New investment model could make commuting cheaper

The Finance Ministry and the National Economic and Social Development Board (NESDB) have discussed the PPP issue, he told participants at the euromoney conference on "The Thailand Investment Forum".

Under the new scheme the government may collect revenue from mass-transit services and then pay back concessionaires, Pongpanu said.

He said current PPP arrangements for mass-transit systems have proved a failure as private firms operating the Skytrain and underground train make losses, while the PPP model has succeeded in the energy sector.

He said the government could provide a direct subsidy to commuters by lowering fares for train services.

Investment in mass-transit projects in the next eight years is estimated to be worth about Bt770 billion. The PDMO plans for about 20 per cent of funding to be financed by PPP, he said.

For all mega-investment projects of the current government, the cost would reach Bt1.6 trillion to Bt1.8 trillion, Pongpanu said. These projects cover mass transit, transport, energy, water resources, education, health and housing.

Pongpanu said the government would borrow directly from commercial banks and then re-lend to state enterprises such as the State Railway of Thailand which will invest in new double rail track networks.

Sirichai Sombutsiri, senior executive vice president of Siam Commercial Bank, said local banks were confident they could finance the projects.

As the government planned to borrow about Bt300 billion over four years from the domestic market to finance the investment, banks could comfortably provide the loans, he said.

Looking at current deposit and lending growth rates and liquidity in the asset-management industry, funding parts of mega-projects was not a problem and it would not crowd out private investment, Sirichai said.