Thailand on track for 2 trillion baht infrastructure projectBy Saksith Saiyasombut & Siam Voices Sep 19, 2013 1:10PM UTC
Today is the 7th anniversary of 2006 Coup d’etat in Thailand and also the day 2 trillion baht (US$64 billion) infrastructure development bill is submitted to Thai parliament.
While the act has a lot of critics (specifically on the ‘debt’ side), it is the most ambitious infrastructure investment in Thailand since the 1997 financial crisis.
The latest big infrastructure investments in Thailand occurred before the Asian financial crisis. After the crisis, Thai governments cut spending and even after the economy recovered there was little political will to launch major infrastructure projects. Thaksin Shinawatra’s government spent a lot of money on stimulating the economy, but there was little investment in infrastructure with the exception of Suvarnabhumi Airport, which opened in 2006 and is already struggling to handle passenger numbers.
This time, the Pheu Thai government is serious about infrastructure development. With the votes they have in parliament, the act should be passed without much trouble. Let’s look ahead at what we can expect over the next decade.
What is the plan?
The act will raise around 2 trillion baht to upgrade various infrastructures.
- 42.7% for highspeed trains
- 24.9% for Bangkok metro/subway
- 15% for road upgrades
- 14.4% for train (non-highspeed) upgrades
- 1.6% for sea ports
- 1.5% for cargo stations and custom houses at borders
The Thai government has set a goal to reduce logistics costs per GDP by 2% (currently at 15.2%) and gradually shift the transport modal from road to rail.
The grand ambition of the highspeed train project is linking Southeast Asia to China – namely from Singapore to Kunming in China’s southwestern Yunnan province.
Who is behind the plan?
Some key Pheu Thai people are:
- Pansak Vinyaratn - the chief policy adviser to Prime Minister Yingluck Shinawatra. He was the chief policy adviser to Prime Minister Thaksin before. He is the main strategist on the infrastructure and highspeed train plan.
- Chadchart Sittipunt – the Minister of Transport, a rising star after his work on transportation policy and grassroots PR.
- Prapat Chongsanguan – the current governor of State Railways of Thailand (SRT). He was the governor of Mass Rapid Transit Authority of Thailand (MRT). He is the guy Pheu Thai sent to fix the SRT’s chronic problems.
What to expect?
The two most obvious benefits of 2-trillion-baht project are the economic benefits of the investment itself and the logistics upgrade. The Thai government said it will create 500,000 jobs during the course of investment.
Thailand’s rail infrastructure is very old and fragile. The existing rail network was built more than a century ago and has not been upgraded much in a last few decades. Whether it’s highspeed rail or not, the SRT infrastructure and organizational bureaucracy will be improved a lot after the upgrade, which can only benefit the economy.
The next point to watch is the geopolitical shift after the new ASEAN connectivity loop. Mainland ASEAN will link itself closely to Southern China.
Domestically, we will see the geopolitical shift within Thailand as well. The current ‘everything comes to Bangkok’ situation will be gradually changed. The economic power will be distributed to large cities in different parts of Thailand. Five to 10 clusters of ‘new economic area’ will emerge around the highspeed train lines.
What are the concerns?
Debt will be the most discussed issue but, in practice, Thailand’s public debt level is still controllable.
If the political forecast is correct, the Pheu Thai government should win the election again in 2015 and the development plan will go ahead.
My chief concern is human resources and know-how on the highspeed rail project – a completely new thing to Thai society. Very few people know about it and the inefficiency of SRT will make things worse – expect serious delays.
It will take times, maybe a decade or more, to create a good train network and operate it properly.
Article courtesy of Thai think tank Siam Intelligence