Parliament's decision last week to pass the first reading of the 2-trillion-baht borrowing bill overhauling the nation's infrastructure has boosted foreign investors' confidence in the Yingluck administration.
Domestically, however, the public is wary about the nation borrowing such huge amounts that will take one's whole life to repay.
Our lousy rail system makes it difficult to argue against comprehensive infrastructure development.
But the public are sceptical about how the megaprojects will be carried out without the money being siphoned off by corruption.
It is beyond understanding why the government has chosen to get parliamentary endorsement first and share with us later who will manage these ambitious and expensive projects, and how they will be carried out to ensure efficiency and transparency.
This is why many consider the borrowing bill a blank cheque for the government to do anything it wants.
Even when we exclude the 2-trillion-baht debt, each citizen is now shouldering public debt of 60,000 baht, according to the National Debt Clock figures.
The figures change by the minute and will certainly rocket when the 2-trillion baht loan is added to the books and when the public debt ratio rises to 50% of gross domestic product.
This historic loan will enable the government to invest in a rail system overhaul without seeking joint ventures with the private sector.
But most economists are scratching their heads wondering how the government will pay back the debt if business and income taxes fail to yield the necessary revenues.
Actually, we still have huge property resources which we can tap to increase our tax revenues. But the Yingluck government has shown no sign of overhauling land and buildings taxes.
During its tenure, the Democrat Party tried to introduce some progressive tax measures. But the efforts were half-hearted and went nowhere. Landlords are the main sponsors of political parties, after all.
With insufficient tax and revenues, what lies ahead is a debt time-bomb for the country. If the government has any plans to prevent this, it is not telling us.
The people have every right to know how the government will increase taxes without perpetuating existing income disparities.
Land and property tax rates are pitifully low. It means the rich pay proportionately little for what they have when the general global trends are for the rich to come under progressive tax schemes.
Any increase in value-added tax must be weighed carefully to avoid putting too heavy a burden on the middle class and the poor.
This debt bill, as I call it, is a political victory for Pheu Thai. Another victory awaits them with the charter amendment efforts. Both will significantly change the country's political and economic terrain.
Prime Minister Yingluck Shinawatra, 45, will go down in history as a leader able to transform a dinosaur infrastructure system into one designed for the modern age, similar to her brother's feat in turning the Nong Ngu Hao development, which had dragged on fruitlessly for four decades, into what we now know as Suvarnabhumi international airport.
Foreign investors surely love this government, and vice and versa. No previous prime minister has taken so many overseas trips, except Ms Yingluck's very own dear brother.
Despite public protests, the Yingluck government is eager to sign free-trade agreements with both Europe and soon with the US. Why shouldn't they love Ms Yingluck?
The debt bill will also make the Yingluck government more endearing to foreign businesses. For they cannot only export modern railway technology but also the energy know-how to run the high-speed trains.
Tourists will certainly enjoy better travel in Thailand, thanks to the new rail system. Businessmen, especially those in the provinces, will also benefit from the overhaul.
According to Kanda Naknoi, Connecticut University's assistant professor of economics, the new rail system here will create business opportunities, and land prices are likely to rise nationwide.
She shares my view that the few landlords who own large chunks of land in the country will benefit most from rising land prices.
Given the present tax structure, however, they will not have to proportionately shoulder the debt burden from the 2-trillion-baht loan even though they will directly benefit from it.
Like most of us, Asst Prof Kanda said she does not oppose the railway system overhaul. She said the authorities, however, must revise their financing and project management plans to make them viable and beneficial to all.
The 2 trillion baht in borrowing covers only the rails and not the trains. This doesn't make sense.
Trains must be included in the investment proposal. At the very least, the proposal should outline the potential costs of the trains while private concessions should be considered as well.
Only then can the public realise the actual costs of the infrastructure system. "I think it makes more sense to build only one line and try running the trains first, like Japan did," the economist said.
On the financing side, alternative plans for high-speed trains have not been revealed to the public. Partial equity financing is not impossible. Equity financing can be done within domestic capital markets or with foreign investment. That will reduce both the debt burden and the risk incurred by management, Ms Kanda said.
Even if the proposed borrowing is still below the debt ceiling (50% of GDP), poor management could result in more borrowing being taken on in the future.
Concerning management of the proposed dual-track train system, Ms Kanda doubts if the new tracks and trains would be able help the perennially debt-ridden railway agency.
It is important the debt plan is accompanied by a just and viable taxation system. Without such property tax plans, high-speed trains could transform the geographical landscape without changing the country's economic disparities.
High-speed trains cannot remove income inequality unless Thailand implements tax reform.
Achara Ashayagachat is Senior News Reporter, Bangkok Post.
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- Writer: Achara Ashayagachat