Two-Trillion-Baht Infrastructure Development Projects to Be Carried Out with Fiscal Discipline

(03/03/2013)

The Government will carry out two-trillion-baht infrastructure mega-projects, while taking into account fiscal discipline. A draft bill seeking a loan for financing the projects will be submitted to Parliament during the current parliamentary session, before April 2013. Speaking in the weekly program “Yingluck Government Meets the People” on 2 March 2013, Deputy Prime Minister and Finance Minister Kittiratt Na-Ranong stated that the mega-projects involve mainly road, air, and maritime transport network development. He said that the Ministry of Finance and the Ministry of Transport were working together in proposing the huge infrastructure development strategy and the draft bill to the Cabinet. The mega-projects would be carried out over the next seven and a half years and the implementation of the projects would be made known to the public. Mr. Kittiratt said that the planned two-trillion-baht investment fund is worthwhile and in line with financial disciplinary principles. Thailand has set its public debt ceiling at not over 60 percent of GDP. At present, the country’s public debt stands at about 43 percent of GDP. Out of this percentage, 8 percent will not cause a burden to the national budget. These figures show that Thailand’s public debt is relatively low. He explained that the two-trillion-baht loan would be secured gradually until the end of 2020. The Government would maintain fiscal discipline to ensure that debt repayment each year would not exceed 15 percent of the annual national expenditure. He believed that investment in the development of transport networks would cut logistics costs and reduce economic losses for the country. Mr. Kittiratt said that the Government was ready to work with the private sector in investing in the mega-projects. It would have less of a burden in seeking investment funds, if the private sector is interested in co-investment. Meanwhile, Transport Minister Chadchart Sittipunt explained that the Government had decided to focus on the development of transport networks, because Thailand’s infrastructure investment has been minimal in recent years. The country’s huge infrastructure investment took place in 1996 and 1997, when it accounted for 35-40 percent of the national budget. During the past five years, Thailand’s investment in infrastructure development accounted for only 15 percent. He said that high transportation and logistics costs would make it difficult for Thailand to compete with neighboring countries. If no action is taken to reduce the costs in the next 10 years, the country’s competitiveness will decline. He expects that Thailand will be able to cut its logistics costs by 2 percent, from 15.2 percent now to 13.2 percent within the next seven years. Mr. Chadchart cited the investment in two-trillion-baht infrastructure mega-projects as a new facet for national development and it would help reduce logistics costs.