Loans Not Needed: Abhisit

[webfact]

CONTROVERSIAL LOAN
Loans not needed: Abhisit
The Nation



Kittiratt says borrowing Bt2 trillion to fund projects no threat to fiscal discipline

BANGKOK: -- The opposition yesterday agreed that the country needs massive infrastructure investment but found fault with the government's plan to seek a Bt2-trillion project loan through issuing a special decree and bypassing the annual budget, which could lead to lax fiscal discipline and ballooning public debt.

During the House-Senate debate on the bill authorising the Finance Ministry to arrange the loan, opposition leader Abhisit Vejjajiva said the government has no need at all to ask for Bt2 trillion from the financial market, the biggest borrowing in Thailand's history, because it could rely on the annual budget or run additional budget deficits. That would be enough to finance the projects without pushing public debt up to the ceiling as a percentage of gross domestic product (GDP), said the Democrat Party leader.

While the government estimates the total financing cost at Bt5 trillion - Bt2 trillion in principal and Bt3 trillion in interest - this assumes that interest rates will remain low throughout the 50-year repayment period. That is rather doubtful given the global economic uncertainty. The resulting rise in public debt per GDP, which is currently at 45 per cent, was a major concern, he added.

Finance Minister Kittiratt Na-Ranong said the borrowing would not upset the fiscal balance. While it will take time to completely pay off the debt, what the country will get in return is infrastructure assets, which will serve the country for decades.

The government could accelerate debt repayment by just paying more principal back to reduce the interest burden.

Most of the funds will come from the local market, so the income from interest payments will end up in the pockets of the Thai people.

To ensure spending transparency, the projects proposed by state agencies will be scrutinised by the Finance Ministry, NESDB and Budget Bureau, he added.

Kittiratt said the government wants to maintain its goal of achieving a drop in the budget deficit until it achieves a balance.

Abhisit said the government could also employ existing mechanisms such as the public-private joint venture law to encourage private sector investment to support the projects. Then the government might not need to seek such a huge loan.

Transport Minister Chatchart Sithiphan said the government should be the main investor while the private sector would be encouraged to take part in some projects on a case-by-case basis.

These projects are not aimed at generating revenue, but rather at developing the economy and cutting the country's logistics costs. If the private sector played a role, they might charge high fees or fares for people to use the infrastructure, he said.

Abhisit said the government must exercise strict fiscal discipline and prioritise which projects it would finance. The government has spent heavily on its populist policies and it would be better to channel some budgets of populist policies to this infrastructure development scheme, he said.

Kittiratt said the country needs to build up its resources to boost the economy, promote connectivity within the country and with neighbours and enhance the country's competitiveness. The borrowing will also ensure the continuity of project development to completion.

Abhisit said the government should not just spend profusely on upgrading infrastructure and ignore spending to improve other not less important areas such as education and healthcare.

MP Boonjong Wongtrairat, from the opposition Bhum Jai Thai Party, said at yesterday's House debate that the Finance Ministry did not have any clear plans about how it would repay the huge public debt, adding that there would probably be a tax hike.

Boonjong said he was also not convinced that the transport minister would be able to manage the projects successfully, judging from the fact that its State Railway of Thailand was making big losses.

Prime Minister Yingluck Shinawatra told the opening session that the public debt to GDP ratio might jump during the initial investment phase but these projects would facilitate faster GDP growth, which would bring the ratio down in the long term. She gave her assurances that the projects would be implemented with complete transparency and that auctions and e-auctions for the projects would be conducted in strict compliance with the procurement regulations of the PM's Office.

Chatchart said the investment would help lower the logistics cost to GDP ratio. The logistics cost for last year was Bt1.75 trillion, or 15.2 per cent of GDP of Bt11.5 trillion. The projects can help shave Bt200 billion off the overall logistics cost.

Over 80 per cent of Thailand's freight goes by land, 2 per cent by rail and 12 per cent by water. The logistics cost for land transportation is Bt1.72 per tonne per kilometre, for rail is 93 satang per tonne per kilometre and for water is 64 satang per tonne per kilometre.

Points of contention

Abhisit: Funding could come from the annual state budget at a rate of Bt300 billion-plus a year for the seven-year period.

Kittiratt: That arrangement does not sit well with the government's goal of achieving a balanced budget.

Kittiratt: Thailand needs to invest in new infrastructure to boost the economy and promote linkages with neighbouring countries. Borrowing will ensure continuity of project development.

Abhisit: The government should not focus only on "hardware" upgrades while ignoring other areas such as education and public health.

Abhisit: The private sector should be encouraged to contribute more to the mega-projects to save taxpayers' money.

