Foreign investors back logistics plan

Benefits to infrastructure outweigh funding concerns; execution remains a worry

The foreign investor community is throwing its support behind the government's infrastructure development plan, convinced that if efficiently executed, it will boost the Kingdom's attractiveness and draw more foreign investment.

Regardless of the political war of words during the House debate in the past two days, Peter John van Haren, president of PJ International Consulting and president of the Thai-Canadian Chamber of Commerce, said that foreign investors' attention is centred on the benefits of the investment.

"It doesn't concern us if the borrowing would entail any complications. Our focus is on the benefits to the country's infrastructure, as the proceeds will be invested in the transport system and the logistics. It has been in our conversation for a long time that Thailand's transport links with other countries and domestic links, like to Chiang Mai, Khon Kaen or the South, have been lagging in terms of development in the past years," he said during an interview with Krungthep Turakij TV yesterday.

Despite the opposition's criticisms about the constitutionality, repayment ability and transparency, the local business community is also backing the Bt2-trillion investment plan, designed to boost the country's logistics competitiveness through domestic and regional linkages. Topping the local investors' concerns is the execution. Due to pressure mainly from the Anti-Corruption Organisation of Thailand, the government has promised stringent procurement rules to ensure transparency.

The Bt2-trillion borrowing bill has sparked widespread attention, due to the huge amount involved and the long repayment period. At press time, voting on the bill was yet to take place, but it is expected to have sailed through thanks to the government's majority votes. In the next step, the Democrat Party is pinning its hope on the Constitution Court ruling the bill unconstitutional.

Niwat Kanjanaphoomin, president of the Thai Bond Market Association, estimated that the borrowing will drive public debt to 52 per cent in 2020, when the gross domestic product will expand from Bt12 trillion now to Bt15 trillion to Bt16 trillion then.

Kasikorn Research Centre estimated that without legal obstacles, the government could start issuing bonds for Bt30 billion in the last quarter of this year, to finance the infrastructure and water-management projects.

Dr Roong Poshyananda Mallikamas, an economist at the central bank, yesterday said that the investment would be a good thing if it bolsters long-term competitiveness. The Bank of Thailand is now studying the economic value of the investment and benefits to the country's competitiveness in the long term.

Van Haren said some of Thailand's infrastructure was very good.

"Some parts must be improved, though, like the rail network. With the narrow, obsolete track, the rail system needs a revamp, to support more goods shipment. The new system would be a boon given that the network has covered more than 50 provinces," he said in the interview.

He admitted that the investment offers great opportunities to foreign investors who are willing to share their expertise in construction know-how and technology.

Still, he noted that unlike local investors, foreign investors would leave all legal issues in the hands of local governments. If the projects they are involved with are implicated in corruption, "we're sure that courts in their respective countries would issue a clear and quick ruling, demanding the companies to take responsibility. This forces them to make sure that the projects are transparent and would not cause them problems".

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Article source: http://www.thethailandlinks.com/2013/03/30/foreign-investors-back-logistics-plan/