Last Tuesday the Cabinet approved in principle the Bt165-billion mass-transit projects, the first of which will be the Red Line from Bang Sue to Taling Chan.

The tentative schedule for bidding and the start of construction is April and October this year respectively, with work slated for completion in 2010.

KTB's first executive vice president, Preecha Phukham predicted that this year the government would mobilise funding of around Bt25 billion to Bt30 billion from local banks, half of which might come from his bank.

As the largest state-owned bank, KTB can provide loans directly to the government at a lower interest rate, in line with rates offered to low-risk borrowers. The bank will use the country's international credit rating as the benchmark to set the lending rate for the projects.

"Mass-transit projects are for the public benefit, so the interest charged should be at a suitable rate. Also, the bank has sufficient liquidity to meet the government's borrowing requirements, Preecha said.

KTB has set a lending target for government projects for this year of Bt45 billion, a rise of 20 per cent on last year.

Apisak Tantivorawong, KTB president and chairman of the Thai Bankers' Association, said government projects would also boost the banking sector's loan growth next year as it also planned to build major infrastructure projects.

These major projects will also boost investor confidence in Thailand and support economic growth. Bangkok Bank president Chartsiri Sophonpanich agreed, saying that government approval for the mass-transit projects would build confidence in the country.

He said Bangkok Bank would probably aim to provide funding for the projects in the form of syndicated loans. The bank also has corporate customers in construction sector that would boost its lending growth.

Somruedi Banchongduang

The Nation