INFRASTRUCTURE

The success of the skytrain and the subway in easing congestion has convinced the government that more mass transit is the way to go. Planning is now under way for a system that will ultimately cover 291 kilometres

by CHAROEN KITTIKANYA

]WITH A SLEW of megaprojects planned over the next five to six years, the government is being urged to tap the highly liquid domestic market for funding rather than seek project financing from external sources to prevent foreign exchange risk.

According to Dr Ockert Van Zyl, Siemens' president and CEO, given the current high liquidity in the money market in Thailand, the government should utilise local project financing facilities instead of offshore loans.
"For large projects, financing is also very important. I am glad to see that there is a lot of liquidity in the local market," Dr Van Zyl said. "And given the fact that revenue to be generated from the projects are denominated in Thai baht, I expect the investment [in the Bangkok mass transit system] would be funded by local financial institutions."

He said local project financing would not only help curb foreign-exchange risk, but also ease the rigid lending conditions set by the foreign creditors.

Currently, most of the large projects including the new Bangkok international airport are being funded by the Japan Bank for International Co-operation (JBIC) and rigid lending terms are said to have been imposed.
"Based on the government's announcement about the Bangkok mass transit system, we (Siemens) see a large number of opportunities in Thailand over the next five years," Dr Van Zyl added.
Siemens is expected to be involved primarily as a turnkey supplier, not in civil works which mostly will be taken up by construction firms.

Siemens, as part of a consortium with Sino-Thai Engineering and Construction Plc and B. Grimm, in December was selected as the winning bidder for the Airport Link operated by the State Railway of Thailand linking the Makkasan area to Suvarnabhumi Airport, with a rapid rail system featuring trains that will travel at speeds of up to 160 kilometres an hour. The group quoted a price of 25.9 billion baht and final negotiations are pending.




According to Siemens, other opportunities for the company include the planned extension of the Bangkok subway and skytrain system.

The skytrain extension is expected to start immediately after the operating company completes its debt restructuring plan, he said. Siemens supplied the electric rail system of the skytrain and subway.
The company saw a surge in its transport systems business sales last year to 6.189 billion baht due to the MRTA subway project which was completed ahead of the contract schedule.

The government intends to invest up to 1.9 trillion baht in infrastructure projects over the next five to seven years. Of that amount, 1.5 trillion will go to mass transport.

However, there are concerns about the government's ability to finance megaprojects in the financial market. Market watchers are also worried that if the government raises funds via the debt market, it would bring about a crowding-out effect to the market.

Recently, Moody's Investors Service raised concerns over how the Thai government would finance its megaprojects with a minimum impact on public debt and the country's overall international credit standing.
The government is mapping out a possible debt-market master plan for the next four years, part of which would design ways for it to raise funds to finance its megaprojects.

Aside from raising funds from the debt market, the government might also tap the stock market and borrow from financial institutions or use instruments such as securitisation.

and rents on the Rama IV Road stretch served by the subway were up 8.27%.
As well, land prices along the subway rose by 6% on average, led by a 12% rise around the Lat Phrao intersection.

Land prices along proposed future routes of the MRTA subway system have already risen by 13% in the Bang Bua Thong and Rattanathibet areas.

Meanwhile, office rents along the BTS skytrain route rose by 8.71% on average during that time period while land prices along the BTS route climbed by 4% on average. Further increases in land prices, office and retail rents could be expected in line with the planned construction of 291 km of routes for seven mass transit systems worth a total of 521.67 billion baht.

The government intends to invest up to 1.9 trillion baht in projects over the next five to seven years, of which 1.5 trillion baht will go to mass transport projects in Greater Bangkok through the construction of more skytrain and subway routes.

Plans to expand the mass transit system was included in Prime Minister Thaksin Shinawatra's list of promises made in his speech to supporters during the kickoff of the Thai Rak Thai party's election campaign.

Suriya: "Subway line between Lat Phrao and Samut Prakan's Samrong district is next."

In fact, the rapid mass transit system is not this government's brainchild, but the product of the Urban Rail Transport Master Plan commissioned by the Office of the Commission for Management of Land Traffic Planning which won the cabinet's approval in 1994, way before Prime Minister Thaksin Shinawatra took office.
The study initially called for 287.5 km of mass transit routes to be completed in a decade.

But the premier can be credited for putting the Bangkok mass transit project into high gear.
A fast-track 480-billion-baht package to expand the existing 44 km of track, comprises the subway and elevated train systems, to cover a 291-km mass transit system connecting Bangkok with Nonthaburi, Pathum Thani, Samut Sakhon, and Samut Prakan, to be completed within six years (2004-09).
The plan went before the cabinet in September 2004.

Officials hope that the expansion plans will finally create a fully integrated transport network.
The contractor chosen by the Transport Ministry for the project would have to form joint ventures with existing operators or take over the service.

The priority is a 28.5-km elevated rail link with eight stations linking Bangkok city centre with the new Suvarnabhumi international airport. It is due to be finished in 2007.

Three more lines are planned for the city's new metro system, going both above ground and underground, which will account for nearly 40% of the expansion plans.

The remainder of the plan involves conventional train lines within Bangkok and the expansion of the skytrain.
Transport Minister Suriya Jungrungreangkit said recently that the ministry would add the subway line between Lat Phrao and Samut Prakan's Samrong district to a group of priority projects to ease traffic congestion in Greater Bangkok.

The 32-km route is projected to cost 40.6 billion baht and to be completed in six years.
Previously, the route was not part of the government's overall plan for the 291-km network but the ministry decided to include it after a preliminary study showed the route would attract about 197,000 commuters.