Connect with us

Economics

Thailand plans massive $76bn investment in infrastructure

A massive programme of investment in Thailand’s infrastructure, designed to enhance international connectivity and competitiveness, is set to be implemented this year amid a renewed commitment to investment and regional development.

Published

on

high speed rail thailand

A massive programme of investment in Thailand’s infrastructure, designed to enhance international connectivity and competitiveness, is set to be implemented this year amid a renewed commitment to investment and regional development.

The government is lining up 55 projects worth Bt2.27trn ($76.27bn) to be executed by 2020, with Bt100bn ($3.36bn) allocated in the 2013 fiscal year, the local press reported on January 18. The projects come under the government’s long-term development plan, but are being accelerated due to new commitments to investment and regional development, including liberalisation in neighbouring Myanmar, and the roll-out of the ASEAN Economic Community (AEC).

high-speed-rail-thailand

Chinese officials have shown strong interest in the rail links to Chiang Mai and Nong Khai, as they will eventually connect to the Chinese network.

 

The AEC has set a goal of regional economic integration, with the focus on creating a competitive single market integrated both internally and within the global economy.

“The infrastructure development projects are designed to make Thailand the true centre stage of ASEAN,” said Chadchart Sittipunt, the minister of transport. “Under this plan, Bangkok will no longer singly represent Thailand. Major cities will gain greater prominence, thanks to the AEC, which will […] extend regional connectivity.”

The Ministry of Finance is expected to present a plan to Cabinet to borrow Bt2.2bn ($73.91m). If given the green light, 64% of this figure will be allocated to 31 railway projects, 24% to 13 road schemes, 7% to seven water transport projects and 5% to four air transportation development ventures.

Thailand’s connectivity with its ASEAN neighbours

The aim of the investments is to improve Thailand’s connectivity with its ASEAN neighbours, boost trade, lower transportation costs, ease existing bottlenecks, and support the growth of the crucial tourism sector. By developing alternatives to road transport, Thailand also hopes to lower its carbon emissions.

Thailand lies at the heart of South-east Asia, a region which has enjoyed strong economic growth in recent years, and has recovered from the global economic crisis considerably more quickly than countries in Europe and North America.

As well as the AEC, Thailand is a participant in a number of other regional bodies intended to support growth and integration, including the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation and the Ayeyawady-Chao Phraya-Mekong Economic Cooperation Strategy.

Important transportation corridors that are likely to be the focus of infrastructure investment include the Southern Economic Corridor (from Bangkok to Phnom Penh in Cambodia and Ho Chi Minh City in Vietnam) and the North-South Economic Corridor (linking Thailand with Laos, Myanmar and China, and terminating in the Chinese city of Kunming).

Chandchart said that he aimed to increase the use of railways from a 12% share of the transport sector to 40%, and four high-speed rail projects worth Bt900bn ($30.24bn) will be among the first to be rolled out under the plans.

However, the government is not only committing money, it is also looking to restructure the State Railway of Thailand (SRT) to improve services and increase administrative capacity.

Investments in airports will take some of the pressure off Bangkok’s Suvarnabhumi Airport, which currently accounts for 72% of airport arrivals, said Chadchart, who suggested that the airport at Mae Sot, a trading centre on the Myanmar border, could be developed.

Foreign investors expected to play a leading role

While the transportation plans are certainly capital-intensive, the minister said financing would be available through 3% government bonds as well as other revenue streams, and that the economic benefits of transport development would pay off the cost in the longer term.

There should also be considerable scope for private investors as well as contractors, as public-private partnerships are expected to account for 14% of the total spent; this proportion could increase, thus lowering the burden on the public purse.

Foreign investors are expected to play a leading role, and Japanese Prime Minister Shinzō Abe has reportedly already expressed interest in Japanese firms’ participating in tenders, particularly for the upcoming high-speed rail projects. Chinese officials have shown strong interest in the rail links to Chiang Mai and Nong Khai, as they will eventually connect to the Chinese network.

