Investment: Flood prevention & high-speed trains

Former Finance Minister Korn Chatikavanij explains how Chinese sovereign wealth funds & improved use of Thai savings could make these a reality.

high-speed train

In the photo above, a high-speed train in Shanghai, China. Thailand, as part of its planned infrastructure spending spree hopes to build a high-speed train corridor that will stretch to China. BANGKOK POST

For a thorough critique of Pheu Thai policy and a list of the key issues, read the full article here.

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ECONOMY: Govt needs to get serious about foreign investment by Korn Chatikavanij


hgh-speed trainInvestment is key for Thailand to move forward. Water management projects alone will cost at least several hundred billion baht. At the same time even more money is needed in order to complete other infrastructure projects that have been long overdue.

The main problem facing Thailand today is that we do not have sufficient funds to pay for all these projects, as each year we can spare only 20% from the annual budget for new investment.

At the same time, the world economy is currently experiencing a huge excess in liquidity, while the value of global currencies is declining from various quantitative easing programmes initiated since the 2008 financial crises.

Despite the declining value of their excess money, many nations as well as companies are not willing to invest their reserves due to various concerns and restrictions.

The competition for access to global capital has become more and more intensified. For example, the Asian Development Bank predicts that in the next 5-10 years, Asia alone will need to invest around US$400 billion (12.5 trillion baht) each year for new infrastructure projects. Meanwhile, we should be more concerned about increasing competition from the Western world as they need more and more investment to jump start their economies and sustain economic development.

This is especially true for European countries which are faced with large accumulated deficits that have prevented them from borrowing more money.

These countries are being forced to rely solely on investment from the private sector and overseas sovereign funds.

A great example is the case of the China Investment Corporation , which has more than $400 billion of capital. The CIC has recently affirmed its intentions to invest in various infrastructure projects in the United Kingdom. Despite this, the UK government is fully aware that relying on foreign investment may not be enough, and that it still needs to seek investment from other local institutions.

The CIC, which is highly connected with Chinese companies and other state enterprises, is sending a clear signal that it wants to play a more active role in the management of its investment projects, instead of only investing money and playing the role of construction contractor in the projects.

With this agenda, the CIC would certainly consider investing in countries that are open to foreign investment and have reliable legal and judicial system with internationally-recognised standards.

...[Thailand should] should [also] rely more on local sources of funding.

In fact, Thailand has a huge savings pool and excess liquidity but what we lack is the method to collaborate and divert them to good investment projects.

To overcome this, we need to rapidly develop a strong capital market by continuing on our existing capital market development plan which was fully supported by the previous administration... [read the rest of the article here]

(Source: Bangkok Post, ECONOMY, Govt needs to get serious about foreign investment, 22/12/2011, Korn Chatikavanij, link

Infrastructure Investment Vocabulary

investment is key for Thailand to move forward
investment - taking your money and putting it into projects to make a profit or earn interest (buying stock shares, bonds, real estate)
key - important คนสำคัญ

get serious about foreign investment

infrastructure - the high-cost facilities that everyone in the economy shares (water, roads, electricity, trains) สาธารณูปโภค
long overdue - late, should have been done a long time ago
infrastructure projects that have been long overdue

Thailand, as part of its planned
infrastructure spending spree hopes to build a high-speed train corridor that will stretch to China

high-speed train -
"a type of passenger rail transport that operates significantly faster than the normal speed of rail traffic. Specific definitions by the European Union include 200 km/h (124 mph) for upgraded track and 250 km/h (155 mph) or faster for new track... actual maximum commercial speed is about 300 km/h (186 mph) for majority of national high speed railways (Japan, China, France, Germany, Spain, Italy, UK), and about 400 km/h (249 mph) for Maglev trains," also called "high speed rail (HSR)" (See Wikipedia)

corridor -
1. a strip of land that connects one country to another, often providing a passageway to the sea; 2. a long narrow passageway between two places, for example, a corridor or hallway between offices in a office building 
high-speed train corridor - a thin strip of land with a high-speed train running through it that connects two countries or connects one country (China) with Bangkok and the sea

