Gains seen in infrastructure
Boost from mega scheme spending to be seen in 10 yearsThe government's proposed Bt2-trillion investment on infrastructure, if implemented, could boost the per capita income of Thais to US$10,000 (Bt300,000) per year from the present $5,000 per year within the next 10 years, according to the Fiscal Policy Research Institute Foundation.
Kanit Sangsubhan, director of the foundation, said that if the country spent an average of Bt200 billion to Bt300 billion per year, it would add half a percentage point annually to economic growth, meaning gross domestic product would expand by 5.5 per cent per year on average.
This massive investment would also help boost the economic growth of neighbouring countries, as they would have to make investments on their own infrastructure to catch up with Thailand. If the neighbours' economies expand, this will also bring benefits back to Thailand. Therefore, such investment would be a boon for the region.
Kanit said the planned investment comes at the right time given low interest rates of about 3-5 per cent for loans. The Finance Ministry has also confirmed that public debt will not surge beyond the ceiling of 50 per cent of GDP.
He added that one of the points one should pay attention to was whether the investment would be carried out in a transparent manner.
"If we don't invest now, we will lose the opportunity. So what we should be worried about now is not whether the investment will be made but that it might not happen," he said.
He expects the investment early next year as the Bt2-trillion bill is expected to be passed by Parliament in the third or fourth quarter of this year.
Finance Minister Kittiratt Na-Ranong said Thailand was ready to invest in infrastructure because of the low public debt and high liquidity.
Somchai Sujjapongse, director-general of the Fiscal Policy Office, said the investment would help improve the living quality of Thais, as well as the country's credit rating, as per capita income would increase by 1 per cent per annum on average.
He said the infrastructure investment would be small in the first year but would increase significantly in the three to four years after that, and would also encourage an increase in investment by the private sector, as well as trading and consumption. Such investment would help the country to save energy.
"We don't see much negative impact from the investment. There would be a surge in public debt as well as the current-account deficit, but it would be positive for the economy. Inflation would go up but it would be at an acceptable level," he said.
Chularat Suteethorn, director-general of the Public Debt Management Office, affirmed that the investment would not increase the level of public debt to exceed the fiscal-sustainability framework. It would stand at not higher than 50 per cent of GDP in the next seven years.
Meanwhile, the cost of loans would be at a lower level as government bonds with a 10-year term offered 3.6-per-cent interest, and 4.2-4.4 per cent for bonds with long-term maturity of between 30 and 50 years.
She said the public debt stood at 45 per cent of GDP as of January. Of that, 93 per cent was domestic debt. Compared with developed countries, Thailand has a low level of public debt. In Japan, the public debt is now 200 per cent of GDP, and 170 per cent in the United States. In Malaysia, a developing nation, the public debt is 53 per cent of GDP.
Meanwhile, the Transport Ministry is aiming to make Thailand the regional aviation hub in the next five years.
Transport Minister Chadchart Sittipunt said at a separate event yesterday that Thailand should start realising within five years the goal of becoming the hub in aviation, flight connection and maintenance, aircraft-parts production, and training of personnel.
He said Thailand's aviation infrastructure was ranked 28th in the world. The state aviation agencies can also borrow funding by themselves to finance the expansion of infrastructure such as the second phase of Suvarnabhumi Airport at a cost of Bt60 billion by Airports of Thailand or the investment on air-traffic management at a cost of Bt4 billion by Aeronautical Radio of Thailand.
But he added that such agencies would have to prepare to deal with the fast-changing industry amid the low-cost-airline boom, which has prompted high traffic and increased passenger numbers.