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Construction firms gear up for mega-projects

Firms marshal resources for Bt2 trillion govt infrastructure projects
Somluck Srimalee
07 Jun 13
The Nation

Listed construction firms are readying themselves to participate in the bidding under the government's Bt2-trillion infrastructure project by preparing their investment budgets and non-financial resources.

Ch Karnchang director Prasert Marittanaporn said the company had decided to withdraw from participation in the water-management project worth Bt350 billion in order to focus all of its resources on mega-projects under the infrastructure programme.

"We have limited resources and have to focus on what we can do better," he said.

The company plans to issue a debenture worth between Bt3 billion and Bt4 billion in the second half of this year. The funds raised will support its intention to bid for a large slice of the Bt2-trillion infrastructure projects.

"We expect a share of between 25 and 30 per cent of the government's infrastructure projects," he added.

Italian-Thai Development also plans to issue a debenture, worth Bt2.5 billion, in the final quarter of the year. This will be used to pay back the company's debenture that expires this year. The proceeds will also go towards preparing the business to join the bidding under the Bt2-trillion infrastructure programme, as well other mega-projects such as the Dawei project in Myanmar.

Sino-Thai Engineering and Construction, meanwhile, last month increased its registered capital from Bt1.18 billion to Bt1.5 billion as part of funding preparations to support its business expansion, including participation in the government's infrastructure projects.

KGI Securities said that although the bulk of the infrastructure projects would kick off late this year or during 2014, some projects - such as the BTS Green Line extension from Mo Chit to Kukot and the Pink Line from Kai Rai to Min Buri - were already open for bidding.

This will boost business for construction firms, especially those listed in the Stock Exchange of Thailand, said the securities house. KGI's research suggests Ch Karnchang will be a substantial beneficiary from the infrastructure projects, the company having already signed a contract to construct the Green Line route from Baring to Samut Prakan. The company also has the potential to win a share of other contracts in the overall infrastructure programme, it said.Finansia Sirus Securities also believes listed construction firms will benefit from the government's infrastructure projects.

Labour shortage

However, in order to reap these potential rewards, construction firms also have to prepare their non-financial resources, especially labour, in which both the construction and property sectors are currently facing a shortage. "When the government's Bt2-trillion infrastructure project begins to kick in, it will impact the supply of labour in the market, where the shortfall is already at least 200,000 workers," said Business Housing Association president Issara Boonyoung. On the plus side, when the infrastructure projects are completed, new residential areas will be opening up along the new routes of the rail system, he said.