Finance Ministry officials are concerned about investment returns and financing of the mass transit, transport and other mega-projects proposed under the Modernisation of Thailand scheme by the Thaksin government.

Their concern is based on the fact that the bidding terms of reference for several projects are in the hands of other ministries. For example, the mass-transit investment is being screened by the Transport Ministry while the Finance Ministry, which is in charge of the government's budget, is shut out.

Caretaker Prime Minister Thaksin Shinawatra earlier invited foreign investors to bid for the mass-transit projects in Bangkok and the transport and water resource developments around the country. The projects have been delayed due to the political turmoil.

Although he has announced his intention to step down from the premiership in the new government, Thaksin promised to push forward the mega-project investment plan, worth Bt1.8 trillion between 2005 and 2009. The cost of the mass-transit projects is estimated to be Bt423 billion for the originally planned seven rail routes, the transport project Bt346 billion, and the water resources project Bt203 billion.

The two key conditions of international bidding for the work are that it must not create public debt and must not involve concessions. Bidders have been invited to propose any investment structure or financing plan.

"It is apparently the right model, but nobody knows whether it will be cost-effective or will generate adequate returns," said a Finance Ministry official. If any of the projects fail, taxpayers will ultimately be forced to foot the bill.

Before Thaksin launched the Modernisation of Thailand scheme and invited foreign investment, the Public Debt Management Office proposed a plan of indirect investment in the mega-projects by the government in the first phase, due to its capacity to borrow funds at lower cost.

Thailand Development Research Institute research director Somchai Jitsuchon predicted that the mega-projects would be further delayed because the new government will have only one year in office and will be preoccupied with political reform. Moreover, pressure from public demands for more transparency will also affect the planned investments.

During the recent anti-Thaksin protests, a large group of engineers joined the People's Alliance for Democracy campaign. They accused the prime minister of favouring foreign investors at the expense of local construction companies and engineers. They also charge that the Thaksin model leaves big loopholes for possible corruption.

If the momentum of the campaign against the government continues, Somchai said, the new government would come under pressure and may have to review the mega-projects. He would agree with such a review if it aimed to ensure wise investment.

In its stock report on Wednesday, Asset Plus Securities said that although the new government is expected to proceed with the mega- projects, it expected further delays due to financing prospects.

"There remains opposition to the procedure for carrying out the projects, particularly the mass-transit projects. While the government pursues a comprehensive investment, several agencies, such as the National Economic and Social Development Board, have suggested that the investment should be carried out according to the availability of central budgets."

Meanwhile, the Finance Ministry predicts that public debt, as a percentage of gross domestic product, will drop to 34.6 per cent in 2009 from about 45 per cent currently. It said that, as the public-debt-to-GDP figure is lower than the upper-limit target of 50 per cent, this left more room for government borrowing to finance the mega-projects.

Officials do not think the revoking of Egat Plc's privatisation will have much impact on public debt, if Egat has to borrow to finance its investments instead of raising funds from floating shares on the stock market. Egat plans to invest Bt200 billion over next five years in various projects and, according to one official, this is "small money". 

Wichit Chaitrong

The Nation

----------------------------------

Commuters surveyed

Now that the political stalemate has ended, at least for the moment, hopes are high that major economic policies will resume - particularly the long-awaited Bt550-billion mass-transit development projects. Still, Bangkok residents should not expect to see all 10 rail routes take shape at once, for a recent survey suggested otherwise.

The Transport and Traffic Policy and Planning Office recently produced 500,000 questionnaires, asking residents which five routes they wish to have first. The questionnaires are being handed out this week to commuters using the subway, BTS Skytrain and Bangkok buses. Included are questions on travellers' usual mode of transport and their opinions on appropriate subway fares.

A source at the office said it expected about 10 per cent of the questionnaires to be completed and returned - some 50,000 sets.

"Then their opinions will be stored and become the statistics that officials will take into account when they are making any policy decisions," the source said.

Under the supervision of caretaker Transport Minister Pongsak Ruktapongpisal, the subway network is to be expanded from the previously planned seven routes to a total of 10, with investment also raised from Bt423 billion to Bt550 billion. According to a source at the Transport and Traffic Policy and Planning Office, the office has not yet prioritised which routes will be built first, which is why public opinion is being sought.

"We are trying to accumulate all the pros and cons to support the government when it comes to make the decision," he said.

Many parties expect further delay in the mass-transit investment projects. DBS Research Group said in a research paper last Friday that other mega-projects could take shape, but not mass-transit development, which should anticipate further delays.

Watcharapong Thongrung,

The Nation