Without Clear Payback Plan, Bt2-Trillion Loan Will Backfire: Thai Talk

[webfact]

THAI TALK
Without clear payback plan, Bt2-trillion loan will backfire
Suthichai Yoon
The Nation



BANGKOK: -- Korn Chatikavanija, the former finance minister and the Democrat Party's deputy leader, posted on Facebook after the Bt2.2-trillion infrastructure loan bill passed its first reading in the House on Friday:

"Minister Kittiratt [na Ranong]: You have betrayed the role as finance minister, who is supposed to maintain fiscal discipline, by proposing the loan bill despite the fact that you could have used the normal budget procedure."

That was probably the strongest statement from the opposition throughout the debate on the issue. Kittiratt has insisted that the normal budgetary process was circumvented because the government wants to borrow rather than run budget deficits to finance the long-term projects.

The minister's official reason was to avoid sending the wrong signal that the move is to stimulate the economy. "Budget deficits or fiscal policies are exercised when the government wants to boost the economy. But our objective is to invest in new infrastructure projects, after years of not having built the necessary basic infrastructure."

The debate isn't about whether we need to build new rail, road, water- and air-transport systems so that Thailand can become Asean's communications hub. In fact, public opinion in general has demonstrated support for these projects. The government's arguments are, in fact, quite convincing when it proposes the infrastructure scheme as another pillar in its strategy to "rebalance" the economy, close the income gap and raise living standards for the public.

Not even the opposition Democrat Party is trying to derail the projects. Instead, it has zeroed in on how the schemes will be financed and how the introduction of the bill might even violate the Constitution and undermine economic stability.

Under Article 169 of the charter, state spending has to conform to laws such as provisions on budget allocations and reserves. Since the government is not following the normal budgetary procedures, critics have raised serious doubts about how it can ensure that MPs will not meddle in the spending plans.

In other words, the bigger the project, the higher the suspicion of taxpayers over the possibility of money being siphoned off to politicians and bureaucrats' own pockets.

The government can now proceed to borrow Bt2 trillion over the next seven years, with repayment to be made over the next 50 years. Interest could top Bt3 trillion, bringing the total debt to Bt5 trillion, prompting opposition leader Abhisit Vejjajiva to suggest that the total repayment burden might be spill over into "the next life".

The weak link in the whole presentation is that the government has yet to produce an environmental-impact assessment (EIA) for some of the expensive projects in the package. It has produced no concrete plans to make the whole process transparent enough to soothe public fears of massive corruption, which has always been considered part and parcel of spending on major projects, past, present and future.

Another unanswered question is why the bill doesn't include plans for private investment, which could significantly reduce state spending and, in fact, ensure a higher degree of efficiency and accountability. The official reason given by Transport Minister Chadchart Sittipunt is that the initial risk is high and private investors will be brought in at a later stage, when the chances of failure are reduced.

That explanation obviously isn't going to convince a sceptical public that the government is better at risk management than the private sector.

It might not be fair, but conspiracy theorists are suggesting that a kickback of 10 per cent from the whole scheme could enable anyone commanding the Bt2-trillion package to "buy" all 500 MPs in the House at Bt100 million each. And they would still have enough money to campaign in the next general election - Bt100 million each. They could return to power for three full terms at least. That, of course, is an extreme scenario. But the way such mega-deals are being rammed through the House inevitably conjures up such a frightening picture.

It is therefore imperative that the government comes up with a definite plan to explain where the revenue to pay back the Bt2-trillion loan will come from over the next 50 years. Without that payback schedule and a watertight anti-corruption plan, the overwhelming majority that passed the bill last week will not amount to a meaningful mandate at all.


-- The Nation 2013-04-04

[Locationthailand]

This is folly - the Govt has no plan whatsoever on how to meet the debt - it is simply relying on projection of future growth and there has been no transparency on how it intends to build sufficient profitability to retire debt. Total insanity. But what else would you expect when giving the treasury keys into the hands of a convicted criminal? Only in Thailand...

