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Published on October 23, 2007

However, the loans would have strings attached in that they must finance equipment and machinery from China.

Assistant government spokesman Chodechai Suwanaporn said the Cabinet agreed to a draft framework of a general-loan agreement to obtain loans from China Exim Bank worth up to US$400 million (Bt13.67 billion) to support equipment and machinery from China. The Thai Finance Ministry would guaranteed the loans.

Chodechai did not specify whether the loans would support mass-transit systems, but Deputy Finance Minister Sommai Phasee had earlier said the Finance Ministry was considering loans from China Exim Bank, because the JBIC seemed reluctant. However, Sommai also commented on the Chinese loans' requirement that the conditions attached with them might not give the ministry enough flexibility.

However, the JBIC recently told the ministry it was still interested in financially supporting the mass-transit systems.

Under the general-loan framework approved by the Cabinet, loans would be approved on a project-by-project basis. Such projects should have no more than 50-per-cent Chinese content. The loans bear interest of 3 per cent over 15 years.

The draft general-loan agreement is also in line with Chinese law. Problems rising from the agreement are to be sorted out by the China International Economic and Trade Arbitration Commission in Beijing, whose ruling is final.

The Cabinet yesterday also approved the dissolution of two state enterprises under the Defence Ministry: the Tanning Organisation of Thailand and the Battery Organisation of Thailand.

Chodechai said while the Cabinet agreed the ministry could continue to handle the manufacture of leather shoes and batteries, it added there was no need to have state agencies or state enterprises take charge of these operations.

The Finance Ministry also remarked that if the Defence Ministry wanted to have their own units for production, they should be small, serve only military branches and not be geared towards business returns.

The ministry can allocate its defence budget for production and subcontracting production, probably by hiring employees of the two organisations.

The state would need a budget of Bt1 billion and Bt311.96 million, respectively, to dissolve the two organisations, inclusive of compensation to employees.

The Cabinet also reported the Budget Bureau would approve the budgets. If there is no budget for this purpose, then both state enterprises can borrow money, using the Finance Ministry as a guarantor.

The Cabinet also approved a plan by the Thailand Tobacco Monopoly (TTM) to build a new Bt16.2-billion manufacturing facility in Bangkok. Construction is scheduled from next year to 2012.

The TTM will open bids for the construction and infrastructure systems, with local contractors sought.

An international bidding will be launched for the procurement of machinery and equipment, in which foreign suppliers are invited to join.

The TTM will have to reserve some profits to be remitted to the Finance Ministry for the construction expenses.

The TTM plans to reserve up to Bt4.66 billion next year and another Bt4.68 billion in 2009. Combined with its current reserves of Bt6.85 billion, the TTM will have Bt16.2 billion to finance the project.

The current facility in Bangkok, covering 312 rai, will become part of Benjakitti Park in 2011, while the new facility will be capable of producing 32 billion cigarettes a year.

Meanwhile, the Finance Ministry yesterday announced it would offer a 20-per-cent reward to anyone informing the ministry of the whereabouts of the assets of debtors of government agencies.

Comptroller-General Department spokesman Manas Jamveha yesterday said debtors owed government agencies about Bt2.74 billion. Many contractors have violated contracts with government agencies, and the courts have ordered them to pay compensation to the government.

However, state agencies cannot find their assets. Thus, anyone providing information about the whereabouts of debtors' assets will be rewarded with up to 20 per cent of the assets' worth by the Finance Ministry, he said.

The Nation