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Published on February 23, 2008

Japanese investors signalled their readiness to return yesterday with an influential Japanese business group visiting Bangkok and Tokyo giving the green light to finance metropolitan mass-transit projects.

Prime Minister Samak Sundaravej said after meeting with Hiroshi Shimozuma, chairman of the Kansai Economic Federation (Kankeiren), representing companies in Japan's Kansai region, and the Japanese ambassador that they told him Japan was prepared to invest here again after Bangkok welcomed an elected government.

For instance, the Japan Bank for International Cooperation (JBIC) will grant a loan at an interest rate of only 1.4 per cent to Thailand for the Purple Line subway project.

Tokyo had been reluctant to approve transport loans under the interim government of Prime Minister Surayud Chulanont. JBIC's loan package requires the blessing of Japan's Diet.

Samak's economics team - Commerce Minister Mingkwan Sangsuwan, Finance Minister Surapong Suebwonglee and Industry Minister Suwit Khunkitti - was also present at the talks at Government House.

The Samak government badly needs to jump-start investment to boost the economy after major source countries, especially the US and Japan, stayed on the sidelines during the military-installed government.

Surapong said the government plans to invest up to Bt900 billion in logistics and rail projects to ensure sustainable economic growth.

About Bt500 billion will be needed for logistics projects and Bt300 billion-Bt400 billion for a high-speed train system and suburban rail projects, Surapong said, without providing details or a timeframe.

"Investments in infrastructure mega-projects will start around the end of this year," he said.

Responding to the Democrat Party's concerns over the state's fiscal stance, Surapong said that even though these projects require huge capital, the government will maintain fiscal discipline to keep public debt under 50 per cent of gross domestic product.

The People Power Party-led coalition government's top priority is stimulating investment.

The Asian Development Bank has said that Thailand's economy should have grown by more than 6-7 per cent instead of 4 per cent last year. Thailand's political environment caused it to miss the opportunity to expand 3 percentage points faster.

Samak said the Japanese, the biggest investors in Thailand, are back. And Japan's powerful local business group sought a meeting with him after the policy debate in the House.

He assured them that after the election, his government was ready to run the country and the "political incident" was an unexpected and brief episode.

Kankeiren's chief told him that his visit was meant to cement business ties. Kansai is the second largest region in Japan, with more than half of its external trade linked to Southeast Asia.

Kankeiren also invited Samak to visit Kansai's Osaka and Kyoto, the capitals of Japanese cuisine and culture.

Surapong said that most of the Japanese businessmen who met with Samak came from the electronics industry. They expressed confidence in the democratic government and said they were ready to set up operations here.

In addition, the Japanese will go ahead with the provisions of the Japan-Thai Economic Partnership Agreement. The government also accepted Kankeiren's proposal to increase direct flights from Kansai to the resort island of Phuket to cater to increasing demand from tourists.

 The Nation