BANGKOK – Thailand’s construction industry has issued an urgent distress call to the Thai government, warning of a potential wave of abandoned projects and site closures as the cost of essential raw materials and fuel reaches “unsustainable” levels.
Ms Liza Ngamtrakulpanit, president of the Thai Contractors Association (TCA), warned on April 1 that the sector is facing a terminal crossroads.
Operators are now being forced to choose between halting work entirely or continuing at a loss that threatens their solvency.
Data released by the TCA highlights a staggering rise in overheads. Since early March, diesel prices have climbed by 14.3 baht (56 Singapore cents) a litre, triggering a domino effect across the supply chain.
Key materials have followed suit:
Steel Rebar: Prices have surged by at least 4.5 baht per kg, with suppliers reporting severe stock shortages.
Concrete: Ready-mix prices have risen by up to £10.15 (S$17) per cubic metre.
Logistics: Freight costs for heavy haulage have seen “unprecedented” spikes, with some southern routes seeing surcharges of up to 78,000 baht a trip.
The TCA highlighted a “double bind” affecting contractors in both the private and public spheres.
In the private sector, many project owners have refused to acknowledge the inflationary pressure, holding contractors to original fixed-price agreements and threatening heavy fines for delays – even those caused by national lockdowns or global supply shocks.
The public sector offers little more protection. While state contracts include a price adjustment formula, known as the K-Factor, the TCA argues it is “dangerously outdated”.
Created in 1989, the formula often tracks irrelevant metrics like the consumer price index – which monitors the price of eggs and sugar – rather than the actual market price of industrial fuel and steel. THE NATION/ASIA NEWS NETWORK