INFRASTRUCTURE

Huge budget for mega-projects this year

Seminar told government funding will be no problem in view of more favourable figures for public debt

The government and state enterprises will spend about Bt600 billion to finance investment in mega-projects this year, says Public Debt Management Office deputy director-general Sun Vithespongse.

Speaking at an infrastructure seminar yesterday, he gave assurances that financing was not a problem, because the government had lowered public debt to about 41 per cent of gross domestic product.

The Finance Ministry and state enterprises plan to borrow Bt150 billion and Bt300 billion, respectively, he said, explaining that the interim government felt the need to boost public spending to offset declining investor confidence after the recent series of negative factors. These included the introduction of harsh capital controls and the New Year's Eve bombs in Bangkok.

Sun said the government would borrow from the domestic market, while state enterprises would borrow Bt100 billion from abroad.

The rest will come from the government's budget and state enterprises' retained income.

Investment in mass-transit projects in Bangkok, involving five electric-rail routes, is expected to total Bt218.1 billion. These projects include the Blue, Purple, Red, Light Green and Dark Green lines.

The State Railway of Thailand (SRT) and the Mass Rapid Transit Authority of Thailand (MRTA) plan to borrow Bt84.7 billion from the Japan Bank for International Cooperation (JBIC) to finance the first three lines.

The SRT will be responsible for the Red Line from Rangsit to Bang Sue and Taling Chan. The MRTA will be responsible for the Purple Line, from Bang Sue to Bang Yai; and the Blue Line, linking Bang Sue, Tha Phra and Bang Khae, plus Hualamphong and Tha Phra.

The exact amount of the JBIC loan will be finalised when Finance Minister MR Pridiyathorn Devakula visits Japan early this month.

The Bangkok Metropolitan Administration will be responsible for investment in the Light Green and Dark Green lines.

The government will also encourage private sector participation in funding the projects under the Public-Private Partnership programme. It hopes to tap Bt45.7 billion worth of private funds. The government plans to invest in civil works, depots, stations and tracks, while private firms will be invited to invest in rolling stock and signalling systems.

Meanwhile, reducing traffic congestion in Bangkok and expanding piped-water supplies in rural areas are among key issues to be addressed in a new partnership agreement between the government and the World Bank.

The Country Development Partnership - Infrastructure (CDP-Infra), announced yesterday, is the seventh such partnership developed since 2000. It is aimed at improving Thailand's national competitiveness and economic growth by supporting the development and implementation of infrastructure strategies while reducing financial burdens in the public sector, said World Bank country director for Thailand Ian Porter.

Porter said Thailand's developments in electricity supply, ocean shipping and telecommunications were modern and efficient compared with neighbouring countries.

While these factors have made a significant contribution to economic expansion, new challenges must now be faced, he said. Urban transportation problems in major cities, high logistics costs and a low rate of renewable energy all weaken the country's foundation for sustainability and "if they continue, will reduce Thailand's long-term economic growth".

Zhi Liu, infrastructure-sector coordinator at the World Bank, said the partnership programme would focus on priorities, with the World Bank taking an advisory role as a facilitator.

"Thailand is a middle-income country, continuing to move up, and overall doing much better than other countries in the region," Zhi said. "It is time to mobilise international experience and expertise, while understanding Thailand has unique characteristics."

He said Thailand must look at how to invest in infrastructure and how to prioritise government spending when it was limited by increasing demands from social services. International experience can help in the understanding of barriers and gaps in strategies and the determining of risks. "Thailand must look at what the key issues are if it wants to become more competitive in the global market," he said.

The World Bank's main local partner in CDP-Infra will be the National Economic and Social Development Board (NESDB), whose senior adviser, Porametee Vimolsiri, said infrastructure strategies were an important element of the national plan, which has an overall guiding philosophy based on an sufficiency economy.

"The sufficiency economy aims at adapting well to globalisation, which has a significant impact on Thailand's future," he said.

CDP-Infra will use these guiding principles to focus on implementation and logistics, renewable-energy development, improved urban transportation, capacity building by the National Telecommunications Commission and implementation of a pilot project for rural water supply.

NESDB chairman Panas Simasathien said two key issues were the energy crisis and rising logistics costs. "There is a great demand for a well-balanced infrastructure-development strategy that links economic, social and environmental dimensions together," he said.

Alice Coster,

Wichit Chaitrong

The Nation
Thu, February 1, 2007