Sunday, December 16, 2007

Parties differ on funds for mass transit

Business News - Monday December 17, 2007

Bangkok Post

Parties differ on funds for mass transit

15-baht fare pledges raise eyebrows


All major political parties aim to use transport infrastructure, in particular Bangkok mass transit, to revitalise the shrinking construction sector, though they differ on how to pay for and manage the systems.

Aungsurus Areekul, the secretary-general of the Thai Contractors Association, said construction project value in 2007 declined by 50% from the previous year as a result of stagnant real estate markets in line with the delay of previous government's megaprojects such as the skytrain and dual-track rail projects.

Nevertheless, none of the projects are set out yet as sources of funds could not be finalised until now, including 165.4-billion-baht for five electric rail routes approved by the Surayud Chulanont government last November.

The Democrat, People Power, Chartthai, Puea Pandin and Machimathipataya parties say the delay of the rail projects has led to an economic slowdown. All parties aim to complete the projects in four or five years if they join the cabinet.

Korbsak Sapavasu, an executive of the Democrats, the main rival to PPP in next Sunday's election, said 450 billion baht would be allocated for logistics infrastructure development in the next four or five years. Dual-track rail and skytrain projects were given the first priority.

However, the budget would not be provided by the new government. Instead, authorities such as the State Railway of Thailand (SRT) must seek their own funds, using revenues from the projects for debt repayment.

Aside from logistics development, the party also has a 300-billion-baht investment plan for expanding national irrigation from 2009 to 2012.

The projects are expected to boost construction industry growth as well. But funds for this project would be included in the national budget.

The party would also help the industry by stimulating the market. It would offer a two-million-baht loan per person for home purchases. The party anticipated the measure would create purchasing power of 20 billion baht in the first year.

''Certainly, a government formed by our party would not build housing projects to compete with the private sector,'' said Mr Kobsak.

Samran Bhu-Anantanondh from the People Power Party (PPP), founded by former Thai Rak Thai Party members, said PPP aimed to complete the five skytrain lines in three to five years and the bids for the other four or five lines would be arranged in 2008 or 2009. PPP is the frontrunner, say polls.

The skytrain fare would be fixed at 15 baht per trip, said Mr Samran. The fare is currently 15 to 45 baht and subway rides cost between 15 and 39 baht.

Unlike the Democrat party, PPP said, the entire construction cost would be provided by the government budget.

Property funds would be established to promote the liquidity of construction firms and the new government would raise registered capital of the Export-Import Bank to increase its capacity to support local companies to invest aboard.

Machimathipataya leader Prachai Leophairatana also aimed to fix skytrain fees at 15 baht per trip. However, this cheap rate would last for only the first 10 years after the new skytrain lines commence commercial operations. After that, the rate would increase to 40 baht per trip to have a 30-year payback.

Mr Prachai vowed to complete 10 skytrain lines in the next four years. He would allocate a budget of 2.85 trillion baht for all megaprojects. Long-term bonds would be issued, aiming to support government's investment programmes.

Industry tycoon Sawasdi Horrungruang, an executive of the Chartthai party, criticised the proposed skytrain fare of 15 baht, saying it was economic nonsense.

''It's politics,'' said Mr Sawasdi.

Chartthai, he said, would proceed with the construction of new subway lines. In addition, the party aimed to build an 8,000-kilometre railway across the country. ''I could raise funds for the 8,000-kilometre railway in six months if Chartthai party leads the new government,'' said Mr Sawasdi, but did not detail sources of funds.

The Puea Pandin Party led by Suvit Khunkitti aims to build only three new skytrain lines. Chirayu Vasuratna, the party's deputy leader, said real estate projects mushrooming around the skytrain routes pointed out the need for more prudent city planning before other new lines are built.

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