Chadchart: In principle, the government has to invest in these projects itself, as the primary goal is to generate economic returns for the country.

-- The Nation 2013-03-29

[OzMick]

We don't want to run budget deficits because we want a balanced budget, so we will borrow the money and pay interest.

[fareastguy]

We don't want the money over a 7 year period @ Baht300billion per year WE NEED IT NOW !!

[Ricardo]

Borrowing over the longer-term would mean, other Ministers/Cabinets/Governments got some of our brown-envelopes, so that's clearly out !

[sscsamui]

Sound like somebody want to grease the pockets Big time before the end of there term....Just a thought..

[AleG]

Most of the funds will come from the local market, so the income from interest payments will end up in the pockets of the Thai people.

There's something missing there... let's see:

Most of the funds will come from the local market, so the income from interest payments will end up in the pockets of the rich Thai people.

That's more like it. A three trillion transfer from public funds to bankers, yay for PTP and their pledge to reduce the gap between the haves and have nots.

[Mampara]

In my view, if we are able to be granted a loan of this magnitude, means that Thailand as well as the existing government has full credibility from all the financial institutes and governments of the world. Well done Sir.

[chainarong]

Correct Abhisit Correct.

[hellodolly]

This makes no sense considering the source who claims it is OK to lie to the public.

"Finance Minister Kittiratt Na-Ranong said the borrowing would not upset
the fiscal balance. While it will take time to completely pay off the
debt, what the country will get in return is infrastructure assets,
which will serve the country for decades.

The government could accelerate debt repayment by just paying more principal back to reduce the interest burden."

How are they going to pay more principal with money they don't have.

Look at the car scam. The people paid the money to the government with the idea they would get a portion of it back in a year. This gave the government a chance to invest it in a low yield investment and make a bit on the deal.

Some how they lost the money they had in hand and are now looking for a loan to pay it back.

2 trillion Baht to invest in some thing they will nor see a money return on for years is a bit to much for this group of Dubai followers to handle.

I mean the repayment I have no doubt they will spend it.

[slapout]

In my view, if we are able to be granted a loan of this magnitude, means that Thailand as well as the existing government has full credibility from all the financial institutes and governments of the world. Well done Sir.

You are entitled to your view, but using this government and credibility in the same sentence will in all probability will be like chuming for tunia in shark infested water. The mullets are doomed as bait/chum while the sharks get fatter and none of the people trying to make ends meet (general public) go deeper in debt, due to backlash to the economy of Thailand from this self fulfilling preposal, which will indebt the next 2 generations of those of us who reside here.

[GrantSmith]

But he also admitted that he occasionally lies to make some people feel good.

What's wrong with that? A politician with a heart, not something you see every day! Hahahahah....

So who's running the asylum today?

[ratcatcher]

But he also admitted that he occasionally lies to make some people feel good.

What's wrong with that? A politician with a heart, not something you see every day! Hahahahah....

So who's running the asylum today?

[Ricardo]

In my view, if we are able to be granted a loan of this magnitude, means that Thailand as well as the existing government has full credibility from all the financial institutes and governments of the world. Well done Sir.

Slightly premature to conclude that just yet, as the loan has yet to be floated and lenders found, however setting a nice over-high interest-rate should work, it does for most other junk-bonds ! And the punters will be paying for it, through their taxes or the charges for use of the new infrastructure, so who cares anyway ?

Edited March 29, 2013 by Ricardo

[Mampara]

I guess if Kittikat says everything about the deal is just fine then we should trust him, right?

You bet we should trust him. he is about the only one we can trust in this situation.

But he also admitted that he occasionally lies to make some people feel good.

If your country was suffering from a state of depression what would you do? would you lead them into further depression, or would you say or do something to try and lift the spirits? there is not a public figure in the history of the world as we know it today that has not tried to lift the spirits of its people. what was said is just a pinprick compared to what was said in the past. the main problem of course is that losers only dwindle in the past because they have nothing to contribute to for the future. at least the man had the guts and decency to admit that. do you know of anybody else that can do that? I don't think so they just pass the buck.

Edited March 29, 2013 by Mampara

[kurnell]

Everybody is missing an opportunity here. I am gonna go to Yingluck and tell her that if she doesn't give me a cut of the profit I am gonna write a letter to the Bangkok Post and tell everyone they are nicking money. Easy street, here I come!

[Sydebolle]

Look at Europe today. The highway from Lisbon to the South (Alentejo, Algarve) is First Class, between four and eight lanes and blazed with light at night except ....... hardly any cars on it. This is symptomatic for entire Europe where infrastructures were built without consulting the present and future needs nor who would pay for it at the end.

