New government construction jobs worth as much as 595 billion baht could be ready for bids within this year, offering more potential to local contractors as long as political conditions remain stable, says Kasikorn Research Center.
Eleven megaprojects are expected to enter the bidding stage this year. The largest will be infrastructure investments by the State Railway of Thailand (SRT) worth a total of 176.8 billion baht. The work includes the fifth and sixth phases of a dual-track renovation programme between Chachoengsao and Klong 19 and Kaeng Khoi in Saraburi.
The second-largest project will be a high-speed train route between Bangkok and Nong Khai worth 150 billion baht. Bids could open late this year or early next year if the Thai and Chinese governments can finalise details of their planned joint investment.
Five of the 11 projects will be mass-transit lines including the sixth contract for the Purple Line linking Bang Yai and Bang Sue worth 3.66 billion baht, and the first contract for the Green Line between Soi Baring and Samut Prakan worth 18.51 billion.
Also in the pipeline are the Green Line between Mor Chit and Saphan Mai worth 21.76 billion baht, the Pink Line between Kae Rai and Pak Kret and Nonthaburi worth 42.06 billion, and the Red Line between Bang Sue and Rangsit worth 75.54 billion.
Another major project will be phase two of the Suvarnabhumi Airport expansion worth 62.5 billion baht to support up to 60 million passengers a year from the current 45 million, which is expected to be completed in 2016.
“Politics is an uncontrollable risk to which contractors have difficulty adjusting,” said Pimonwan Mahujchariyawong, assistant managing director at K-Research.
“But if political conditions remain good and the planned megaprojects are implemented, it will benefit the construction sector.”
However, negative factors that will affect the sector will be higher costs of construction materials, up 5-10% this year, and labour.
Ms Pimonwan said construction costs were on an upward trend as prices of oil and many ores including steel, copper and other metals were increasing. Steel will be the first to rise.
Since early this year, labour wages have risen 5-10% and another increase by midyear is possible. Within the next two years, labour wages will rise 25-30%, according to many political parties.
Dr Pimonwan suggests contractors apply new technology such as finished construction materials to reduce costs and use more foreign workers.
K-Research also forecasts residential construction this year will slow on negative factors including rising interest rates, inflation and construction costs.
Positive factors will be a shift by large developers that mainly focus on Bangkok to other major provinces in low-rise and high-rise development, and higher farm incomes that will encourage spending on home renovation.
Construction in the industrial sector has potential for growth in line with capacity expansion in sectors such as automobiles, electrical and electronic goods and small power producers.
The commercial sector also looks promising as foreign investors are interested in retail and wholesale businesses, while Thai investors from Bangkok are building more department stores, large and small retail spaces and community malls in the provinces.
Factors to monitor will be construction costs, measures to control the risk of a real estate bubble, a labour shortage, as well as community opposition to certain types of projects on grounds of environmental and health impact.