Second loan agreement for Red Line rail project recently signed with Japan

[Lite Beer]

Second loan agreement for Red Line rail project recently signed with Japan

BANGKOK: -- The Thai government recently signed an agreement with the Japanese government under which 10.6 billion baht in loan will be secured from Japan for the construction of the second stage of the Red Line rail project from Bang Sue to Rangsit.

Finance Minister Sommai Phasi said that the conditions of this loan are quite generous with the interest rate for procurement and services set at 0.40 percent per annum and the interest rate for consultant fee set at 0.01 percent and loan fees set at 0.20 percent

The loan is payable in 20 years with grace period for the first six years.

Mr Sommai said that three loans were to be secured for the implementation of the Red Line rail project and this was the second loan already secured with the third loan to be secured next year.

He assured that there should not no problem about servicing this loan.

Source: http://englishnews.thaipbs.or.th/second-loan-agreement-for-red-line-rail-project-recently-signed-with-japan

-- Thai PBS 2015-06-12

[RustBucket]

The fact that Thailand has to boirrow a measly $320 million from the Japanese government screams to me that Thailand has no money. That is a tiny amount of money in the scheme of things unless of course you are flat broke.

The Thai people need to be worried about their future economy, if the government can not come up with an amount of cash that is comparable to 0.1% of its GDP to finance a much needed infrastructural project for their country.

[Robby nz]

The fact that Thailand has to boirrow a measly $320 million from the Japanese government screams to me that Thailand has no money. That is a tiny amount of money in the scheme of things unless of course you are flat broke.

The Thai people need to be worried about their future economy, if the government can not come up with an amount of cash that is comparable to 0.1% of its GDP to finance a much needed infrastructural project for their country.

I think you will find that's its normal for countries to take out loans for infrastructure projects.

But then you may well be a world class economist experienced in international finance, if so then I would certainly defer to your superior knowledge.

Possibly its not so surprising they would use loan finance considering the annual repayment of the principal and interest of the loans taken out to finance the Yingluck rice pledging scheme since its inception are 64 billion baht per year.

If $320 is measly and a tiny amount to you perhaps you would like to help out with a small gift of say $100 million.

[NCC1701A]

looks like a elevated track. somehow, a pick up truck will still get hit by a train.

[rubl]

The loan agreement probably includes a few clauses describing a Japanese involvement in the activities to get this rail llink completed. In a way the low interest terms and the six year grace period would suggest the Japanese Government to subsidise some of it's own (i.e. Japanese) businesses

[Gunna]

The loan agreement probably includes a few clauses describing a Japanese involvement in the activities to get this rail llink completed. In a way the low interest terms and the six year grace period would suggest the Japanese Government to subsidise some of it's own (i.e. Japanese) businesses

I read in the Post that

"With no procurement restrictions, Thailand can buy materials, equipment and services from any country so long as it uses an international auction method."

I think this is an updated map and there are 2 Red lines

Dark Red with an extension from Bang Sue south to Mahachai

Light Red with an extension west to Salaya

Edited June 13, 2015 by Gunna

[hhinhh]

The fact that Thailand has to boirrow a measly $320 million from the Japanese government screams to me that Thailand has no money. That is a tiny amount of money in the scheme of things unless of course you are flat broke.

The Thai people need to be worried about their future economy, if the government can not come up with an amount of cash that is comparable to 0.1% of its GDP to finance a much needed infrastructural project for their country.

A much better investment than in rotten rice

[phoenixdoglover]

Bringing happiness to the people through low interest loans. And the Japanese are doing this out of the goodness of their hearts!

[khunken]

This looks like a (partial?) resurrection of the collapsed Hopewell project. Travelling to CW Immigration on Wednesday I wondered what ITAL-Thai were doing with the Hopewell 'monuments'.

So it will be an initial connection into the light-rail system for Don Mueang before they get going with the 'brown line' which will eventually connect DM to Suvarnabumi.

[Srikcir]

The fact that Thailand has to boirrow a measly $320 million from the Japanese government screams to me that Thailand has no money. That is a tiny amount of money in the scheme of things unless of course you are flat broke.

