Promotion and Awareness (DEQP). DEQP processes information, promotes environmental projects such as recycling and conducts public education and media programs. It also develops the relationship between MOSTE and the nongovernmental organizations (NGOs). NGOs can receive support from the Environmental Fund, and over 60 NGOs are registered as environmental NGOs.
Department of Energy Development and Promotion (DEDP). DEDP, under the MOSTE, is responsible for implementing the energy policy developed by NEPO. It is the main executing agency for the Energy Conservation Act. DEDP also manages energy conservation in large building initiatives (required for all facilities using more than 1 megawatt (MW) of electricity). In addition, DEDP manages research activities on potential energy sources.
Wastewater Management Authority (WMA). WMA, created by the cabinet in 1995, is responsible for setting up wastewater treatment facilities and a waste collection system, and for collecting fees for services in the lower Chao Phraya River basin. WMA reports directly to MOSTE, but investments will come from the private sector.
Ministry of Industry
The Ministry of Industry plays an important role in controlling industrial pollution and is responsible for implementing the Factories Act. The ministry has the power to issue regulations on the location and nature of a proposed industrial site, permissible machinery, standards, and methods for controlling the discharge of waste, pollutants, or any other element that may negatively affect the environment. However, the ministry finds it difficult to enforce stringent PCD regulations and focuses more on pollution prevention versus pollution control, thereby promoting cleaner production and waste minimization techniques. In many cases, the ministry views its primary function as promoting industrial development; it therefore serves more as an advocate for industry than as a regulator.
Specialized agencies that assist MOSTE in carrying out its mission include:
Department of Industrial Works (DIW). DIW oversees the environmental performance of factory operators, assessing the processes and operations within a factory. This task contrasts the PCD’s role, which is to monitor waste discharged from a factory. Under the Factories Act, DIW issues three-year renewable licenses for the construction, operation, renewal, and extension of facilities and sets requirements on industrial discharges, effluent standards, facility monitoring, and treatment facilities for hazardous waste. Private firms are required to submit wastewater plans to DIW, which is authorized to carry out periodic checks on facilities’ compliance.
GENCO. The Ministry of Industry has approached the hazardous waste problem by investing in GENCO (a public-private venture to develop a landfill for hazardous waste) with the GCN Group, a Thai private sector investor. The facility will be built in the Rayong province and will handle hazardous waste from Bangkok and the Eastern Seaboard. Waste Management International is providing technical support. In addition, hazardous waste sites are planned in the southern, northeastern, and northern regions. Other specialized divisions that assist in carrying out the ministry's environmental responsibilities include the Hazardous Substance and Chemicals Control Division and the Office of Industrial Services and Waste Treatment.
Industrial Estate Authority of Thailand. The Industrial Estate Authority of Thailand (IEAT) regulates industrial estates that fall under its dominion to ensure that all developers and operators conform to environmental criteria—from EIA submission to full operation. Industrial estates are either managed and owned by IEAT, established through joint ventures with private developers, or wholly managed and owned by private developers. In total, Thailand has more than 100 industrial estates. IEAT currently operates 23 industrial estates with approximately 1,300 factories. By the year 2001, it plans to have 54 estates under its authority. IEAT exercises considerable authority over environmental regulations and is considered an effective enforcer of pollution control measures in the estates. In IEAT estates, waste is often treated by central treatment facilities. DIW regulates estates not under the authority of IEAT.
Thailand Industrial Standards Institute. The Thailand Industrial Standards Institute (TISI) is responsible for setting standards for industrial processes. It represents Thailand at the International Standards Organization meetings (ISO) and is promoting and supporting ISO 14000. TISI set up a National Accreditation Council as the agency authorized to certify firms under the Thai Industrial Standards for ISO 9000 and ISO 14000.