spending spree -
when a person goes out and buys a lot of things in a short period of time
stretch - to cause something to reach, often as far as possible, in a particular direction ขยายออก, ยืดออก

sufficient - enough พอเพียง
funds - money needed or available to spend on something เงินทุน
sufficient funds to pay for all these projects

spare - to prevent someone from having to experience something unpleasant ยกโทษให้,อภัยโทษ
annual - happening once a year ประจำปี
budget - the amounts of money that an organisation has available to spend on different things during a period งบประมาณ (See Wikipedia)
we can spare only 20% from the annual budget for new investment

we do not have
sufficient funds to pay for all these projects, as each year we can spare only 20% from the annual budget for new investment.

excess - greater than is usual; too much of something มากเกินปริมาณที่พอดี

liquidity - 1. the availability of money in the economy (through loans) to businesses and consumers (to meet their needs); 2.  having enough cash (or assets convertable to cash) to continue in business and continue paying off debt and liabilities, having cash or at least being able to get cash quickly, the speed that an asset can be turned into cash (cash is 100% liquid, a savings account a little less, a time deposit a lot less) สภาพคล่อง

huge excess in liquidity - lots of money available for borrowing through loans (if you qualify with your credit rating)
the world economy is currently experiencing a huge excess in liquidity

quantitative easing - "an unconventional monetary policy used by central banks to stimulate the national economy when conventional monetary policy has become ineffective. A central bank buys financial assets to inject a pre-determined quantity of money into the economy. This is distinguished from the more usual policy of buying or selling government bonds to keep market interest rates at a specified target value."

"A central bank implements quantitative easing by purchasing financial assets from banks and other private sector businesses with new electronically created money. This action increases the excess reserves of the banks, and also raises the prices of the financial assets bought, which lowers their yield."

"Expansionary monetary policy typically involves the central bank buying short-term government bonds in order to lower short-term market interest rates (using a combination of standing lending facilities and open market operations). However, when short-term interest rates are either at, or close to, zero, normal monetary policy can no longer lower interest rates. [See Keynesian liquidity trap] Quantitative easing may then be used by the monetary authorities to further stimulate the economy by purchasing assets of longer maturity than only short term government bonds, and thereby lowering longer-term interest rates further out on the yield curve.

Quantitative easing can be used to help ensure inflation does not fall below target. Risks include the policy being more effective than intended in acting against deflation – leading to higher inflation, or of not being effective enough – if banks do not lend out the additional reserves." (See Wikipedia)

2008 financial crises
- "the late-2000s financial crisis (often called the global recession, global financial crisis or the credit crunch) is considered by many economists to be the worst financial crisis since the Great Depression of the 1930s. It resulted in the collapse of large financial institutions, the bailout of banks by national governments, and downturns in stock markets around the world. In many areas, the housing market had also suffered, resulting in numerous evictions, foreclosures and prolonged unemployment. It contributed to the failure of key businesses, declines in consumer wealth estimated in the trillions of U.S. dollars, and a significant decline in economic activity, leading to a severe global economic recession in 2008" (See Wikipedia)

initiated
- created; started ริเริ่มโดย
quantitative easing programmes initiated since the 2008 financial crises.

global - all over the world, including the whole world, throughout the world ทั่วโลก
currency - the system of money that a country uses; the value of the country's money
global currencies - the values of money used by countries around the world
the value of global currencies is declining from various quantitative easing programmes initiated since the 2008 financial crises

reserves - 1. money kept for future use; 2. the amount of foreign currency or gold held by a national bank, which is used for dealing with the national banks of other countries เงินสำรอง
concerns - worries ความกังวล
companies are not willing to invest their reserves due to various concerns and restrictions.

access - the ability to get something สิทธิหรือโอกาสในการใช้
capital - money invested in a business (See glossary)
access to global capital - ability to get money for your business or government from banks and investors around the world

intense (adjective) - strong; very great or large in amount
intensify (verb) -
to become stronger; greater; larger in amount
intensified (adjective) -
example: intensified compeitition  
the competition for access to global capital has become more and more intensified

concerned - worried about something มีความกังวล
jump start 
jump start their economies
sustain - to keep; to continue รักษาไว้
development - the gradual growth and formation of something
economic development - the gradual growth and formation of a country's economy

we should be more concerned about increasing competition from the Western world as they need more and more investment to jump start their economies and sustain economic development

deficits - when spending is greater than money coming in (must be financed by borrowing and increased debt)
European countries faced with large accumulated deficits that have prevented them from borrowing more money.

