Thailand looks past pandemic to build $9 billion airport city

Thailand is looking past the pandemic and pushing ahead with a 290 billion baht ($9.4 billion) “airport city” aimed at creating a destination for travel and manufacturing, according to the head of the project.

The plan is to expand U-Tapao International Airport in Rayong Province, where much of Thailand’s automotive and petrochemical companies have plants and factories. In recent years, the airport brought in tourists from places such as China and Russia to the seaside city of Pattaya.

“It’ll be the core of a new growth center and a hub for logistics and tourism,” said Kanit Sangsubhan, secretary general of the Eastern Economic Corridor Office, which oversees the project spanning 1,040 hectares (2,570 acres). When completed, it will handle 60 million passengers and 3 million tons of cargo yearly, making U-Tapao one of the nation’s three largest airports.

U-Tapao was originally developed in the mid-1960s to support the U.S. military during the Vietnam War.

An initial phase of the redevelopment is due for completion by 2024, giving the aviation hub some “insulation” from the coronavirus-induced economic crisis and collapse of foreign tourism, Kanit said in an interview. Thailand closed its borders to foreign travelers in late March.

However, a challenge is to get businesses to buy into the idea of a new aviation and logistics hub for Southeast Asia.

“The building of infrastructure is easy, but the hard part will be bringing companies and investment to the area,” said Manoj Lohatepanont, director of Chulalongkorn University Transportation Institute in Bangkok.

Other planned features include a free-trade zone, an aviation maintenance center and headquarters for e-commerce and logistics companies. A high-speed train system is being built to connect the airport with Pattaya and Bangkok, about three hours drive away.

Construction of a new terminal is being handled by a consortium of BTS Group Holdings Pcl, Bangkok Airways Pcl and Sino-Thai Engineering & Construction Pcl. Operations will be managed by Japan-based Narita International Airport Corp.

Although the aviation sector has been one of the hardest hit by the coronavirus pandemic, Kanit expects a full recovery by the end of 2021 and forecasts a 1.5 percentage-point boost to annual economic growth from the airport complex’s construction. This year, Thailand is on course for a record contraction of 8.1% of gross domestic product.

The nation’s economic performance has lagged the Southeast Asian region for a prolonged period. The airport redevelopment is part of a wider, 1.7 trillion-baht blueprint to expand advanced industry and infrastructure on the eastern seaboard, as a way of closing the gap.