The new government is being urged to pay contractors an outstanding budget of 80 billion baht neglected by previous administrations, says Polpat Karnasuta, president of the Thai Contractors Association (TCA).

"Many Thai contractors face liquidity problems as they cannot collect construction costs," he said.

Dozens of contractors in the association are going out of business while around 200 of its 566 members have delayed paying their membership fees, he added.

The TCA last week sent a letter requesting the government to accelerate paying construction costs to contractors and to speed up bidding for construction projects.

"The construction industry will improve this year as the new government attempts to stimulate the economy with its spending," said Mr Polpat. "Megaprojects can replace the export sector, which has slowed down."

He said members of the association and the Italian Thai Development Group had formed a joint venture, Thai Contractors Asset Co Ltd, in which they hold 18.6% and 81.4% respectively with registered capital of 500 million baht last year.

The company is to develop The Oriental Residence, a 32-storey leasehold and serviced-apartment condominium worth 3.5 to 3.8 billion baht on the two-rai site on Wireless Road where the association's office used to be located.

It will have a total saleable area of 16,000 square metres and will contain 145 serviced apartments sized from 50 to 200 sq m and 44 condominiums sized from 60 ro 300 sq m.

The company's managing director, Valaithip Charanachitta, said the plot was leased from Crown Property Bureau for 33 years with a 220-million-baht contract starting from 2007.

She said the payback period would be in seven or eight years, as the project generates cash flow from condominium units, and return on investment would be around 13-15%. The project would have Thanachart Bank as a financial supporter with a credit line of 800 million baht. Construction would start in January and is due to be completed in the next three years.

Currently, monthly rates for a serviced apartment in the location are 1,200 to 1,300 baht per sq m while market prices for freehold and leasehold condominiums are above 100,000 baht per sq m.

source : www.bangkokpost.com