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Mini debate on Bt2-tn investment

Mini debate on Bt2-tn investment
THURSDAY, October 03, 2013

While Transport Minister Chadchart Sittipunt said that the Bt2-tn transport plan is for the country's future, former finance minister Korn Chatikavanij agreed. Yet, the latter said he opposed the financing plan.

Chadchart  made the point on this planned seven-year investment in a debate with former finance minister and Democrat MP Korn  on a Krungthep Turakij TV programme on Wednesday regarding the Bt2-trillion-borrowing bill.

"We often talk about the project cost of Bt2 trillion. But we should also ask ourselves, what would be the cost of not doing it?" he said.

Because of high concerns about possible massive corruption and the transparency of the project, Chadchart said he gave top priority to these issues.

The Prime Minister’s Office is preparing regulations regarding the appointment of qualified representatives of private companies to assist the government’s monitoring of this mega-project to ensure its transparent implementation, he said.

Deputy Prime Minister Phongthep Thepkanjana said in a separate event on Wednesday that a project inspection committee, comprising representatives from the private sector without vested interests, would be established to ensure compliance with applicable budget acts, laws and regulations governing each project, as well as reference bidding prices.

A similar set-up will be used for other state projects such as the Bt350-billion water-management scheme. This set of regulations on tendering, specifications and procurement practices will also be applied to future projects to be undertaken by the state, Chadchart added.

The transport minister rejected the criticism that the government was focused solely on this project, saying it also annually allocated 20 per cent of the total budget for education, 10 per cent for healthcare, and 4 per cent for transport, which are all key areas for the country’s development.

He added that the borrowing was not for spending recklessly but the funds would be allocated only after proper project analysis. The government will not invest in projects with low economic returns, but in those that would serve as growth engines for the country.

He said the government planned to spend Bt100 billion under the Bt2-trillion scheme in the first year and Bt200 billion in the second year.

Reacting to the opposition’s query as to why the government was funding the project through the off-budget process, Chadchart said this method was considered effective and could ensure investor confidence by enabling them to see what the government planned to do in the next seven years.

He added that there could be different ways to reach a goal. If the government uses the normal fiscal budget to fund the projects for seven years, a new government might find itself with little room to use the budget for its other policies.

Chadchart said that while the figure of Bt2 trillion the government would be borrowing for transport infrastructure investment looked huge, this was for the future of the country, and people should consider the cost of business opportunities lost if the projects are not implemented.

When asked if this method was unconstitutional, he said the government was confident that this was legal as the Finance Ministry, which sponsored the bill, had already consulted the Council of State.

Meanwhile, former finance minister Korn Chatikavanij said the government's Bt2-trillion borrowing bill was like giving a blank cheque to the government.

The loan bill will be considered by the Senate on October 7 Monday, and it will take about two months for it to go through the legislative process.
 
The bill does not have a commitment from the government on whether the transport infrastructure mega-project will be completed.
 
Korn said he would like the government to change the proposed legislation from a borrowing bill to an investment bill so that it can make a strong commitment to follow the proposed infrastructure investment plan closely.
 
"I would like to confirm that both the Democrat and Pheu Thai parties share the same idea on the transport infrastructure, which needs to be invested in and developed. Most of the project was initiated by the previous Democrat government, including the 17-route dual-track system and the high-speed train connecting Bangkok, Nong Khai and Padang Besar," Korn said.
 
"However, considering the financial issue, there are many areas where we don’t agree," he added.
 
Korn said the current government was seeking a huge loan by issuing a special bill, which would allow it to borrow money from an off-budget account. This was in violation of the Constitution and would lead to lack of transparency.
 
He added that it would also lead to a huge delay in the transport-infrastructure project compared with if funds were raised from the normal annual budget. The government’s method encouraged corruption and had a crucial impact on the country’s financial discipline.
 
Korn said 99.6 per cent of the government’s Bt2-trillion project would be invested in transport infrastructure, mainly road and rail systems. That alone is not the solution to boost the country’s competitiveness. There are many other factors to be considered such as education, public health service, and agricultural capability.
 
The Democrat Party recently launched a blueprint for investment and reforms in Thailand. Under the plan, the party has proposed spending Bt1.2 trillion for infrastructure, Bt400 billion on education, research and development, Bt200 billion for public health, and Bt200 billion for an irrigation system.
 
Korn said that in 2014, the government planned to spend only about Bt100 billion from its Bt2-trillion transport-infrastructure funds, which was only 0.7 per cent of gross domestic product. Therefore there will be no significant impact for the country’s economy if the borrowing bill does not pass the legislative process.

 

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