Steel Mill Killing Mars Progress on Thai Industrial Disputes

Raksak Kongtrakul was simply in the wrong place at the wrong time last week when a gunman shot him dead at the construction site of Thailand’s first steel smelting plant in southern Prachuab Khiri Khan Province.

The 36-year-old male had taken a temporary job as a construction worker for Sahaviriya Steel Industries, Thailand’s largest steel firm, to support his wife and eight-year-old daughter. Tragically, he was caught in the crosshairs of an ongoing battle between supporters and opponents of a huge five-phase $15.1 billion steel smelting project that had recently broken ground on the first phase.

Sahaviriya announced that it has video evidence implicating opponents of the project in the shooting, and provincial police fingered assistant village headman Bamrung Soodsawat as the gunman. He has denied the charges, claiming he wasn’t even at the protest site, and has sought help from human rights groups to plead his case.

Nonetheless, the incident followed a series of violent clashes at the steel plant over the past month in which both sides used fists, knives, slingshots, guns and other weapons. No matter who is to blame for Raksak’s death, the entire episode reflects the government’s laissez-faire attitude towards disputes between industrialists and local leaders.

“I don’t think any government has tried to deal with this issue seriously,” said Jon Ungpakorn, a former senator and leading social activist. “Conflicts between communities and companies are simply allowed to take their course, which can have very dangerous consequences, as seen at the steel mill.”

Killings associated with major construction projects are by no means unusual. According to the Bangkok Post, at least 15 community leaders in Thailand have been slain since 2001 mostly because they opposed industrial projects peddled by local crime bosses and politicians – sometimes one in the same.

To its credit, last year the military-appointed government took steps to try and ease tensions between local communities and industrial firms eager to expand, mostly through setting up various local development funds. Although critics say the new policies won’t work and they will need time to bear fruit, executives and policymakers say the government has at least tried to instill a framework for villagers and industrialists to work together for mutual gain.

Last year the government passed an energy law that creates a fund for communities within a five-kilometer radius of the country’s 109 power plants. The fund will total $54 million by the end of this year, and jump to more than $63 million by 2011. It’s controlled by a board with a majority of locals, although it also includes representatives from power producers and the government, said Tawarath Sutabutr, director of the Energy Ministry’s policy and strategy coordination office.

“It’s not only the money, but the fund itself sets up a forum for people and power plant producers to share views,” he said. “Through the forum people can meet and talk and get a better understanding of each other.”

Similar efforts are afoot in the petrochemical industry. A major protest erupted in early 2007 after villagers blamed pollutants from Map Ta Phut in Rayong province – Thailand’s largest industrial estate and a petrochemical hub for the region ­– for making people sick.

Former premier Surayud Chulanont’s government immediately halted approvals of all environmental impact assessments until investigators could determine where the pollutants were coming from and what could be done to stop them. Before allowing approvals, the government raised emissions standards and created funds to help the local communities.

“We are doing our best to coordinate with 25 nearby communities to gain their trust, and that is now taking effect,” said Supachai Watanangura, chairman of the petrochemical industry club of the Federation of Thai Industries, the country’s leading business group. “The communities are not really blaming us for the problems, but they are working together with us and inspecting factories on a regular basis to gain a better understanding. The whole picture is looking better than it was a few years ago.”

Supachai acknowledged that the protests forced the petrochemical companies, power plants and refiners in Map Ta Phut to do more to control pollution. He also said that most firms now understand that transparent operations, environmental protection and good communication with villagers are all good for the bottom line. That said, however, he added that local communities must understand the benefits of industrial investment.

“It’s clear that we cannot go back to the year 1900 when we have no investment and we all live happily with nature,” Supachai said. “The world moves forward. Industry moves forward. We now have the technology to invest in Thailand without spoiling the beauty of nature.”

More investments are on the way. Capacity utilization in many sectors in Thailand is nearing 90 percent, and many firms are just waiting to expand once political stability returns. In 2007, net applications to the Board of Investment rose 32.7% year-on-year to 655.8 billion baht, with most heading to Rayong province and the petrochemical, utilities and automotive sectors.

“Industrialists know they cannot take advantage of natural resources now because it will backfire,” Supachai said. “We need to be transparent and take care of communities. The problems are not gone, but hopefully we can all come together and talk things out to find solutions.”

In the case of Sahaviriya’s steel plant, the principles learned by the power and petrochemical sectors this year did not apply. The company has taken aggressive measures to defeat protesters, including lawsuits and refusing to participate in an investigation by the National Human Rights Commission on whether the plant is located on public land.

Moreover, Sahaviriya has proceeded with construction even though the environmental impact assessment has yet to be approved. Steel mill opponents blame the company escalating the tensions that led to Raksak’s death last week. (A company spokesperson declined to comment.)

Part of the problem is that villagers near the smelting plant see the wetlands where it is being built as vital to the community’s livelihood. Though Sahaviriya’s executives say any huge project is bound to face major protests, some activists don’t believe that’s the case.

“I’m sure it’s possible to choose areas where communities welcome the investment,” said Jon. “They are probably more close to urban centers where people are looking for jobs.”

Although petrochemical and power executives seem confident that community funds might help appease local opposition, critics fear the money may simply mask the underlying problems. Big company cash usually ensures that local authorities sign off on a project and environmental concerns are overlooked, but it may not be a panacea to dispel local opposition even with a council to oversee it.

“For opponents of a project, funds simply don’t work,” Jon said. “The reasons people oppose projects are because they want to preserve the old way of life, protect the environment and help small farmers. Compensation is not the answer. The answer is to find locations where communities will welcome the investment.”

To ensure investments are placed in the correct locations, activists have urged the government to pass a proper law on public hearings so they are not rushed through with the end result already a foregone conclusion. Moreover, they say, authorities should enact zoning regulations and conduct community mapping to discover which villages prefer a more traditional way of life and which are more open to the jobs and other benefits industrial projects can offer.

Although Thailand has plenty of industrial estates that accommodate sector clusters, other projects like power plants and Sahaviriya’s smelting plant are located in more rural areas.

Sourcing major projects will become increasingly important over the next few years. The new government must consider where to locate a planned new massive industrial estate complete with power plants, a deep seaport and other facilities that can support large-scale refining and petrochemical operations. Several studies have said it could be located in Nakhorn Si Thammarat on the Gulf of Thailand, while others have even tossed around the idea of putting it in the majority Malay-Muslim southernmost provinces, where an insurgency has killed more than 2,800 since January 2004.

Beyond that, the government must also find a site for a nuclear power plant scheduled to come online in 2020. The plant is essential for the country’s energy security since Thailand depends too heavily on natural gas for electricity, but it’s almost certain that protests will arise wherever it goes.

To ensure things stay peaceful, the next government would be wise to engage local villagers early and often.

“In the past decisions about locations for projects were made before the community even learned about the plans,” Jon said. “A new approach to find amenable communities and start a dialogue with them would help alleviate some of the problems.”