[virtualtraveller]

I don't think anyone, anywhere, would lend someone money for 7 year investment spree that takes 50 years to pay back, unless it was backed by govt bonds. Simple as that. Market forces. Why is a govt allowed to so easily do this. Why not make it 5 trillion, or 10, over 15 years, that's 3 full Shinawatra terms in power.

[chainarong]

Only time will tell LT, however the time line for investigation and debate should be around twelve months not twelve days, the homework factor isn't showing here . some sensible notes from Korn regarding the private sector,the loan is not balanced ,short on detail and who is going to hold the purse strings. Thats a big worry here ,The Score 9/10 for trying to bankrupt Thailand

Edited April 4, 2013 by chainarong

[maidu]

Here's the scenario: Thaksin, whether in person or via Skype, makes it clear he wants the gov't to get ahold of as much money as possible. He's a businessman, so, as such, is constantly in the business of borrowing as much as possible. As for paying back - hah! Paying back loans is for wimps. Plus it's other people's money and the pay-back process is supposed to kick in long after he's dead. - so why even be concerned about such silly notions as 'paying back with interest'. Just keep focused on the money, and the 30+% which all agree is roughly the amount which will get sucked up by 'middle men' - many of whom are bosom buddies with the Shinawatres.

[jamhar]

Without Clear Payback Plan,

A Bt2-Trillion Loan

is a

Bt2-Trillion GIFT

Edited April 4, 2013 by jamhar

[Thai at Heart]

I don't think anyone, anywhere, would lend someone money for 7 year investment spree that takes 50 years to pay back, unless it was backed by govt bonds. Simple as that. Market forces. Why is a govt allowed to so easily do this. Why not make it 5 trillion, or 10, over 15 years, that's 3 full Shinawatra terms in power.

They do it because they see the situation as having 60 million employees who can pay the debt on their behalf.

[smutcakes]

This is folly - the Govt has no plan whatsoever on how to meet the debt - it is simply relying on projection of future growth and there has been no transparency on how it intends to build sufficient profitability to retire debt. Total insanity. But what else would you expect when giving the treasury keys into the hands of a convicted criminal? Only in Thailand...

I am not sure why you keep harping on about repaying the debt. Other than the timeline involved, I don't even think opposition are overly concerned with actually being able to repay the debt which although could take a long time is perfectly viable- after all I am led to believe they also borrowed well over 1 trillian baht but I could be corrected on this. What financial insight do you have which perhaps you could share with the Democrats so they can raise it? perhaps they have not thought about it.

I 100% agree with Korn on there needs to be more transparency, study etc. At least Korn knows what he is talking about and comments appropriately about the PTP and their policies rather than people on TVF who have no clue what they are talking about and making sweeping statements.

[siampolee]

smutcakes post # 8.

I 100%agree with Korn on there needs to be more transparency, study etc. At least Korn knows what he is talking about and comments appropriately about the PTP and their policies rather than the people on TVF who have no clue what they are talking about and making sweeping statements.

One can only but presume that you are indeed one of the illustrious Oracles from The Temple of Delphi , who knew all yet we lesser mortals have no right to express our opinions ?


This 2 trillion baht fund has been cobbled together on nothing more than a capricious whim and a desire to reward Thaksin and his family and their brown nosing acolytes for their sterling self enrichment programmes.

Such a scam scheme involving this sum of money should have been worked out properly, presented properly with rigid guidelines as to what the investments were going to be and why,

One doesn't present a flim flam of such a tissue of romantic financial notions (lies) as this scheme involves in a time period of a few months, it requires a host of input to present a workmanlike viable agenda to justify the whole scam scheme, followed up with a complete breakdown of the repayments involved.

Note that the Democrats are not against the development plans, however they are indeed concerned as to the transparency of the matter as are a large number of voters too.