Office of the Prime Minister
Divisions that fall under the Prime Minister's jurisdiction include:
Board of Investment (BOI). Promotion policies by Thailand's BOI are structured to have positive effects on the environment. The BOI also provides attractive incentives for companies locating outside the congested capital. Thailand's Seventh National Plan included a policy to relocate polluting industries from the Bangkok Metropolitan Region to designated provincial areas. These policies allow for the planning and provision of centralized waste treatment facilities. BOI’s policies focus on assisting high-technology industries and low-polluting or pollution-controlled industries. In particular, privileges, including tax exemptions for five to eight years, are offered for investors locating in industrial estates equipped with proper pollution control systems. If projects are considered environmental (i.e., they fall under the Refuse, Industrial Waste, or Water Disposal Services or the Transportation of Hazardous Chemicals categories), they are eligible for a corporate tax exemption of eight years and 50 percent reduction of import duties on machinery, if they are located in Zones 1 or 2 (Bangkok and the surrounding areas). For projects located in Zone 3 (underdeveloped areas), promoted environmental projects also can receive tax exemption of eight years, 50 percent reduction of corporate income tax from years 9 to 13, and exemption of all import duties on machinery. In all three zones, permission can be given to bring in foreign experts and technicians and to own land. Companies can also receive privileges based on research and development activities that will benefit the environment. Examples of recent environmental projects receiving promotion include the GENCO hazardous waste project and two joint ventures among the Levy Corporation (U.S.) and its Thai business partners, the Hemmaraj Development Co. and Siam Cement, respectively, for recycling of slag from iron and steel plants.
Electricity Generating Authority of Thailand (EGAT). EGAT, the state-owned enterprise that produces virtually all of Thailand's electricity, is under the direction of the Office of the Prime Minister. It is responsible for transmission of electricity throughout Thailand. EGAT also manages the Demand-Site Management (DSM) program. As described in detail in the Clean Energy section in Part 2, EGAT is in the process of privatizing its operations and is greatly expanding the scope of private participation in the power sector. Presently, however, EGAT directly owns and operates the major power facilities in Thailand, many of which urgently need environmental upgrades to reduce air pollution in urban areas. EGAT is initiating steps in this direction.
National Energy Policy Office (NEPO). NEPO is the secretariat of the cabinet-level National Energy Policy Council. NEPO is responsible for drafting all regulations and policy coordination of all national energy matters. It oversees the privatization of power production and the energy conservation program, including EGAT’s Demand-Site Management program. Moreover, NEPO plays an important role on the Fund Committee, which was established under the Energy Conservation Promotion Act and is responsible for allocating funds to energy conservation projects.
Ministry of Interior
Departments in the Ministry of Interior are primarily responsible for implementing environmental infrastructure projects. These departments must cooperate with the other agencies involved in environmental management to maintain environmental regulations and standards. Although primarily implementing agencies, these organizations also provide significant input into the design and plans for developing environmental management strategies. The departments can influence fees for water, wastewater, and solid waste services. They include:
Bangkok Metropolitan Administration (BMA). In the city of Bangkok and in greater metropolitan Bangkok, BMA is responsible for providing solid waste and wastewater service, among other things. It oversees Bangkok's large-scale wastewater treatment projects and collects and transports solid waste to transfer stations. The governor of BMA has considerable jurisdictional authority to require compliance with environmental standards, for example, by closing down a factory that is posing a health threat to the city's residents. Development and implementation of water supply projects are under the jurisdiction of the Metropolitan Water Authority (MWA) in Bangkok and its surrounding environs.
Public Works Department and Department of Local Administration. In the provinces, the Public Works Department (PWD) has direct jurisdiction over environmental infrastructure projects. PWD plans and implements the development of municipal wastewater treatment and solid waste facilities outside of greater metropolitan Bangkok. The Department of Local Administration (DOLA) is also important for implementation of projects in the provinces. DOLA, which includes the provincial governors and the local administrations, must approve infrastructure plans of the provinces within their jurisdictions.
Provincial Waterworks Authority and East Water
The development and implementation of water supply projects outside the metropolitan Bangkok area fall under the Provincial Waterworks Authority (PWA). PWA is responsible for distributing raw water from its source (which is generally managed by the Royal Irrigation Department) to the user, and for developing municipal water systems outside of Bangkok. The Metropolitan Waterworks Authority is responsible for water supply in greater metropolitan Bangkok.
PWA currently is privatizing its operations in part and recently created a subsidiary, East Water, that will oversee the water distribution function in selected regions. Although initially owned by PWA, East Water has begun to raise private capital by listing its stock on Thailand's stock exchange and plans to shift to majority private ownership. East Water will have a long-term lease on some of the PWA’s pipelines, initially in the Eastern Seaboard area, and will be responsible for upgrading and expanding these systems.
