Thailand can tap the Chinese-initiated Asian Infrastructure Investment Bank (AIIB) as a funding source for its infrastructure megaprojects now that the 2-trillion-baht borrowing bill has been derailed by the Constitutional Court, says a senior Finance Ministry official.
Somchai Sujjapongse, director-general of the ministry’s Fiscal Policy Office, said establishing the AIIB, whose function would be to fund infrastructure projects in the region, could be a boon to countries that need funding for their infrastructure developments.
However, it is unlikely that Thailand could conclude its stance on the AIIB’s set-up, as the country is now under a caretaker government, he said.
With its caretaker status, the Yingluck Shinawatra administration cannot take any action that could create liabilities for the next government.
The planned bank was first announced by Chinese President Xi Jinping and Premier Li Keqiang during visits to Southeast Asia last October as part of efforts by China to boost its regional clout.
The planned bank would have start-up capital of US$50 billion, half of which will be contributed by China and the rest by other Asian countries.
China estimates fund contributions would hit $50 billion within 5-7 years, and the bank would then be ready to become a channel to fund infrastructure projects with a low rate.
The Constitutional Court last week ruled the government’s bill authorising the Finance Ministry to seek 2 trillion baht in loans to finance the infrastructure developments as unconstitutional, stalling the investment plan.
The ruling came after the Democrat Party took the bill to the court, arguing that unlike the annual budget bill that must be passed by parliament, this would bypass scrutiny and inevitably lead to massive corruption since it lacked details and accountability.
High-speed train and electric rails, accounting for 80% of the 2-trillion-baht investment plan, were the major component of the seven-year infrastructure development plan through 2020. The Pheu Thai-led government had hoped infrastructure development would not only beef up the country’s competitiveness but also revitalise the economy.
In the meantime, Sompop Manarungsan, president of the Panyapiwat Institute of Management, said China had initiated the AIIB because the world’s second-largest economy wanted to link its economy to the rest of Asia, particularly Cambodia, Laos, Thailand, Myanmar and Vietnam.
It is difficult for these countries to develop rail routes using their own source of funding, as these projects need high investment, he said, adding that investment in infrastructure projects in these countries could add value to Chinese business in the region.