Govt won't compete for funds

Theeraj Athanavanich, director for public infrastructure at the Financing Bureau, said the Public Debt Management Office (PDMO) was confident it could locate funds from several sources to finance these projects to the tune of Bt1.67 trillion from now until 2011.

If private firms need additional funds to expand their business, the office will not compete with them for capital, he said.

According to financing plans for mega-projects over the next four years, the office intends to borrow up to 18 per cent of its Bt1.67-trillion financing from the domestic market. Local borrowing is expected to peak at Bt98.77 billion in 2011, up from Bt49.33 billion this year.

The Fiscal Policy Office recently said private investment had recovered in the first quarter and was expected to remain strong. The fear is that if private firms need loans for expansion, this could lead to higher borrowing costs.

Threeraj said the PDMO gave priority to borrowing from the Japan Bank for International Cooperation (JBIC), due to the lower costs involved. It will also seek loans from the Asian Development Bank and World Bank if necessary. "We will not compete with the private sector in the local market for loans," he said.

The office plans to borrow about 14 per cent of the cost for mega-projects from overseas.

The largest share of financing, estimated to be 29 per cent, will come from the government's annual budget, while about 8 per cent will come from the retained earnings of state enterprises.  It is yet to be decided from where some 27 per cent of the funding will be secured.

The Office hopes public-private partnerships can be forged as part of the funding exercise.

Pongpanu Svetharundra, director-general of the PDMO, earlier said it would propose to the government the issue of 30-year bonds next year and in later years to finance state projects.

He cited success in the first issuance of 30-year bonds worth Bt2.5 billion last month as a promising start to raising long-term funds.

Huge state investments include Bt310.77 billion for mass-transit projects in Bangkok; Bt511.26 billion for energy projects; Bt380.39 billion for logistics and transport; and Bt176.93 billion for water-resource management.

Bt134.88 billion for education funding, Bt38.17 billion for public health and Bt115.59 billion for public housing is also needed.