Ministry of Public Health
The Ministry of Public Health oversees implementation of the Public Health Act. Although it has the authority to issue judicial injunctions and open criminal proceedings in cases that cause danger to the public, the ministry primarily attends to urban environmental health issues. For example, the ministry has been involved in addressing the environmental aspects of street food contamination in Bangkok. In a more systematic manner, the ministry focuses on developing wastewater treatment systems for the nation's hospital system and on addressing problems associated with disposal of medical waste.
As the foregoing section indicates, Thailand has in place an extensive array of agencies and authorities charged with addressing environmental issues. Despite this organizational structure, which has been considerably strengthened during the past five years, enforcement remains a serious shortcoming in most areas. Nonetheless, the trend has moved toward higher environmental standards and stricter enforcement, with measures to improve regulatory enforcement having an increased impact over the past five years. Before the reforms in the early 1990s, Thailand's poor legal and regulatory structure did not provide the authorities with sufficient power to enforce environmental regulations. Although the situation greatly improved by 1996, enforcement is still minimal compared to that in the United States and other Western countries. The reasons for a lack of enforcement generally can be separated into cultural and organizational barriers.
Compared with Western nations, Thai society and legal systems place much less reliance on the enforcement of legal requirements to achieve desired goals. Thais are seen as lacking a strongly legalistic perspective when attempting to resolve conflicts. Instead, the Thais prefer a more pragmatic approach to resolving conflict, relying on social coping skills such as negotiation or third-party influence rather than legal retribution. Often, fines are imposed as a last resort. This method reflects the Thai preference to avoid confrontation, especially with senior members of the community.
The organizational barrier to effective enforcement is the lack of an agency with overriding enforcement authority. Enforcement efforts are particularly complicated since the jurisdictions of the various agencies involved in enforcing environmental regulations overlap, and these jurisdictions are often not clear. PCD may take on the role of national enforcement agency in the future, since it is already providing this service in the designated pollution control zones. However, its capabilities will need to be enhanced before it can take on expanded responsibilities.
Another organizational barrier is conflicts of interests within ministries responsible for both enforcing the regulations and promoting economic growth. Often the promotion function supersedes the environmental concerns, politically as well as within the ministry. This situation will worsen in the short term as the ongoing economic crisis increases pressure to favor short-term growth over environmental dangers.
At the lower level of civil service, the low income levels of some enforcement bodies, such as the police, increase the likelihood of corruption. This situation is further hampered by the lack of competent staff to carry out inspection and enforcement functions.
There are movements within the general public to pressure the government agencies to enforce environmental protection. In the past 10 years, environmental activists and the general public have become more vocal and have forcefully brought specific issues before the government. Environmental nongovernmental organizations and the media have played a key role in increasing environmental awareness. There have been some high profile cases where the populace has affected government policy, but in comparison to the environmental degradation that is evident, popular participation remains limited. The government hopes the guidelines set forth in the Eighth National Plan will promote greater public participation in environmental affairs. Increasing pressure to consolidate the democratization process in response to the economic crisis will reinforce this shift.
Recent examples of incidents where the general public has affected the operation of plants include the following:
- Villagers in the northern village of Mae Moh protested against the release of toxic particles into the air from one of Thailand's largest power plants, which was adversely affecting the health of the villagers. PCD investigated the situation, and EGAT agreed to temporarily close down part of the plant until proper environmental controls were added.
- Villagers accused another plant owned by a private company, the Phoenix Pulp and Paper plant, of releasing toxic wastewater into the nearby river. The plant was fined and its operations are being closely scrutinized by the authorities.
Western companies entering the market must realize that simple regulations do not equate to business opportunities, because enforcement is far from automatic. Companies interested in the market must investigate each environmental market for particular characteristics or trends of enforcement or nonenforcement, and seek advantages that do not depend on the regulatory environment (e.g., lower energy cost or reduced chemical use). In general, the greatest opportunities lie in areas where the government has specifically allocated budgets for environmental infrastructure projects or where the private companies are making environmentally friendly changes voluntarily. Businesses often make changes in their equipment or processes that positively affect the environment for other reasons, such as cost-cutting, government incentives, regulatory enforcement, efforts to reach international standards, or attempts to improve their corporate image.
Although improved enforcement will take time to come into force, Thailand is well ahead of other countries in the region, having in place the mechanisms and key legislation to provide the framework for vastly improved and integrated environmental management.
It is impossible to predict with certainty how Thailand's environmental issues will evolve as the economic crisis initiated with the 1997 devaluation plays out in Thailand and across the region.
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