News & Update

Thailand seems to be undaunted by the European economic crisis as well as the economic slowdown felt in other parts of the world, with their appetite for construction and public debt not satisfied by ongoing projects.

Thailand’s construction activities are about to increase as the government is poised to approve yet another huge infrastructure spending bonanza. Furthermore, Thailand is doing it at a time when many countries are struggling to reduce national debt. The Thai government is currently finalizing plans for a construction spree which has been promised a long time ago, estimated at a whopping Baht 2,000 Billion or US$67 Billions. Critics of Thai government are vocal with their warning that this spending will tip public debt over 50 percent of the GDP, up 9 percent from its current 41 percent level.

While this endeavor is expected to boost the domestic economy amid uncertainty over the direction of some key export markets affected by the global economic crisis, economists and the ordinary citizens are asking if it will be worth the cost.

The government’s program will cover 57 separate projects spread across the country which will range from train lines, airport upgrades to the extension of Bangkok’s elevated rail service called Skytrain and high speed rail. Over three quarters of the allocated budget has been set aside for sustainability projects which include the latter two train services.

The planned improvement on public transportation system with the construction of high speed rails and Skytrain extension will be a welcome treat for Thailand’s new breed of first-time car owners who are terribly inconvenienced as they sit in their car in stationary traffic. In this scenario, the need for improving Thailand’s infrastructure network seems really compelling and necessary as experts have admitted that the country’s infrastructure is running at full capacity.

Thai economy relies on its export industries which in turn depend on insufficient and crammed road network, affecting the efficiency and productivity required to sustain the export business. Thailand has more than 63,300 km of major roads with only 3,900 km of single track railway operating at excruciatingly slow pace. The government sees this as the opportunity to improve the transportation service in the country as it recognizes the benefits it will give the business sector.

However, critics couldn’t appreciate the justifications saying that the infrastructure proposals are extremely ambitious if the financial impact and repercussions are to be considered. The public debt of Thailand is currently at Baht 3,460 billion or US$116 billion which according to the World Bank’s lead economist for Southeast Asia is sustainable. Critics are urging the government to redirect some of the funds spent on stimulus programs to social programs that will address long-term needs such as old-age pensions and programs that will reduce inequality and increase people’s skills (training, education, etc.).

And some experts are of the notion that the government has no clear plan or program yet on how it intends to raise the funds needed by the ambitious project. Some government officials have expressed doubts if investors will be attracted to the project due to slow rate of return.

The Thai government stated that they are looking at possible investors from China, Japan, Singapore and France for some parts of the project. If the terms are right, it’s possible that there will be foreign takers especially if they consider Thailand’s success in earlier mass transit projects which have benefitted the investing companies from consistently increasing passenger numbers, giving them quite an investment return.