Thai economy may grow 5 pct in 2010-deputy PM

Wed Nov 18, 2009 9:12pm EST

(Repeat of a story from Wednesday, with no change to text)

* Deputy PM concerned about protests but sees them contained

* Says Q4 GDP expansion will be weaker than expected

* Expanding environmental controls in major industrial estate (Adds details throughout on baht, economy)

By Jason Szep and Vithoon Amorn

BANGKOK, Nov 18 (Reuters) - Thailand's economy could grow as much as 5 percent next year if there is political stability, the country's deputy prime minister in charge of the economy said on Wednesday, though he called the baht's rise a concern.

"If politics are stable, 5 percent is not something that is unreachable," Deputy Prime Minister Korbsak Sabhavasu told Reuters in an interview.

Thailand, Southeast Asia's second-largest economy, is expected by economists to grow about 3.5 percent next year, among the slowest in Asia MKTPOLL1.

Many private forecasters factor political instability into their outlook for Thailand, with no end in sight to a seemingly intractable political crisis, underscored by plans for prolonged anti-government protests starting on Nov. 29. [ID:nBKK4822]

That will be the first protracted demonstration by red-shirted supporters of former Prime Minister Thaksin Shinawatra since violent protests in April that were forcibly ended by the army.

"Of course, we are concerned," said Korbsak. "But we've controlled it before and will do it again. Remember the bad one in April, we were able to control it."

He said, however, an expected economic rebound in the fourth quarter would probably not be as strong as the government had anticipated because the disbursement of funds for its stimulus programmes has been slower than expected.

Cabinet approved in September the first disbursement of a 1.43 trillion baht ($42 billion), three-year stimulus plan, a cornerstone of its economic recovery efforts.

"We are in the fourth quarter right now and we believe it is a plus. We are a little concerned it could not be as high as expected because the funding of our stimulus programme is lagging behind a little bit," he said.

"The cash injection is slower than we would have thought. Signing the contracts was about a month late," he said.

CONCERN OVER RISING BAHT

He also expressed concern about recent gains in the baht, which has climbed 4.9 percent against the dollar this year, but said it would not be wise for the government to attempt to influence or reverse its direction.

"We are very concerned. We should not let it fluctuate too much. The Bank of Thailand is doing that part. We want to see less fluctuation," he said. "We should not try to reverse it."

He said the government was pushing ahead with plans to resolve environmental issues at the heart of a landmark court ruling in September that suspended some operations in a major industrial zone and stirred doubts about the ability of the shaky government to satisfy both investors and angry villagers.

Thailand was allocating 2 billion baht ($60 million) to strengthen pollution controls, emergency services and public works around the sprawling 16.5 sq km (4,086 acre) Map Ta Phut industrial estate, the world's eighth-biggest petrochemicals hub, where 76 projects worth about $9 billion have been suspended.

He said he expected approval in a week to expand clean-water pipelines into the community, and would spend 275 million baht to remove 300,000 tonnes of garbage piled up in the area while more than doubling the number of hospital beds to 200.

The projects, including some from Germany's Bayer (BAYGn.DE), India's Aditya Birla Chemicals (ADYA.BO), Australia's BlueScope Steel Ltd (BSL.AX) and 25 companies belonging to Thai energy giant PTT (PTT.BK), were suspended over their failure to comply with health impact assessment (HIA) rules, in force since 2007.

He said the industrial zone had grown far faster and far bigger than originally designed in 1985 when authorities had put in place a buffer zone between industrial and residential areas.

"The factories are not supposed to be there in the first place," he said. "The buffer zone is all gone. And now we cannot take the industry out. We cannot take the people out. So we have to learn to live together."

He blamed the problem on the government led by Thaksin, who was ousted in a 2006 coup and now lives in exile after fleeing ahead of a two-year prison sentence for graft.

"I would say that government didn't do much. They kept expanding into the buffer area," he said. ($1=33.18 Baht) (Reporting by Jason Szep and Vithoon Amorn; Editing by Alan Raybould)



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