There might be a lesson somewhere. Here it is more transparent. Remember the Minister's wife running a construction company from a backyard in Buriram being entrusted by the government to .......... extend the runway of Mae Hong Son airport. Obviously it was built below standard and hence ..... yes, you guessed right ..... the same Buriram-company was awarded the repair job, obviously with new overpriced billings...........

[Locationthailand]

"... She gave her assurances that the projects would be implemented with complete transparency and that auctions and e-auctions for the projects would be conducted in strict compliance with the procurement regulations of the PM's Office."

Considering the PM's office is presently rife with strangling strings from the puppet master, how can she make such a ridiculous statement and what, she thinks she will be in office for the next... years? Spending on a credit card line is fine if the full budget and breakdown of disbursements is transparent to everyone, not just some dodgy bean counter massaging figures inside the halls of parliament. If goals can be documented and met, and failure to do so results in sackings then I 'may' be with it but better to spend as you go than run up debts and gamble the publics money. Nope. One thing you can't trust - is a red promise.

[belg]

50 years repay scam ??? anything build in thailand lasts max 2-3 years, than you need to replace it as nothing is build to last long... so those roads will need to be fixed every year i guess ....

stop the rice scam, the flood scam, whatever.... and there is plenty of money available

but then nobody would get their greasy fingers in the 30% graft money

[MikeOboe57]

I guess if Kittikat says everything about the deal is just fine then we should trust him, right?

You bet we should trust him. he is about the only one we can trust in this situation.

But he also admitted that he occasionally lies to make some people feel good.

If your country was suffering from a state of depression what would you do? would you lead them into further depression, or would you say or do something to try and lift the spirits? there is not a public figure in the history of the world as we know it today that has not tried to lift the spirits of its people. what was said is just a pinprick compared to what was said in the past. the main problem of course is that losers only dwindle in the past because they have nothing to contribute to for the future. at least the man had the guts and decency to admit that. do you know of anybody else that can do that? I don't think so they just pass the buck.

You are not getting the point. Yes, in the past a lot of politicians told big fat lies. But there is not one who openly admitted in an interview during his term in office that he tells "white lies" in his official statements to make things look better and give people a good feeling. In any less dysfunctional country someone like him would have to hand in his resignation letter the very next day.

Ever since I moved to Bangkok I am perplexed how willingly the Thai people accept being spoonfed utter [fill in suitable expletive] and swallow it without complaining. To say nothing of the "farang" defenders of this practise.

[tragickingdom]

When in office Abhisit slashed the funding to public hospitals and reversed the funding that came out of the two and three number lottery because his friend Chamlong considered gambling "un-Bhudist" and Abhisit loved it because why taking away the proceeds of the illegal lottery from his cronies and spending it on education?

Now the infrastructure is not so important. The roads are crumbling from Bangkok to Maesai and from Hatyai to Sisa-ket but who cares? The democrat party is in the game not to upset the status quo, development upsets the status quo and give rural people to become rich and possibly Thai people might take over from all the Chinese who overstayed their welcome already fourty years ago but still managed to get passports.

[TallGuyJohninBKK]

I see the makings of a great plan here... So...water is the cheapest means of transport, compared to rail or overground.

So all the government has to do is follow thru with its plan to flood the entire country (again!), and then presto, everything can be transported by water.

No expensive rail lines to build or water retention projects.... Just a lot of boats... many many boats.... and scuba gear...

Edited March 29, 2013 by TallGuyJohninBKK

[thaicbr]

In my view, if we are able to be granted a loan of this magnitude, means that Thailand as well as the existing government has full credibility from all the financial institutes and governments of the world. Well done Sir.

And then?????

[thaicbr]

When in office Abhisit slashed the funding to public hospitals and reversed the funding that came out of the two and three number lottery because his friend Chamlong considered gambling "un-Bhudist" and Abhisit loved it because why taking away the proceeds of the illegal lottery from his cronies and spending it on education?

Now the infrastructure is not so important. The roads are crumbling from Bangkok to Maesai and from Hatyai to Sisa-ket but who cares? The democrat party is in the game not to upset the status quo, development upsets the status quo and give rural people to become rich and possibly Thai people might take over from all the Chinese who overstayed their welcome already fourty years ago but still managed to get passports.

First you said Abhisit slashed funding for public hospitals... where are your links/proof?

And reversed the lottery funding..where?

Abhisit was in government for 19 months.. Your Heroes the Shinawtra clan (who happen to also be Chinese Thai) have been in power 132 months (give or take a few). And the roads are Abhisits fault.. oh get real.

