An Impasse Grows In Thailand

It's an eerie scene. At the Map Ta Phut industrial complex in eastern Thailand, nearly built chemical plants stand idle along deserted roads. Half-finished columns are wrapped in blue plastic sheeting to protect them from the elements. Billions of dollars' worth of capital are standing there, practically abandoned in the middle of one of the world's largest chemical industry hubs.

The facilities are owned by dozens of famous chemical companies. Many are Japanese firms, such as Mitsubishi Rayon and Asahi Kasei. Dow Chemical and Bayer are there, as are the local conglomerates Siam Cement and PTT. The companies were caught off-guard when the Thai judiciary froze construction of the plants last autumn, years or just months after the Thai government had authorized the projects.

The drama at Map Ta Phut involves, on one side, residents of Rayong province who are concerned about the environmental and health impact of the chemical industry. On the other side are major chemical companies that profess an eagerness to meet or exceed any health, environmental, or safety standards imposed by the state. In the middle stands a wobbly Thai government whose task it is to resolve the thorny impasse.

The Map Ta Phut tussle will likely cut Thailand's gross domestic product by half a percentage point this year. The situation starkly illustrates what can happen when the complaints and concerns of people living near chemical plants are given short shrift for too long. As the impasse drags on, it risks causing permanent damage to Thailand's image of hospitality toward the international chemical industry.

In Chaklang, a hamlet of about 1,000 people less than a mile away from Map Ta Phut's newest chemical plants, barber and village councilor Boonchuay Chaonalun has nothing good to say about the chemical industry. He talks with a bitterness that comes from having been ignored for too many years. "The Japanese own so many plants near here, and I've never met a Japanese person," he says. But the more he describes the many problems that industry has caused for his village, the more his antagonistic stance sounds reasonable.

Financially, the industry doesn't bring anything to his village, Chaonalun says. Upon graduation, local students are unable to get jobs at nearby chemical plants, even as laborers during construction, he says. Moreover, government officials have forced villagers to sell their agricultural land on the cheap so that chemical companies can use the space to build new facilities, he asserts.

More seriously, whereas chemical company representatives are happy to tell him and other villagers about the advanced technologies they use at Map Ta Phut and the benefits their products bring society, Chaonalun says companies are far cagier in describing their production processes and the hazardous substances they handle. As a result, villagers lack vital information about how to protect themselves in case of an accident.

"To protect yourself from phosgene, you need to put a dry cloth in front of your mouth, not a wet one like I thought," he says out of the blue. It's a safety tip he learned not from the companies nearby that use phosgene to produce polycarbonate but rather from outside safety experts he sought out. Chaonalun recalls that a phosgene leak 10 years earlier killed two Map Ta Phut plant workers and injured many villagers, who later received financial compensation. The accident occurred at Thai Polycarbonates, a venture 60%-owned by Mitsubishi Engineering Plastics and the remainder owned by Thailand's TOA Dovechem Chemical Industries (30%), Mitsubishi Gas Chemical (5%), and Mitsubishi Chemical (5%).

Villagers aren't told in real time when an accident happens in Map Ta Phut, Chaonalun says, calling it an issue that has been a sore point for many years. A loudspeaker towers over the village for the purpose of instructing residents on what to do during an accident at a chemical plant, but Chaonalun claims it is activated only long after the fact. "We learn of accidents from ambulances carrying injured plant workers to the hospital earlier than we do from the alarm system," he says.

Various water problems are another sore point with Chaonalun. The rain that falls on his village is so acidic that it damages houses and stings the eyes, he claims. What is worse, he says, chemical plants that were built a decade ago have fouled the well water that his family had been using for drinking and washing. His well water is now muddy and contains elevated levels of manganese. It can still be used for washing, after it is filtered through a cloth, but Chaonalun says his family now depends on bottled water for drinking.

