March 14, 2014 00:00 By Erich Parpart, Somluck Srimal
Foreign business representatives in Thailand are largely unconcerned by this week's ruling by the charter court that the government's Bt2-trillion borrowing bill for planned infrastructure projects is unconstitutional.
They believe that the investment will still go ahead but will be funded through standard budgetary procedures.
David Lyman, chairman and chief values officer of Tilleke & Gibbins and founder of the Joint Foreign Chambers of Commerce in Thailand (JFCCT), said he welcomed the Constitutional Court’s verdict on Wednesday and believed it would have a minimal effect on foreign investors’ confidence, since they are more worried about the current political impasse. “Many people are relieved and pleased with the Constitutional Court verdict,” he said. “Development of infrastructure is needed but it should be within budget, and you should not bankrupt the country by doing so.”
Ferdinand Gyula von der Luehe, former vice chairman of the Thai Chamber of Commerce and current director of the Swiss-Thai Chamber of Commerce, said the verdict was a positive sign for foreign investors since its showed that the country preferred to do things with transparency.
“In the short term, the verdict might have a negative impact, since investment in infrastructure is needed for the development of the country. But it will increase investors’ confidence in the long run because it implicates that the country is willing to do things on the proper track,” he said.
“Transparency and scrutiny by the Parliament are needed for a project like this because it can ensure that the money is actually being use for the benefit of the country.”
Stanley Kang, the current chairman of the JFCCT, said the problem of transparency was a separate issue because it still could not be guaranteed, but he believed that development of the infrastructure project should proceed as soon as possible regardless of how it is done or which government does it.
Competitiveness at risk
“I am disappointed,” Kang said. “The verdict means that the country’s investment in the infrastructure projects has been slowed down along with other related private investments, which have to wait and see what will happen next with the projects.”
He added that the delay in the infrastructure mega-project would impair the country’s competitiveness ahead of the launching of the Asean Economic Community next year.
“Even though Thailand is [ahead of] many neighbouring countries in terms of infrastructure, currently most of them are already heavily invested in it,” Kang said. “If Thailand still wants to be the leader in this region when the AEC comes, the country will have to upgrade its infrastructures.”
Darren Buckley, president of the American Chamber of Commerce in Thailand, said he too was disappointed that the plan to develop the country’s infrastructure cannot move forward but believed that such a project, no matter how it is funded, should be subject to transparency.
“Many members of the American Chamber believe that the development of infrastructure is necessary and important for Thailand’s competitiveness in the future and hope that it continues,” he said.
“Such a project with a large amount of money being involved would always be subject to scrutiny, and no matter how it is being funded it should be transparent and in line with the Constitution.”
Thai property developers, meanwhile, say the court’s verdict will force them to revamp some of their plans.
“We have to delay by two or three years our business plan to develop residential projects in the provinces that were to have the rail system [improved] by the Bt2-trillion infrastructure budget,” Pruksa Real Estate president and chief executive officer Thongma Vijitpongpun said.
Opas Sripayak, managing director of LPN Development, said the company had also revised its plan to expand its investment in the provinces until the transport-infrastructure projects finally get under way.
Land prices in the provinces that have the potential to benefit from the infrastructure mega-project, which have increased by 20-30 per cent since last year, will drop when demand to buy land around the planned transit routes are delayed, said Thamrong Panyasakulwong, president of the Thai Condominium Association.