The end of the 2-trillion-baht infrastructure plan has disappointed the private sector, with representatives saying it is a huge loss of opportunity for Thailand to cash in on economic development.
A train passes a site where concrete pillars of the abandoned Hopewell project are being demolished to pave the way for the Red Line electric railway project, which remains on track. Pattarapong Chatpattarasill
The Constitution Court yesterday ruled that the government-proposed bill to empower the Finance Ministry to seek 2 trillion baht in loans was unconstitutional following a request by the Democrat Party for the court to decide whether the bill violated Sections 160 and 170 of the constitution.
The court unanimously agreed by a vote of 8-0 that the content of the bill convened provisions stated in the first paragraph of Section 169 of the charter, while it also voted 6-2 that the bill's legislative procedures were against Section 170 of the constitution.
Kriengkrai Thiennukul, a vice-chairman of the Federation of Thai Industries (FTI), said the private sector sees it as a lost opportunity, as Thailand has not had a large infrastructure project for 15 years even though investment in logistics is necessary to bolster the country's competitiveness.
Thailand's logistics costs are at 15.2% of gross domestic product, quite high compared with competitive countries where costs are 8-9% of GDP, he said.
"This creates a disadvantage for us in terms of transportation costs," said Mr Kriengkrai, adding that the seven-year investment would have lowered costs by 2%. Although the FTI is totally against corruption of all forms, investment in infrastructure also needs to be done at the same time as tackling corruption, not later, he said.
"It took 35 years for Hong Kong to tackle corruption. Do we have to wait for another 35 years to construct high-speed trains when we are entering the Asean Economic Community in another year and a half?" Mr Kriengkrai said.
Katrat Upayokin, a senior vice-president of Siemens Ltd, said projects to upgrade rail transport in Thailand such as dual-track trains should proceed and he hopes the government can find other solutions to mobilise funds.
"But the high-speed train project should be reviewed to lower the cost. I don't think Thailand needs speedy trains capable of 300-400 kilometres per hour. Speeds of 200-250 km/h are enough," he said.
Chananyarak Phetcharat, DHL Express's managing director for Thailand and Indochina, agreed Thailand will lose opportunities to improve connectivity with other Asean members, but he said proceeding with projects amid concerns about graft would not be a positive move for Thailand.
"These projects are worthwhile in terms of economic value. But the current situation is so sensitive given the fact that the current government is the caretaker administration and concerns about corruption are quite strong," she said.
Ms Chananyarak said even though the government might seek other ways to mobilise funds to push ahead with massive capital projects, it is vital to ensure a transparent process.
Setsuo Iuchi, president of the Japan External Trade Organization, said the 2-trillion-baht borrowing plan has had no direct effect on Japanese investment since there are no concrete projects that rely on the government's infrastructure plans. However, infrastructure planning is essential for Thailand's development in the long run, he added.
"Of course, I will leave a discussion of the financial issue to Thais, but [we believe] Thailand should think about planning development constructively at some point. It is important for Thailand, especially the logistics links to neighbouring countries, as a regional hub in the geographical and economic senses," he said.
Somchai Sujjapongse, director-general of the Finance Ministry's Fiscal Policy Office, warned economic growth might fall short of 3% or even be less than 2% this year if there is no budget disbursement for infrastructure development for fiscal 2014 ending Sept 30.
It had estimated 61.6 billion baht would be disbursed for the megaprojects.
The fate of the plan depends on the Finance Ministry's ability to seek funding through a special law while being aware of the legitimacy of such methods.
The ministry is also concerned that some methods could jeopardise the ministry's plan to achieve a balanced budget by 2017.
A ministry source said putting the infrastructure investments in the government's annual budget could result in discontinuity and delays to the projects.