IN THE MIDDLE OF LAST WEEK, the permanent secretary of the Ministry of Transport, commenting on the Red line suburban rail project between Bang Sue and Rangsit, revealed that the State Railway of Thailand (SRT) will go ahead with bidding for all civil works on the project.
I really admire this move by the permanent secretary in not complying with such a strange condition, which is clearly set only for the convenience of foreign bidders.
I understand that JICA became involved in this project because the Japan Bank for International Cooperation (JBIC) will provide a long term loan for the project. If my memory is correct, the loan is an untied loan without any conditions on sourcing supply from Japan or making use of Japanese contractors.
However, JICA, which is a Japanese organisation, took advantage as a financial adviser to stipulate the conditions of the loan in such a way that favours foreign bidders.
This action is quite improper and may lead to problems afterward.
Thailand is a country with her own sovereignty and has developed to the point that the baht, the national currency, is generally accepted and traded on the exchange markets.
Traders and investors can exchange for baht for payment or investment in Thailand. Baht can, vice versa, be exchanged into foreign hard currencies to settle trade payments or to pay foreign contractors. The foreign bidders who would like to make money in Thailand should at least respect the sovereignty of Thailand in proposing the price in baht.
Furthermore, if the bidding has to be in foreign currencies, and bidders from various countries propose prices in each of their own currencies - such as the US dollar, euro and yen - how can the bidding prices be compared without any loophole for petition? Probably, JICA might have stipulated to have the bidding price in one common currency such as US$ or yen, which is comparable, with an intention to protect foreign bidders from exchange risks. In such a case, a Thai bidder who plans to use products partially or completely made in Thailand would be the only one bearing some or all exchange risks. Is this reasonable?
Nonetheless, the most important reason that we, Thais, should insist on the bidding in baht, is the issue of our sovereignty. The foreign bidders who are really interested in making money from this project could, without any difficulty, find the way to hedge against exchange risks in the existing foreign exchange market.
What surprises me is the fact that the Ministry of Finance allowed this peculiar condition of JICA to be in the agreement. I believe that the agreement was not signed by the current government and I have no idea whether the minister who approved the signing of the agreement was aware of this peculiar condition.
Were not the officials involved in the loan negotiation aware that such a condition was meant to be in favour of bidders from the country of the stipulated currency? Is not it leeway from being an untied loan? It should be in the interest of the Ministry of Finance to renegotiate for the removal of this condition which is unnecessary and not in a spirit of an untied loan.
Any trivial issue involving our sovereignty is always significant - which must be attended to.
Until next Monday.