The Thai people need to be worried about their future economy, if the government can not come up with an amount of cash that is comparable to 0.1% of its GDP to finance a much needed infrastructural project for their country.

I think you will find that's its normal for countries to take out loans for infrastructure projects.

But then you may well be a world class economist experienced in international finance, if so then I would certainly defer to your superior knowledge.

Possibly its not so surprising they would use loan finance considering the annual repayment of the principal and interest of the loans taken out to finance the Yingluck rice pledging scheme since its inception are 64 billion baht per year.

If $320 is measly and a tiny amount to you perhaps you would like to help out with a small gift of say $100 million.

The issue isn't that the government borrowed the money but that it keeps borrowing from foreign governments. Acquisition of capital through foreign debt depresses the GDP growth rate. The simplest way for a nation to borrow funds and still increase GDP growth rate is to SELF-FINANCE by selling treasury bonds.

It's good business for foreign lenders as they will boost their own GDP growth rate over the 20+-year life of the loans. Plus, they will typically get "deal boosters" in the form of special tax exemptions and land development priviledges in exchange for low interest rates. I believe that Prayut wants to reserve the Thai treasury for domestic cash subsidies that he can use immediately to "reward" certain political behaviors.

If the 2007 Constitution were still in effect, Prayut would be prevented by the Election Commission from borrowing funds from foreign governments as a caretaker government. Fortunately for him, someone abolished the 2007 Constitution so the Junta can take whatever fiscal action it wants without accountability.

[wabothai]

Can the signers of these contracts be held personally responsible?

Next year they will be out of the picture anyway. Let the next governments deal with it.

[seajae]

The fact that Thailand has to boirrow a measly $320 million from the Japanese government screams to me that Thailand has no money. That is a tiny amount of money in the scheme of things unless of course you are flat broke.

The Thai people need to be worried about their future economy, if the government can not come up with an amount of cash that is comparable to 0.1% of its GDP to finance a much needed infrastructural project for their country.

I think you will find that's its normal for countries to take out loans for infrastructure projects.

But then you may well be a world class economist experienced in international finance, if so then I would certainly defer to your superior knowledge.

Possibly its not so surprising they would use loan finance considering the annual repayment of the principal and interest of the loans taken out to finance the Yingluck rice pledging scheme since its inception are 64 billion baht per year.

If $320 is measly and a tiny amount to you perhaps you would like to help out with a small gift of say $100 million.

The issue isn't that the government borrowed the money but that it keeps borrowing from foreign governments. Acquisition of capital through foreign debt depresses the GDP growth rate. The simplest way for a nation to borrow funds and still increase GDP growth rate is to SELF-FINANCE by selling treasury bonds.

It's good business for foreign lenders as they will boost their own GDP growth rate over the 20+-year life of the loans. Plus, they will typically get "deal boosters" in the form of special tax exemptions and land development priviledges in exchange for low interest rates. I believe that Prayut wants to reserve the Thai treasury for domestic cash subsidies that he can use immediately to "reward" certain political behaviors.

If the 2007 Constitution were still in effect, Prayut would be prevented by the Election Commission from borrowing funds from foreign governments as a caretaker government. Fortunately for him, someone abolished the 2007 Constitution so the Junta can take whatever fiscal action it wants without accountability.

so where was all your denouncing of the ptp when they wanted to borrow 3 trillion or doesnt that count as they are your side, hypocrisy at its best

[Robby nz]

The fact that Thailand has to boirrow a measly $320 million from the Japanese government screams to me that Thailand has no money. That is a tiny amount of money in the scheme of things unless of course you are flat broke.

The Thai people need to be worried about their future economy, if the government can not come up with an amount of cash that is comparable to 0.1% of its GDP to finance a much needed infrastructural project for their country.

I think you will find that's its normal for countries to take out loans for infrastructure projects.

But then you may well be a world class economist experienced in international finance, if so then I would certainly defer to your superior knowledge.

Possibly its not so surprising they would use loan finance considering the annual repayment of the principal and interest of the loans taken out to finance the Yingluck rice pledging scheme since its inception are 64 billion baht per year.

If $320 is measly and a tiny amount to you perhaps you would like to help out with a small gift of say $100 million.

