Government set to defend massive loan

Government set to defend massive loan

Projects needed to 'keep up with the neighbours'

The government is set to defend its plan to borrow 2.2 trillion baht to fund a seven-year infrastructure overhaul when the issue comes up for parliamentary scrutiny next week.

Work to connect the bridge across the Chao Phraya River for the MRT Purple Line in Nonthaburi is almost complete. The 23km line from Bang Sue to Bang Yai is expected to be finished in October 2015. (PATTARAPONG CHATPATTARASILL)

A detailed list of sub-projects and budgets required will be tabled before the cabinet tomorrow and is expected to be scrutinised by the parliament on March 27-28.

Three important questions regarding the government bill that will allow it to borrow 2 trillion baht for the infrastructure overhaul would be explained in detail, Transport Minister Chadchat Sittipunt said.

The questions concern the projects' necessity, whether the borrowing would affect the country's financial status and public debts, and how the government would ensure its transparency, he said.

He would point out the country would end up lagging behind other nations in the region if it refuses to begin overhauling its infrastructure.

Other key players such as Malaysia and Singapore are speeding up their infrastructure development plans.

Malaysia and Singapore are working on a joint plan to link the two countries with a high-speed train system, while China has moved forward on a plan to connect to Europe by train, he said.

Thailand would lose its competitive ability to attract investors without such a plan, because the cost of logistics here would become higher than in the other countries, Mr Chadchat said.

Deputy Prime Minister and Finance Minister Kittiratt Na-Ranong would tackle questions about rising public debts.

Preliminary results of a study conducted on the 2.2 trillion baht borrowing plan showed public debts would not exceed 60% of gross domestic product (GDP), which poses no harm to the economy, Mr Chadchat said.

More importantly, since this was a seven-year project, the average spending per year would be only 300 billion baht which is small when compared with annual GDP, the minister said.

Mr Chadchat said measures were in place to ensure the projects were transparent. "Aside from drafting the details as a bill and submitting the measure to parliament for endorsement, the government also has held a public hearing on the projects and most people support them," he said.

Several sub-projects of the infrastructure overhaul were actually proposed by previous governments, he said.

The projects will be divided into three development strategies as specified in the bill, ministry sources said.

The first strategy will deal with changing land transport formats by switching to alternative means that will cost less. The budget required is 354.5 billion baht.

The second strategy is to develop infrastructure, at a cost of 1 trillion baht more, so it could be linked with that of neighbours and eventually of the country considered the region's centre.

The third strategy is to improve the efficiency of the transport system at a cost of 593.8 billion baht.

Under the first strategy, a number of new rail routes would be constructed including Lop Buri-Den Chai, Map Ka Bao (Saraburi)-Chumthang Jira (Nakhon Ratchasima)-Ubon Ratchathani and the Nakhon Pathom-Hua Hin-Surat Thani-Padang Besar routes.

In the second strategy, a network of intercity highways would be developed so that they could connect with a high-speed rail system that will include the Bangkok-Chiang Mai, Bangkok-Nakhon Ratchasima-Nong Khai, Bangkok-Hua Hin-Padang Besar and Suvarnabhumi airport-Chachoengsao-Pattaya-Rayong routes.

To improve the traffic flow under the third strategy, roads in Bangkok's suburbs and other large cities would have to undergo major repairs and expansion.

More new roads could be built to connect agricultural production, industrial sites and tourist destinations to main roads.

Mr Chadchat also said the ministry was considering expanding the railway system by adding one more route _ a 300km-long Phitsanulok-Phetchabun-Khon Kaen route. The estimated cost is 90 billion baht.

Suriyasai Katasila, a coordinator of the Green Politics group, said the borrowing bill would require the government to draw on huge amounts of off-budget money to finance the projects. That approach would lack transparency and could lead to corruption within the projects.

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