Major transport project set to go
The government is ready to kick off its long-awaited infrastructure investments, with the aim of accomplishing three main national strategies - a shift to a multi-modal transport system; connectivity; and mobility.However, the amount to be invested in projects outlined for implementation over the seven years to 2020, as approved by Cabinet yesterday, was revised down slightly from Bt2.27 trillion to Bt2 trillion. According to Deputy Prime Minister and Finance Minister Kittiratt Na-Ranong, some of the connected projects will be funded via the annual investment budgets.
If investment from annual budgets is included, Thailand's total outlay during the seven-year period would be Bt4.2 trillion. While strategic projects under the Bt2-trillion plan will be financed by borrowing, the rest - covering connecting projects nationwide - would come from annual investment expenditure, he said.
"The main modes - air, water and railroad - will be financed by the Bt2 trillion borrowing, while the linkages will be financed by annual budgets. In terms of budget, we are ready. Our income would rise in line with economic expansion," he told reporters yesterday.
EXHIBITION NEXT MONTH
The government plans an exhibition from March 7-10 at the Government Centre to reveal the investment plans in detail to the general public. A seminar will also be hosted for in-depth discussion on the plan.
The Transport and Finance ministries will then wrap up the proposal for screening by Cabinet, before it is sent to Parliament next month. The government plans to issue a law to support the borrowing.
Investors from many countries are keen to join the construction projects. Local and foreign business operators are optimistic that the outlays will increase Thailand's competitiveness, particularly under the Kingdom's plan to become Asean's transport hub when the Asean Economic Community comes into being in 2015.
According to Paiboon Nalinthrangkurn, CEO of the Federation of Thai Capital Market Organisations (FETCO), who recently joined a Thai delegation to Hong Kong, investors in Thailand have huge interest in the project, particularly the funding side and any possible delays. Kittiratt and Transport Minister Chadchart Sittipunt explained things at length to over 100 investors.
"All of them supported the investment thanks to the absence of mega projects since the Suvarnabhumi Airport, but they are curious about the funding," he told Krungthep Turakij TV. "On the delay issue, Prime Minister Yingluck Shinawatra and all ministers promised that a campaign would be launched to assure all of no delay. This is what the capital market will monitor."
"It was a job well done for this meeting. The trip has built confidence [among investors in Thai infrastructure projects] to quite a good level," he said.
Of the Bt2-trillion budget, some Bt309.3 billion will be allocated to double-track rail and port improvement. Another Bt955 billion will go to road and rail networks to promote connectivity with neighbouring countries and Asean, which will boost border trade. The remaining Bt672.5 billion will improve urban transport systems (Bt527.8 billion) and links to major provincial cities (Bt144.7 billion).
Transport Minister Chadchart said earlier a modal shift was necessary given higher energy prices and rising concern over global warming.
About 70 per cent of transport in Thailand is done by road, despite high cost and frequent accidents. Better infrastructure nationwide with better inter-city links will distribute economic growth to other parts of the country, as Bangkok faces saturation.
Average road speed in Bangkok and nearby provinces is only 28km per hour, and the country is a net energy importer.
The Asia Pacific Energy Research Centre said in a recent report that Thailand's total energy demands will triple by 2035 if things are not changed.
In the plan approved by Cabinet yesterday, the Bt2-trillion investment will lower Thai logistic costs by at least 2 percentage points from 15 per cent of gross domestic product (GDP) at present. The ratio is less than 10 per cent in the US. Shipment by rail will rise from 2.5 per cent to at least 5 per cent while the water transport ratio will rise from 15 per cent to at least 19 per cent.
These outlays will expand GDP by 1 per cent a year, and create about 500,000 jobs nationwide.
While some equipment and materials will be imported for projects, this is expected to raise the current account deficit by 1 percentage point per annum. Imports are also expected to cut pressure on the Thai baht, after huge inflows.
Despite concerns this investment will spur domestic inflation, the government is convinced it will rise only 0.16 per cent over the period.
Meanwhile, public debt should peak at only 50 per cent of GDP during this time, allowing the government to maintain fiscal discipline. The Pheu Thai-led government earlier announced that it would run a balanced budget in 2016.