The issue isn't that the government borrowed the money but that it keeps borrowing from foreign governments. Acquisition of capital through foreign debt depresses the GDP growth rate. The simplest way for a nation to borrow funds and still increase GDP growth rate is to SELF-FINANCE by selling treasury bonds.

It's good business for foreign lenders as they will boost their own GDP growth rate over the 20+-year life of the loans. Plus, they will typically get "deal boosters" in the form of special tax exemptions and land development priviledges in exchange for low interest rates. I believe that Prayut wants to reserve the Thai treasury for domestic cash subsidies that he can use immediately to "reward" certain political behaviors.

If the 2007 Constitution were still in effect, Prayut would be prevented by the Election Commission from borrowing funds from foreign governments as a caretaker government. Fortunately for him, someone abolished the 2007 Constitution so the Junta can take whatever fiscal action it wants without accountability.

When bonds are issued it is a form of borrowing that has to be repaid at the term of the bond with interest paid annually and the interest rate offered in a bond sale is usually much higher than the terms of this loan, for instance :

http://www.thaivisa.com/forum/topic/779562-thai-finance-ministry-issues-bonds-to-restructure-rice-mortgage-scheme-debts/

BANGKOK, 26 November 2014 (NNT) – The Finance Ministry has issued bonds worth 50 billion baht, the biggest-ever bond issuance in history, in its latest move to restructure the debts incurred from the rice-mortgage scheme from the previous administration.

The bonds, which are issued by Bank of Agriculture and Agricultural Cooperatives (BAAC), are divided into two categories. The first category, which is worth 42 billion baht offers an interest rate of 2.75 percent per year. The latter, which is worth eight billion baht, offers an interest rate of 3 percent per year.

As you can see it is still a debt the country must pay and the interest rate is way above that of the loan in this topic.

One difference is that bonds can be and are traded, that is someone who buys a bond can sell it to someone else this could be an attraction to someone who thinks they can make a profit selling bonds. While a loan is a fixed thing between the one making the loan and the recipient although in some cases loans have been sold on. Particularly non preforming loans which are sometimes sold to debt collectors at way below their paper value so the lender cuts their losses and the debt collector takes on the risk.

As for what's in it for the Japanese, they want a piece of the high or medium speed rail projects so becoming a loan partner in a urban rail projects gives them a foot in the door.

[rubl]

The loan agreement probably includes a few clauses describing a Japanese involvement in the activities to get this rail llink completed. In a way the low interest terms and the six year grace period would suggest the Japanese Government to subsidise some of it's own (i.e. Japanese) businesses

I read in the Post that

"With no procurement restrictions, Thailand can buy materials, equipment and services from any country so long as it uses an international auction method."

I think this is an updated map and there are 2 Red lines

Dark Red with an extension from Bang Sue south to Mahachai

Light Red with an extension west to Salaya

"no procurement restrictions", but there might just be a need to buy stuff and with the 'right' specification that might only be deliverable by Japanese firms?

[RustBucket]

The fact that Thailand has to boirrow a measly $320 million from the Japanese government screams to me that Thailand has no money. That is a tiny amount of money in the scheme of things unless of course you are flat broke.

The Thai people need to be worried about their future economy, if the government can not come up with an amount of cash that is comparable to 0.1% of its GDP to finance a much needed infrastructural project for their country.

I think you will find that's its normal for countries to take out loans for infrastructure projects.

But then you may well be a world class economist experienced in international finance, if so then I would certainly defer to your superior knowledge.

Possibly its not so surprising they would use loan finance considering the annual repayment of the principal and interest of the loans taken out to finance the Yingluck rice pledging scheme since its inception are 64 billion baht per year.

If $320 is measly and a tiny amount to you perhaps you would like to help out with a small gift of say $100 million.

In relation to my bank account it is a lot of money, in relaton to the nation's GDP it is a piffling amount.

If a government needs to borrow 0.1% of it GDP to fund a relatively small project like that, then it is either a retarded third world African banana republic or it is broke. Normally a government builds its external debts with much bigger G2G loans. I have seen foreign aid donations bigger than that.

Put it this way...... If you phone your friend and ask them to lend you 10 baht, are you in good financial shape???????

Edited June 13, 2015 by RustBucket