Thai contractors warn of wave of abandoned projects amid rising costs of raw materials, fuel
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Operators are forced to choose between halting work entirely or continuing at a loss.
Thailand’s construction industry has issued an urgent distress call to the Thai government, warning of a potential wave of abandoned projects and site closures as the cost of essential raw materials and fuel reaches “unsustainable” levels.
Ms Liza Ngamtrakulpanit, president of the Thai Contractors Association (TCA), warned on April 1 that the sector is facing a terminal crossroads.
Operators are now being forced to choose between halting work entirely or continuing at a loss that threatens their solvency.
Data released by the TCA highlights a staggering rise in overheads. Since early March, diesel prices have climbed by 14.3 baht (56 Singapore cents) a liter, triggering a domino effect across the supply chain.
Key materials have followed suit:
- Steel Rebar: Prices have surged by at least 4.5 baht per kg, with suppliers reporting severe stock shortages.
- Concrete: Ready-mix prices have risen by up to £10.15 (S$17) per cubic meter.
- Logistics: Freight costs for heavy haulage have seen “unprecedented” spikes, with some southern routes seeing surcharges of up to 78,000 baht a trip.
The TCA highlighted a “double bind” affecting contractors in both the private and public spheres.
In the private sector, many project owners have refused to acknowledge the inflationary pressure, holding contractors to original fixed-price agreements and threatening heavy fines for delays – even those caused by national lockdowns or global supply shocks.
The public sector offers little more protection. While state contracts include a price adjustment formula, known as the K-Factor, the TCA argues it is “dangerously outdated”.
Created in 1989, the formula often tracks irrelevant metrics like the consumer price index – which monitors the price of eggs and sugar – rather than the actual market price of industrial fuel and steel. THE NATION/ASIA NEWS NETWORK
Source: https://www.straitstimes.com/asia/se-asia/thai-contractors-warn-of-wave-of-abandoned-projects-amid-rising-costs-of-raw-materials-fuel
Google Translation:
Thai contractors are warning of a wave of construction project abandonments amid soaring raw material and fuel costs.
This news article is sponsored by FALLPROTEC, a world-leading company in the design and manufacture of fall protection systems and high-altitude access solutions.
Business owners were forced to choose between a complete shutdown or continuing operations at a loss.
Thailand’s construction industry has signaled an urgent need for help from the Thai government, warning of the possibility of widespread project abandonment and site closures due to soaring and unsustainable levels of essential raw materials and fuel.
Lisa Ngamtrakoonpanich, president of the Thai Contractors Association (TCA), warned on April 1st that the sector is facing a critical juncture.
Business owners are forced to choose between a complete shutdown or continuing operations at a loss, which threatens their ability to pay their debts.
Data released by TCA highlights a shocking increase in costs. Since the beginning of March, the price of diesel has risen by 14.3 baht (56 Singapore cents) per liter, resulting in ripple effects throughout the supply chain.
Other key materials have also increased in price:
Reinforcing steel: Prices have surged by at least 4.5 baht per kilogram, with suppliers reporting severe shortages.
Concrete: Ready-mixed concrete prices have risen to a maximum of £10.15 (S$17) per cubic meter.
Logistics: Shipping costs for oversized goods have soared to “unprecedented” levels, with some southern routes charging additional fees of up to 78,000 baht per trip.
TCA highlights the “dilemma” affecting contractors in both the public and private sectors.
In the private sector, many project owners refuse to acknowledge inflationary pressures, clinging to fixed-price agreements with contractors and threatening hefty fines for delays, even those caused by nationwide lockdowns or global supply shocks.
The public sector is offered no more protections, and while government contracts include a pricing formula known as the K-Factor, the TCA argues that this formula is “dangerously outdated.”
This formula was created in 1989 and often tracks irrelevant indicators, such as the Consumer Price Index, which tracks the prices of eggs and sugar, rather than the actual market prices of industrial fuels and steel. (THE NATION/ASIA NEWS NETWORK)
