The government's 2.2 trillion baht infrastructure investment programme is crucial for improving Thailand's economic outlook and competitiveness over the medium term, Prime Minister Yingluck Shinawatra said yesterday.
She rejected criticism that the spending programme would drain the country's public finances, and insisted that public debt would remain within acceptable levels.
Ms Yingluck, speaking in her weekly television and radio broadcast, said the government would soon submit a bill authorising the investments to parliament for approval.
The proposed bill would authorise new borrowing of up to 2.2 trillion baht to finance infrastructure programmes over the next seven years.
Up to 90% of the investment programmes would involve rail infrastructure, including new high-speed train routes across the country and up to 400km of new mass transit lines in Bangkok.
But critics say the bill is unnecessary, as public investment programmes should be financed through the annual budget to ensure transparency.
Public debt, which stood at 4.93 trillion baht or 43.9% of GDP as of last September, could also sharply increase over the next several years due to increased spending, they say.
But Ms Yingluck insisted that public debt would not exceed 50% of GDP over the next several years, even once the costs of the infrastructure investments are included.
Thailand's infrastructure must be expanded and modernised to support future growth, reduce logistics costs and strengthen transport links with neighbouring countries as regional trade and investment is expected to increase sharply over the next several years, Ms Yingluck said.
Logistics costs the country as much as 15.2% of GDP each year, a level double that of the United States which reflects the fact that transport in Thailand almost overwhelmingly depends on lorries, a much more costly and inefficient mode of transport compared with rail or sea transport.
Ms Yingluck said the investment programme, to be overseen by Transport Minister Chadchat Sittipunt, would also help boost foreign trade and investment for the economy.
She estimated that logistics costs would fall by 2% of GDP once the new infrastructure projects are completed.
New infrastructure investment is a key pillar of the government's broader medium-term development strategy, Ms Yingluck said, which aims to address current social, economic and political inequities as well as strengthen "connectivity" between provinces and with neighbouring countries.