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SCMP Reporter

THAILAND is set to launch its biggest urban re-development project to clear the notorious Klong Toey slum, providing a big push for the low-cost housing market.

  The National Housing Authority (NHA) will resettle 7,000 families within five years in units on the fringes of the slum, Bangkok's largest shanty-town, in the process removing a key obstacle to its urban renewal programme.

  About 4,200 families will exchange their makeshift hovels at the end of this year for small plots of land offered under a 900-million-baht package of low-cost loans.

   But almost half of the slum dwellers are refusing to leave because of fears that their close-knit community will be dispersed to remote sites.

  There are believed to be more than 25,000 illegal squatters in Klong Toey, and up to 1.8 million slumdwellers in Bangkok.

  The NHA's deputy governor, Mr Sompong Hirikul, said the government agency hoped to move about one-third of these people into resettlement areas by the end of the year, though it was not certain all would be housed immediately.

  Klong Toey is prime real estate adjacent to Bangkok's main port. It is within close proximity to the main commercial and residential districts and has been a target of developers for years but the squatters have fiercely resisted legal attempts to force them out without alternative housing arrangements.

  Social workers say there is no national programme to house the urban poor, who are regarded as a potential security threat and a hindrance to development.

  Moves to close the widening gap between the upper and lower housing levels, which has been exacerbated by soaring land prices, were laid down in the Seventh National Economic and Social Development Plan - the master strategy that decides Thailand's future development.

  However, developers have traditionally been reluctant to enter the low-cost housing market, which cannot match the high returns of the condominium and middle-class housing sectors.

  At the same time, the government is unable to meet soaring compensation demands for land appropriation, a problem which has already substantially delayed key infrastructural projects.

  Residents forced to give up their land for highway schemes are petitioning the government for changes in the policy, which fixes land values at the rate applicable when the plans were first approved, and not at current levels.

  One road scheme still underway in northeast Thailand based its compensation on levels that applied in 1981-82, the start-up date for planning the project.

  The Condominium Trade Association has called for a ''land readjustment'' plan enabling the government to resume plots occupied by squatters from landowners and open up the dormant low-income market.

  Association president Mr Rangsarn Torsuwan said the land could be divided between low-income groups and other developers using the Japanese model of shared occupancy, which would boost the long-term values of the entire site.

  ''Building condominiums or flats in far away suburban areas is not the best solution. It is not surprising to find people are unwilling to move, as relocating them to distant areas will take them further away from their work places,'' he said.

  To lure the private sector into the low-income market, plans are being drawn up for the NHA to jointly develop cheaper housing with developers, which the government believes will lower their resistance to the unfashionable market.

  Under the scheme, manufacturers will be enlisted to produce cheaper building materials as an incentive to developers, who will also be invited to design and manage estates targeted at low-and medium-income groups.

  Observers said one of the main sticking points is finance, with developers worried about a high level of payment defaults.

  With bank funding for low-cost housing notoriously difficult to obtain, the government has responded by offering cheap loans through the Government Housing Bank (GHB), which formerly served only state employees.

  The bank's chairman, Mr M. R. Chatumongal Sonakul, announced last month that it would compete against commercial financial institutions by doubling the loan ceiling to 60,000 baht (about HK$18,300) for low-income families.

       An average low-cost dwelling costs about 300,000 to 400,000 baht.



Bangkok's slums to be redeveloped