With such large investments planned, Thailand has shown a commitment not only to overhauling its own transportation infrastructure but to greater connectivity in the region. However, for the AEC to succeed, new railways and roads need to be partnered with a renewed commitment to freer trade and economic liberalisation, including lowering tariff and non-tariff barriers and legislation restricting foreign investment. Thailand has one of the more liberal economies in the region, but across ASEAN, there is still some way to go before the ideal of an integrated economy open to globalised world markets is achieved.

Oxford Business Group

Note: This article was written by  Oxford Business Group, the views and opinions expressed in this article are those of the authors and do not necessarily state or reflect the views of  Thailand Business News

With some of the industry’s most experienced analysts conducting on-the-ground research throughout the year, OBG provides its global readership with the business intelligence they need to stay ahead.

Click to comment

Leave a Reply

Economics

Thailand’s Ministry of Finance expects 3.5 to 4.5% economic growth in 2022

For next year, the Ministry of Finance is projecting an economic growth of 3.5-4.5% from effective pandemic control measures, incentives, domestic spending, the export sector, private investment support, global economic recovery, and government expenditures.

Published

on

70b43f2f
The Minister of Finance says Thailand’s economy this year would see only a 1.1-1.2% growth

BANGKOK (NNT) – The Ministry of Finance is now projecting an economic rebound to 4.5% growth next year, with government investments serving as key drivers. The Minister of Finance says the government will focus more on inclusive growth next year, with no sectors left behind.

(more…)
Continue Reading

Ecommerce

Pakorn Peetathawatchai, President, The Stock Exchange of Thailand (SET)

Published

on

Pakorn Peetathawatchai, President, The Stock Exchange of Thailand (SET)

What measures has SET taken to support listed companies’ compliance with ESG standards?
PAKORN PEETATHAWATCHAI:

PAKORN: When we first began promoting ESG-compliant investments, we were met with little interest. We attributed this to a lack of clear data to showcase the economic benefits of ESG investment, and perhaps limited clarity as to what constitutes a sustainable or ESG-compliant investment. The launch of the THSI list and, subsequently, the SETTHSI Index, was designed to address this. Our most recent data, comparing returns for the SETTHSI Index with the broader SET and SET100 indices from April 2020 to April 2021, underscores the economic benefits of these investments: the group compliant with ESG standards outperformed the other two indices on every data point. 

As of May 2021 Thailand was home to CG and ESG assets under management totalling BT54.8bn ($1.7bn) across 50 funds – up from 23 funds in 2019. Meanwhile, of the BT187.1bn ($5.9bn) raised in green, social and sustainability bonds since 2018, BT136.4bn ($4.3bn) was raised in 2020 – 83% from the government and the remainder from development banks and private players. This rising demand, in a move to manage risk and generate returns, has been complemented by growing supply and promotion: supply from ESG-compliant businesses aiming for resiliency and sustainable growth, as well as promotion from regulators highlighting investment opportunities with good CG and SD practices. Indeed, the pandemic has been a catalyst in shifting the view of ESG compliance from a luxury to a requirement in the new normal.

In what ways can enhanced standard-setting and regulatory mechanisms overcome the remaining barriers to improved ESG performance?

PAKORN: A multi-stakeholder approach is crucial for enhanced ESG performance – not only in Thailand, but around much of the globe. This can also help to address the standout incumbent challenge: access to reliable, wide-ranging ESG data. For example, the 2020 update to the 56-1 One Report established clear ESG standards and triggered online and offline capacity-building programmes to support listed firms’ compliance. SET is developing an ESG data platform with a structured template to promote the availability of comparable data, maximise value added from corporate sustainability disclosures, and foster collaboration between the business value chain and stakeholders. This is expected to support Thai companies along their ESG journey in an economically sustainable way, result in a greater number of sustainability-focused products and services, drive sustainable investing in the Thai investment community and ultimately “make the capital market work for everyone”, as outlined in the SET’s vision.
 

 

Read More

Continue Reading

Recent

Most Read

Join 14,209 other subscribers