One of the things that most galls Chaonalun is the farce of the public hearings that are part of the environmental impact assessment process in Thailand. Companies give away money and food at the meetings, he says. Experts representing chemical companies make beautiful presentations, but there is no discussion, and in the end, all the villagers who attend are deemed to be supportive of the project, he claims.

In Bangkok, a two-hour drive from Chaklang, Dominikus von Pescatore, the general manager of Bayer in Thailand, is equally exasperated with the problems the company faces in Map Ta Phut. His frustration is directed at Bayer's inability to get regulatory clearance to fully make use of facilities it recently expanded in Thailand. Despite C&EN's numerous requests to chemical industry representatives in Map Ta Phut, von Pescatore is the only one who agreed to an interview.

"We are world leaders in the promotion of sustainable development. Our Map Ta Phut site received a safety award from the Thai prime minister last year, and our expanded facilities have actually lower emissions than before," von Pescatore says. "We are used to operating to the highest standards, and we can operate to even higher standards if needed."

The crux of the problem, von Pescatore says, is that the Thai government has not yet defined the regulatory standards that companies building or expanding facilities in Map Ta Phut must meet. Under Article 67 of the constitution Thailand adopted in 2007, new industrial projects must not only submit environmental and health impact assessment reports but also undergo review by a committee of technical experts and representatives of private organizations specializing in environmental and health issues.

Thailand has standard procedures for conducting environmental and health impact studies, but the government has not yet promulgated regulations detailing how the review committee should be run. The projects that are now frozen at Map Ta Phut had received the green light to proceed because they were complying with all existing regulations at the time. However, the Thai judiciary ruled last autumn that complying with the constitution, and its review rule, was also essential.

The freeze initially affected 76 projects, but construction on several resumed after companies lodged appeals through various channels. A spokeswoman for Dow, for instance, tells C&EN that most of the $3 billion in projects that the company is building with Siam Cement and Solvay Peroxy-Thai in Thailand are back on track after being told to stop last fall. Existing plants at the site continue to run as normal.

At Bayer, the projects affected by the court order are a 10% expansion of a plant making the plastic polycarbonate and a 25% expansion of a plant making bisphenol A, a raw material for polycarbonate and epoxy resins. Bayer has mostly completed the work but can operate the plants only at the capacity levels approved before the expansion.

The company is suing for the right to use the new capacity on the grounds that it's impossible to comply with nonexisting rules. The company also argues that no permit should be required because the expansions won't result in an increase in environmental emissions.

Von Pescatore notes that an additional element of frustration with the impasse in Map Ta Phut is that the Bayer organization has gone all out to be an upstanding corporate citizen. Senior executives from the German firm appear at meetings held periodically with Rayong villagers, even though they could delegate the entire exercise to local staff.

Moreover, according to a Bayer spokeswoman, 20% of the company's employees in Rayong are natives of the province. She further points out that Bayer provides scholarships and internships to local students who are learning to become chemical industry technicians and that the company has set up a cooperation program with the Rayong Technical College. Von Pescatore appears dumbstruck when told that villagers in the province believe that chemical industry jobs are closed to them.

Bayer started to build its presence in Map Ta Phut almost by accident a decade ago, when the firm bought Monsanto's global acrylonitrile-butadiene-styrene business. It found Map Ta Phut to be a site welcoming of foreign investment and endowed with excellent physical infrastructure for the chemical industry.

Japanese investors select Map Ta Phut for different reasons, explains Verapong Chaiperm, deputy governor of the Industrial Estate Authority of Thailand (IEAT). "Japanese operate on the basis of relationships," he says. Companies from Japan, he says, have set up facilities in Thailand essentially on the basis of their smooth working relationships with groups such as Siam Cement and PTT, a state-owned oil refiner and petrochemical producer.