sector - a part of the economy ภาคเศรษฐกิจของประเทศ (public sector = government, private sector = all businesses, household sector = families and consumers, banking sector,...) (See Wikipedia)
private sector - all the businesses (owned by people not the government) in a country

sovereign
- 1. of a country ruling itself เอกราช อำนาจอธิปไตย; 2. related to a country ("sovereign debt" means the debt of a country)
overseas sovereign funds - meaning: money from sovereign wealth funds from other countries

sovereign wealth funds -

forced to rely solely on investment from the private sector and overseas sovereign funds.

China Investment Corporation -

intentions - plans in you mind about what you are going to do ความตั้งใจ เจตนา
affirmed its intentions
the CIC has recently affirmed its intentions
to invest in various infrastructure projects in the United Kingdom.

aware - knowing that something exists, or having knowledge or experience of a particular thing ทราบ
institutions - large and important organizations, such as universities or banks สถาบัน

the UK government is fully aware that relying on foreign investment may not be enough, and that it still needs to seek investment from other local institutions

state - government รัฐ
enterprises - companies
state enterprises - companies owned by a government

clear - easy to understand
signal - an action or words meant to send a message to other people (not saying it directly; indirect)
clear signal - sending an easy to understand (indirect) message

active - working, operating, doing its job
role - the purpose, function or influence of someone or something in a particular situation; function or job บทบาท

play a more
active role - being more involved in the activity or process
play a more active role in the management of its investment projects

construction - the work of building or making something, especially buildings, bridges, etc. การก่อสร้าง 
contractor - a company that has a contract and arrangement with another company to do work or provide goods or services ผู้รับเหมา
construction contractor - a company that does construction work for another company or person

playing the role of construction contractor in the projects

the CIC, which is highly connected with Chinese companies and other state enterprises, is sending a clear signal that it wants to play a more active role in the management of its investment projects, instead of only investing money and playing the role of construction contractor in the projects

agenda - 1. list of goals to achieve in the future; 2. a list of things that people will discuss at a meeting ระเบียบวาระ; กำหนดการ, วาระ

reliable
- works correctly, works the way you expect, does not fail ที่น่าเชื่อถือ เชื่อถือได้, ไว้ใจได้
reliable legal and judicial system

standards - 1. acceptable levels of quality or achievement มาตรฐาน 2. a rule for behaving which should be obeyed มาตรฐาน, บรรทัดฐาน, กฎเกณฑ์, กรอบ
internationally-recognised standards
 

with this agenda, the CIC would certainly consider investing in countries that are open to foreign investment and have reliable legal and judicial system with internationally-recognised standards

local sources of funding - loans and equity investment (by part-owners of the company who hold stock) from within the country (not foreign) 
rely more on local sources of funding - more finance of business with money from inside the country 

pool - a collection or gathering together of something
savings pool -  a collection or gathering together of money from the savings of many people
huge savings pool -
when the savings of all the people in a country is very great

excess liquidity
- lots of money to be loaned (more than enough for those that qualify)
collaborate -
work together to achieve goals ร่วมมือ, ทำงานร่วมกัน,
divert - 1. cause money and resources to be used for a different purpose; 2. to cause to go in another direction 

divert the huge savings pool and excess liquidity to good investment projects

Thailand has a huge savings pool and excess liquidity but what we lack is the method to collaborate and divert them to good investment projects

capital market
- the group of markets and stock exchanges where companies and governments sell shares, bonds, etc. in order to obtain the money they need (See Wikipedia)
capital market development plan - a plan for how to develop and improve the capital markets of a country over many years

administration - the elected government that a country has for a period of time (examples: the Abhisit administration, the Yingluck administration)
the previous administration - the Abhisit adminstration

About the author

columnist
Writer: Jon Fernquest
Position: Online Writer