Thai Cabinet OKs borrowing $68B for megaprojects

AP News

3/20/2013 4:27:29 AM - AP News

BANGKOK (AP) — Thailand's Cabinet has approved a plan to borrow $67.6 billion to build high-speed train lines, ports and other infrastructure over the next seven years.

Prime Minister Yingluck Shinawatra said the bill approved by Cabinet ministers Tuesday will allow the government to borrow the funds in Thailand and overseas without going through the annual government budget process. She said this will ensure the infrastructure plans aren't delayed and will give investors confidence in the projects.

"Funding the projects through the regular annual budget can be problematic because the budget is subjected to year-by-year approval. If there's a change of the government or in politics, the schemes could be discontinued," Yingluck told reporters. "By issuing of the borrowing bill, private investors can plan their investment to develop infrastructure in the provinces more confidently."

The financing plan needs the approval of parliament, which is controlled by Yingluck's party.

The projects include four high-speed rail lines that will connect Bangkok with Chiang Mai in the north, the Laotian border, Thailand's industrialized eastern seaboard and Malaysia. The trains will travel at 250 kilometers (155 miles) per hour.

Plans also call for the construction of approximately 3,000 kilometers (1,864 miles) of dual-track rail lines that the government said could triple the number of rail services per day from the current 90. It is part of a push to switch hauling of goods from roads to rail to lower fuel consumption, logistics costs and delivery times.

According to the Transport Ministry, 86 percent of goods are transported by road in Thailand, which is Southeast Asia's second-largest economy.

The government also plans to add 13 lines to the mass transit train network in the country's capital and surrounding provinces to catch up with urban sprawl. The expansion will add 410 kilometers (255 miles) to rail routes across Bangkok and its outskirts.

Four more ports will be built on banks of Bangkok's main river and on the Gulf of Thailand and Andaman Sea coasts.

The government said the projects will boost Thailand's economic growth rate by 1 percentage point a year and create more than 500,000 jobs.

The plan's critics said it reduced transparency by bypassing the budget process and raised public debt to unacceptably high levels.

Finance Minister Kittirat Na-Ranong said Tuesday the mega projects will not drive the public debt higher than 50 percent of Thailand's gross domestic product. He said the infrastructure debt will be paid off within the next 50 years.