Thailand: Developers welcome proposed streamlining

They reacted positively to the proposal by the Office of Natural Resources and Environmental Policy and Planning (ONEP) to revise the application process for environmental impact assessment. Rather than having to apply for EIA approval from an expert panel, developers would be required instead to comply with a full environmental checklist under the supervision of local authorities, which are in charge of issuing construction licences.

Thai Condominium Association president Thamrong Panyasakul-wong said such a move would bring about a new standard practice for condo developers.

"Currently when we decide to buy a plot of undeveloped land for a new condominium project, we have to bear the risk if the project cannot win EIA approval. The approval process relies heavily on the judgement of members of the expert panel," he said.

Without a standardised approval process, one of two projects in adjacent areas could win EIA approval while the other does not. This has been a major risk for developers, he said.

Property firms are ready to do anything to protect the environment, but need a single set of standards, he noted.

"Standards aside, the checklist will also help us save costs. With the checklist, we can go ahead with the projects. Under the current rules, we need to wait for six to eight months for the expert panel to grant EIA approval," he said.

Large developers have to acquire land in advance, bearing the cost of interest while the land sits undeveloped.

Some big companies can tap funds from the bond market, offering a coupon rate of 5 per cent, but smaller firms have to depend solely on bank loans. The minimum loan rate is now 7 per cent per annum.

Kree Dejchai, SC Asset Corporation's chief operating officer, said standardised EIA rules would help property firms tremendously. Now, SC Asset, for which condominiums account for a large chunk of the business, has to wait 10 to 12 months to win EIA approval for its projects.

He noted that this added to financing costs, while developers are subject to many rules.

Condominium development is now governed by four laws.

The first is the Environmental Quality Protection and Promotion Act 1992, which stipulates the EIA approval process.

Second is the Urban Planning Act, which is exercised by the Bangkok Metropolitan Administration (BMA) for development in Greater Bangkok and nationwide by the Public Works Department. Parts of the law cover environmental aspects, such as the one specifying that the construction process must not affect neighbouring locations.

Third is the Building Control Act, also exercised by the BMA and the Public Works Department. Included in the law is environmental management.

Last is the Condominium Act, which is implemented by the Interior Ministry's Lands Department.

"The last three laws are enough to control condominium development, but we are also willing to comply with the environmental checklist," Kree said.

Opas Sripayak, managing director of LPN Development, the biggest player in the condominium market, added that the change would help save costs for developers aside from operational smoothness. His company also has to wait eight to 12 months to win EIA approval for its projects. The abolition of the application process and the adoption of the checklist would benefit both developers and home-buyers.

He suggested that once the process is cut short, the financial burden would be cut and consequently unit prices could be cut to benefit home buyers.

"We welcome any proposals to save the environment, but the regulatory process should be clear and facilitating."

He also suggested that the ONEP may come up with a number of checklist sets, to respond to different physical conditions of each area. While development in the central business district could just follow the checklist, some environmentally sensitive locations may need to be controlled by a combination of checklists as well as an expert panel's opinions.

"For some locations where environmental threats are low, just the checklist should be enough, and this would benefit both developers and home-buyers," he said.