As stated the fact is that 10% of the total fund could and would buy a country for those with their delusions of grandeur and the establishment of a new imperialistic dynasty that commands total obedience from all of its serfs subjects.

Now I wonder if there is an interested party or parties who might be interested in such a deal and one must ask do they already have people in place and already working for them to bring this idea to a favourable conclusion for such an interested party or parties?

Whilst wandering around the farm this morning I came upon the buffaloes wallowing in a waterhole indeed the clarity of the earthy soup was indeed better than the transparency that surrounds or rather cloaks this 2 trillion baht loan scam scheme. Edited April 4, 2013 by siampolee

[smutcakes]

smutcakes post # 8.

I 100%agree with Korn on there needs to be more transparency, study etc. At least Korn knows what he is talking about and comments appropriately about the PTP and their policies rather than the people on TVF who have no clue what they are talking about and making sweeping statements.

One can only but presume that you are indeed one of the illustrious Oracles from The Temple of Delphi , who knew all yet we lesser mortals have no right to express our opinions ?

This 2 trillion baht fund has been cobbled together on nothing more than a capricious whim and a desire to reward Thaksin and his family and their brown nosing acolytes for their sterling self enrichment programmes.

Such a scam scheme involving this sum of money should have been worked out properly, presented properly with rigid guidelines as to what the investments were going to be and why,

One doesn't present a flim flam of such a tissue of romantic financial notions (lies) as this scheme involves in a time period of a few months, it requires a host of input to present a workmanlike viable agenda to justify the whole scam scheme, followed up with a complete breakdown of the repayments involved.

Note that the Democrats are not against the development plans, however they are indeed concerned as to the transparency of the matter as are a large number of voters too.

As stated the fact is that 10% of the total fund could and would buy a country for those with their delusions of grandeur and the establishment of a new imperialistic dynasty that commands total obedience from all of its serfs subjects.

Now I wonder if there is an interested party or parties who might be interested in such a deal and one must ask do they already have people in place and already working for them to bring this idea to a favourable conclusion for such an interested party or parties?

Whilst wandering around the farm this morning I came upon the buffaloes wallowing in a waterhole indeed the clarity of the earthy soup was indeed better than the transparency that surrounds or rather cloaks this 2 trillion baht loan scam scheme.

Everyone has the right to an opinion- but they are far more worthwhile if they are based on some level of fact. I do not pretend to understand the complex dynamics of this kind of thing- but I presume someone like Korn does- which is why I tend to base my opinions around comments he makes.

For example you write 8 paragraphs. One paragraph is relating sensibly to the topic of transparency which i agree, the other 7 are just rants about scams, lies, deceits based on fiction/fact, who knows- I just know that people in the opposition whose job it is to be in the know on these issues, are far more concerned about transparency, proper studies than they are about the ability to repay the loan, which is the point i was making in my original post.

With respect to your second paragraph, which is your opinion, what did you make of the 1.4 trillion loan the Democrats supposedly took? Where has that gone?

[siampolee]

We are talking about the current clear as mud 2 trillion scam scheme not the previous 1.4 trillion which doesn't seem to have attracted the criticism that the current 2 trillion loan has.

If you are so concerned about the 1.4 trillion fund used under the Democrats please feel free to do your research and then you can present the facts as you intepret those facts and thus convince us as to the honesty factor involved in that little matter.

Your attempt to derail the issue is indeed very much in line with the tactics one expects from those valiant defenders of the current regime.

Debates in forums range far and wide with many facets coming into view. I made my statement as I saw fit and I highlighted the dubious background to the 2 trillion baht scam scheme.

Having lived and worked here for some 22+ years I like many others are indeed too well aware of the lies and the deceit of the politicians hence we have serious reservations as to the real agenda concerning the 2 trillion baht scam scheme.

