Minister strives to ensure transparency

As the second reading of the Bt2-trillion borrowing bill takes place in Parliament, he foresees meeting with department chiefs to streamline the selection process for contractors and consultants as well as the median prices of government projects. While high-speed-rail projects are in the public focus, work is underway to establish a unit to run the projects in lieu of poorly managed State Railway of Thailand. 

Besides heeding advice and listening to the concerns of trade chambers, Chadchart says he is open for discussion with the private sector, which will enhance the government’s oversight of the projects. To win public support, as the bill is expected to become law in the third quarter of this year, he is looking for “scientifically proven” figures to show the exact economic rate of return of each project to substantiate the investment. During the coming months, he will also wait for the approval for some projects’ environmental impact assessments.

“I told them all [department chiefs] not to fabricate any figures. There must be scientific reasons to support the figures,” he said in an interview. “Transparency is the key here. A tiny blind spot could affect the whole picture.”

He says all these issues must be addressed before the bill comes into law, to ensure the immediate start of the long-awaited investment. 

The Bt2-trillion borrowing bill will face the final parliamentary vetting in August, while fund-raising should kick off in the fourth quarter.

Nearly the entire sum will be invested by units under the Transport Ministry, which has been notorious for corruption. Of the total, Bt783 billion is set aside for four high-speed-rail projects with combined length of 1,360 kilometres, Bt472 billion for new mass-transit routes (256km) in Greater Bangkok and Bt403 billion for double-tracking of the existing national rail system (2,857km). 

Though other government units such as the Finance Ministry, the National Economic and Social Development Board (NESDB) and the Budget Bureau will have a say on project viability and financing, Chadchart’s units must prepare all necessary information for approval. 

Chadchart realises that the median prices will be the heart of the transparency issue. The information-technology system will be deployed to complete the database of contractors and advisers. All the contractors and advisers will be listed, with details of their expertise and track records. Through this database, all units will know how many projects a particular firm has been involved and its remaining capacity, as well as the cost of each project. 

At present, such information is not shared across different units. The improved system will help each unit determine the appropriate median prices of its projects. 

A committee will be set up with private-sector participation to ensure realistic median prices and follow-up on project progress for quality control. 

“They will be put under some kind of control, as we do know |that many problems stem from |having a poor project adviser. Together, we will decide the median prices that are acceptable to both the public and private sectors.”

The minister also realises that he will have to be extremely careful with the implementation of the high-speed-rail project, as this has drawn extensive criticism. Comparative costs have been reviewed. For example, France spent about Bt800 million per kilometre on the TGV project in 2001. Taiwan’s 2007 THSR project cost about Bt1.7 billion per kilometre. In 1997, Japan spent about Bt1.4 billion per kilometre for the Nagano Shinkansen project. Thailand’s project is expected to cost about Bt500 million per kilometre, higher only than Spain’s AVE project.

For efficiency, on consultation with the Finance Ministry and Asian Development Bank, SRT is expected to set up a business unit to oversee operation of the high-speed trains. Some talented engineers will be transferred to this unit, which will oversee its own accounting. Despite its poor record, SRT’s involvement remains necessary as the new rail system will be built on the agency’s land. It will take a while before this will be spun off, given the bad experience involving the spin-off of Airport Rail Link. 

Despite the huge investment in the rail network, Chadchart acknowledged that roads will remain the most popular means of transport for the next 10 years. To enable a modal shift to rail effectively, Thailand will need new locomotives and warehouses, he said. 

“The fact is, if we don’t invest in these projects now, nothing will take shape in the next 10 years and the cost will be higher. For example, the double-track rail project is estimated to cost more than Bt400 billion, against Bt76 billion when it was planned by the Chuan [Leekpai] administration.”

Chadchart is aware that the public is concerned about return on the investment of their tax money. He conceded that the financial returns of each project could be low, but said the total economic benefits would make the investment worthwhile. Better connections mean more travel and spending. Data in Chiang Mai showed that when low-cost Orient Thai started flying to the northern city in 2003, the city welcomed 2 million visitors a year. Now, the number has risen to 5 million, sparking demand for accommodation and other facilities. Aside from increases in land prices, the government can reap higher value-added tax. 

However, more work is to be done to come up with convincing figures. The NESDB will play a key role in this regard “for the most detailed figures”. 

“The borrowing bill is good in a way: It entices public scrutiny,” he said. “It’s not up to me alone, but the entire system of the ministry. There’s an improvement: Their attitude towards transparency and scrutiny and cooperation has changed for the better.”