A government agency with a mandate to manage industrial parks throughout Thailand, IEAT finds itself at the center of the crisis since the judiciary issued its construction freeze last autumn. Chaiperm, a Ph.D. scientist trained as a water treatment engineer, estimates that assets worth $8.5 billion have been affected by the court order. The agency has set up an office to advise affected companies on what recourse they have to get their projects restarted.

As soon as possible, the government must pass regulations detailing how industrial investors should comply with the new constitution, Chaiperm says. But that's easier said than done. Even with a well-functioning government, it would take a year for parliament to enact new regulations.

Thailand's prime minister, Abhisit Vejjajiva, has vowed to fast-track the effort, but he is not heading a stable government. His administration is the country's third in two years. Earlier this month, hundreds of thousands of demonstrators descended on Bangkok to demand new elections in the hope of restoring Thaksin Shinawatra, who was ousted as prime minister in 2006 by a military coup. It's hard to imagine the current prime minister devoting much of his attention to Map Ta Phut.

Since Thailand adopted its new constitution, Chaiperm says, IEAT has worked hard to seek a consensus among all stakeholders in Map Ta Phut, including the national government, local authorities, communities, and nongovernment agencies. IEAT has been coordinating a 2007 decision by the Thai government to turn Map Ta Phut into a national "pollution control zone." To allay villagers' concerns about the environment, Chaiperm says, IEAT has trained about 300 local residents since March 2008 as volunteer environmental auditors who inspect plants and grade their operational performance.

Chaiperm's opinion of Chaonalun, the village councilor from Chaklang, is that he represents a faction of particularly hard-line local residents. It's simply not true that the alarm system in Chaklang is defective, Chaiperm says. "I will talk with Mr. Chaonalun," he tells C&EN.

As for the groundwater pollution, he says manganese is often present in Thailand's water and that the Map Ta Phut area was in the past home to mining operations that could have disturbed underground water flow. Chaiperm says it's exceedingly difficult to pinpoint the source of groundwater contamination.

A consensus is emerging among some villagers and the chemical industry in Map Ta Phut that the complex should be managed as an "eco-industrial town." Under this concept, new plants can be added to the area only if they don't cause any substantial damage to the environment or a health risk. "As long as the area has still more carrying capacity for industry, we all agree on investments by clean and green industries," Chaiperm says.

One of the leading activists in Rayong province is far less conciliatory. Sutthi Atchasai, founder and head of the nongovernmental group Eastern People's Network, tells C&EN that he lobbied for the stringent environmental requirements in the country's new constitution. He was also the instigator of the citizens' lawsuits that led to the construction freeze at Map Ta Phut.

As a result of his activities, Atchasai claims through an interpreter, people he doesn't know follow him wherever he goes, and his phone line is bugged. "It's probably the investors, but I can't really know," he says. Thai authorities have not acted on his complaints about the harassment, he claims.

Atchasai's financial support mostly comes from the Thai health ministry. Except for some technical training he received from a foreign nongovernmental organization in Manila, Atchasai says he receives no foreign financial support.

Atchasai does support the eco-industrial town concept, but not to the extent that it welcomes further expansion. "There just isn't enough capacity for absorbing more chemical industry in Rayong province now," he says. It would be nice if tax revenues from the chemical industry could pay for better hospitals and schools in Rayong, he says. But the health burden on residents is simply too heavy to carry at present.

"In the past two years alone, there have been 37 accidents involving evacuations or injuries, and there's no alarm system," he says. He maintains that the incidences of asthma, leukemia, and skin rashes are abnormally high in Rayong.

As the impasse drags on, Thailand runs the risk that investors will judge the country as more trouble than it's worth. In a statement, the American Chamber of Commerce in Bangkok tells C&EN that "until the requirements under Article 67 are clarified and the supporting laws and regulations are enacted, a cloud will remain over future investments in Thailand. Investors need clarity, predictability, and stability."

But with local citizens and international investors at odds, and a wobbly government seemingly unable to mediate the impasse, it's hard to imagine when predictability and stability will return to Map Ta Phut.