Anyway it is good to see criticism which is the lifeblood of any forum and I thank you for highlighting the fact that we are both somewhat biased politically and perhaps a trifle blind as to the honesty factor in some of the current and past maladministrations ideas and policies or perhaps in the view of some somewhat limited in our outlook. ,

Edited April 4, 2013 by siampolee

[alant]

This is folly - the Govt has no plan whatsoever on how to meet the debt - it is simply relying on projection of future growth and there has been no transparency on how it intends to build sufficient profitability to retire debt. Total insanity. But what else would you expect when giving the treasury keys into the hands of a convicted criminal? Only in Thailand...

rather like the USA, UK and Europe all of whom have mega debt and or loans with no plans on how to pay it back, how pray will the Greeks pay their debt back, growth? Thailand seems to be in line with modern economic thinking and I believe may well be the SE Asian hub for it.

Edited April 4, 2013 by alant

[JetsetBkk]

Payback? Who cares about payback? The soon-to-be multi-billionaires who signed this deal will be long gone by the time the poo hits the fan.

[thaicbr]

This is folly - the Govt has no plan whatsoever on how to meet the debt - it is simply relying on projection of future growth and there has been no transparency on how it intends to build sufficient profitability to retire debt. Total insanity. But what else would you expect when giving the treasury keys into the hands of a convicted criminal? Only in Thailand...

I am not sure why you keep harping on about repaying the debt. Other than the timeline involved, I don't even think opposition are overly concerned with actually being able to repay the debt which although could take a long time is perfectly viable- after all I am led to believe they also borrowed well over 1 trillian baht but I could be corrected on this. What financial insight do you have which perhaps you could share with the Democrats so they can raise it? perhaps they have not thought about it.

I 100% agree with Korn on there needs to be more transparency, study etc. At least Korn knows what he is talking about and comments appropriately about the PTP and their policies rather than people on TVF who have no clue what they are talking about and making sweeping statements.

i could not find many references to the Democrat Loan but the few i did find showed corruption at the Ministry of health (over priced equipment) and the ministers related to the case resigned (amazing if that would ever happen with PTP). Also it would seem they have already injected funds into the SRT to start the double tracking scheme between Hua Hin and BKK and Korat and BKK.. but again not a lot available.. Ohhh and they issued government bonds to help finance some of the loan projects which were over 2 years..

If you have other information .. Please share

[Tatsujin]

In other words, the bigger the project, the higher the suspicion of taxpayers over the possibility of money being siphoned off to politicians and bureaucrats' own pockets.

Well, that's a given, and the ONLY reason people get into politics here in the first place . . .

[belg]

too bad us farangs have no rights at all here and 0 change to get thai citizenship, otherwise i would know a good passtime to become rich while sleeping, it's called being a politician

and for the small people, they can dream of becomming a policeman, also seem to bring a lot of dough

[smutcakes]

This is folly - the Govt has no plan whatsoever on how to meet the debt - it is simply relying on projection of future growth and there has been no transparency on how it intends to build sufficient profitability to retire debt. Total insanity. But what else would you expect when giving the treasury keys into the hands of a convicted criminal? Only in Thailand...

I am not sure why you keep harping on about repaying the debt. Other than the timeline involved, I don't even think opposition are overly concerned with actually being able to repay the debt which although could take a long time is perfectly viable- after all I am led to believe they also borrowed well over 1 trillian baht but I could be corrected on this. What financial insight do you have which perhaps you could share with the Democrats so they can raise it? perhaps they have not thought about it.

I 100% agree with Korn on there needs to be more transparency, study etc. At least Korn knows what he is talking about and comments appropriately about the PTP and their policies rather than people on TVF who have no clue what they are talking about and making sweeping statements.

i could not find many references to the Democrat Loan but the few i did find showed corruption at the Ministry of health (over priced equipment) and the ministers related to the case resigned (amazing if that would ever happen with PTP). Also it would seem they have already injected funds into the SRT to start the double tracking scheme between Hua Hin and BKK and Korat and BKK.. but again not a lot available.. Ohhh and they issued government bonds to help finance some of the loan projects which were over 2 years..