Abhisit is simply stating that you do not need to borrow so much. and certainly not in one go.. That the infrastructure can be built using the normal government forms of Budget... Budget that is checked and ruled in a more transparent way... example.. If you were buying a house. Would you take out a loan for said house 5 years before you buy it and pay the interest charges on the longer loan.. NO

[SOTIRIOS]

Firstly.....there is no return on investment for infrastructure...

Infrastructure is basic physical and organizational structures needed for the operation of a society or enterprise,^[1] or the services and facilities necessary for an economy to function.^[2]
It can be generally defined as the set of interconnected structural
elements that provide framework supporting an entire structure of
development. It is an important term for judging a country or region's
development.

The term typically refers to the technical structures that support a society, such as roads, bridges, water supply, sewers, electrical grids, telecommunications,
and so forth, and can be defined as "the physical components of
interrelated systems providing commodities and services essential to
enable, sustain, or enhance societal living conditions."^[3]

Viewed functionally, infrastructure facilitates the production of goods and services, and also the distribution of finished products to markets, as well as basic social services such as schools and hospitals; for example, roads enable the transport of raw materials to a factory.^[4] In military
parlance, the term refers to the buildings and permanent installations
necessary for the support, redeployment, and operation of military
forces.^[5] To make it simple, infrastructure is anything that is needed everyday, an everyday item.

Jobs may be created.....or society might run more smoothly.....

....but not if the money is....'misappropriated'......

....as for this nonsense of adding credibility or status to Thailand.....the money lenders are in the business of lending money...

......the only thing a loan of that size adds is.....the opportunity to siphon money.....

......and yes..the Thais will be paying for decades, if not generations.....

....not to mention...investment in infrastructure can easily be washed away....as was the case recently..check the figures...

(..by the way...none of the present ministries responsible seem to have addressed these losses....)

(...so this loan would be a perect way to cover up their omissions....if not negligence in this regard)

[Payboy]

Loans not needed: Abhisit

Abhisit not needed: Thai voters.

[OzMick]

Loans not needed: Abhisit

Abhisit not needed: Thai voters.

Don't you mean "wanted"? A responsible government gives the people what they need, not what they want.

Edited March 29, 2013 by OzMick

[Skywalker69]

In my view, if we are able to be granted a loan of this magnitude, means that Thailand as well as the existing government has full credibility from all the financial institutes and governments of the world. Well done Sir.

Did you miss the line? "Most of the funds will come from the local market, so the income from interest payments will end up in the pockets of the Thai people"

[thaicbr]

Loans not needed: Abhisit

Abhisit not needed: Thai voters.

Abhisit not needed: Thai rural voters... Who are still getting their bribes to this day..

at the detriment of the Rice farming industry in the future... You lose customers in any business its hard to get them back.. Thailand has lost customers from over pricing their rice.. simple really

Edited March 29, 2013 by thaicbr

[khunken]

Loans not needed: Abhisit

Abhisit not needed: Thai voters.

I'm very surprised to see this coming from you. No opposition needed?

Abhisit is doing his job - the one he was elected to do. I know it's awkward when he makes sensible suggestions along the line of 'why is all the money needed now?'. The B300Bn plus for the flood abatement 'plan' was rushed through by emergency decree &, one year later, only a tiny portion is actually spent.

Yes, the country's infrastructure needs updating, especially the rail network. What is extremely doubtful is the need for high-speed trains. It's like a child going from crawling to running without learning how to walk.

[473geo]

Loans not needed: Abhisit

Abhisit not needed: Thai voters.

I'm very surprised to see this coming from you. No opposition needed?

Abhisit is doing his job - the one he was elected to do. I know it's awkward when he makes sensible suggestions along the line of 'why is all the money needed now?'. The B300Bn plus for the flood abatement 'plan' was rushed through by emergency decree &, one year later, only a tiny portion is actually spent.

Yes, the country's infrastructure needs updating, especially the rail network. What is extremely doubtful is the need for high-speed trains. It's like a child going from crawling to running without learning how to walk.

So if a child omits crawling and jumps up to run all be it perhaps a little unsteadily (accepting there must be strict monitoring but not to the detriment of continued progress).......you suggest suppress the initiative and make the child crawl for what you consider to be a reasonable, acceptable period of time..........kind of explains your political leanings......and the Thai having experienced this type of mismanagement for centuries are criticised on this thread for accepting what happens as a fait accompli?..... here is an intersting article rather summing up the Democrats election campaign - Thai PM Abhisit's election campaign stalls (Reuters) http://in.reuters.com/article/2011/06/16/idINIndia-57727520110616 read it all especially the little snippet regarding a promient military gentleman......give PTP the funding and let Thai people exercise control (as far as it goes) in Thailand via the ballot box as it should be

Edited March 29, 2013 by 473geo