If you have other information .. Please share

The very fact that you cannot find much information about it should in itself ring alarm bells, so they borrowed a huge amount by issuing Government bonds which is for all intents and purposes 'borrowing' yet there is very little or nothing documented about it, where were the plans, studies etc which have been demanded of the latest borrowing. Sounds great, even greater than some of the money was given to the SRT, who are notoriously prudent.

Whatever, both parties do close enough the same thing when in power, and both are corrupt to the core. No, two or many wrongs dont make a right, but a level of consistency in the criticism would be fair.

[thaicbr]

This is folly - the Govt has no plan whatsoever on how to meet the debt - it is simply relying on projection of future growth and there has been no transparency on how it intends to build sufficient profitability to retire debt. Total insanity. But what else would you expect when giving the treasury keys into the hands of a convicted criminal? Only in Thailand...

I am not sure why you keep harping on about repaying the debt. Other than the timeline involved, I don't even think opposition are overly concerned with actually being able to repay the debt which although could take a long time is perfectly viable- after all I am led to believe they also borrowed well over 1 trillian baht but I could be corrected on this. What financial insight do you have which perhaps you could share with the Democrats so they can raise it? perhaps they have not thought about it.

I 100% agree with Korn on there needs to be more transparency, study etc. At least Korn knows what he is talking about and comments appropriately about the PTP and their policies rather than people on TVF who have no clue what they are talking about and making sweeping statements.

i could not find many references to the Democrat Loan but the few i did find showed corruption at the Ministry of health (over priced equipment) and the ministers related to the case resigned (amazing if that would ever happen with PTP). Also it would seem they have already injected funds into the SRT to start the double tracking scheme between Hua Hin and BKK and Korat and BKK.. but again not a lot available.. Ohhh and they issued government bonds to help finance some of the loan projects which were over 2 years..

If you have other information .. Please share

The very fact that you cannot find much information about it should in itself ring alarm bells, so they borrowed a huge amount by issuing Government bonds which is for all intents and purposes 'borrowing' yet there is very little or nothing documented about it, where were the plans, studies etc which have been demanded of the latest borrowing. Sounds great, even greater than some of the money was given to the SRT, who are notoriously prudent.

Whatever, both parties do close enough the same thing when in power, and both are corrupt to the core. No, two or many wrongs dont make a right, but a level of consistency in the criticism would be fair.

Ohhh Smuts. You have all the information at your finger tips but you're not sharing.. not fair!

At least I presume you have as you have mentioned this 1.4 trillion several times.

Sent from my i-mobile i-STYLE Q6

[maidu]

The very fact that you cannot find much information about it (prior borrowing) should in itself ring alarm bells, so they borrowed a huge amount by issuing Government bonds which is for all intents and purposes 'borrowing' yet there is very little or nothing documented about it, ......

"no news is good news" ...but seriously folks, if there's not a bunch of headlines about a prior gov't borrowing plan, then we can assume things went moderately well with it, unless the borrowers have successfully muffled everyone (including reporters) who might have found newsworthy problems with it.

The topic here is the 2.2 trillion current imbroglio-in-the-making funny money that PT and the Shinawatres want - which will balloon to 5 to 7 trillion with % and inevitable cost-over-runs. If they don't get it approved, will T call out the Red shirts to come to Bangkok and thrash it for the 3rd time (after 2009, and 2010)?

Meanwhile, PT and Shinawatres are making great efforts to alter the Thai Constitution in order to enable T to return a hero and, in their words, 'for reconciliation.' It's like throwing gas on a red hot coals in order to cool things out. Concurrently Thai politicians are unable to even give lip service to environmental issues, education, parks, alternative power, youth centers, animal shelters. Indeed, unless they've visited a western country, they don't even know what youth centers and animal shelters are.