ADB urges $8bn extra annual spend
Infrastructure bump pushed to raise GDP
An additional US$8 billion (267 billion baht) of annual infrastructure investment is needed for Thailand through 2030 to accelerate the country's economic growth pace to 4.2%, says the Asian Development Bank (ADB).
"From 2016-30, Thailand will need to invest $268 billion in infrastructure, or $14 billion per year to keep the GDP growth rate for the period at 4.2%. But Thailand only invests $6 billion annually in infrastructure," said Rana Hasan, director of development economics and indicators.
The $6 billion in annual investment does not include spending by state-owned enterprises, meaning the real number is likely higher.
He said the required investment was calculated based on the infrastructure needed to support the country's potential growth.
The Thai government is hopeful its 1.7-trillion-baht infrastructure investment scheme through 2022 will boost the country's economy to reach its growth potential of 4-5%.
Mr Hasan said developing Asian countries need $26 trillion or $1.7 trillion per year for infrastructure investment during 2016-30. This spending takes into account climate change mitigation costs and spending to meet global climate goals.
"Infrastructure investment is crucial as it is highly correlated with economic growth and eradicating poverty," he said.
Mr Hasan said the $6-billion investment is equal to 1.35% of Thailand's GDP. From 2010-14, Thailand invested 1.6% of GDP per year in infrastructure.
"Although Thailand still has a gap to fill in terms of infrastructure investment, its gap remains much smaller than its regional peers," he said.
Transportation infrastructure such as intercity rail systems and electric trains has been tacked as the first priority.
"Thailand's rail system is very out-of-date so there's plenty of room for improvement and the new investment should focus on that sector," said Mr Hasan.
Apart from rail systems, other types of infrastructure including power, telecommunications water and sanitation also are in need of an upgrade, he said.
To fill the investment gap, ADB recommends fiscal reforms, promoting private participation and better planning, design and execution of investment projects.
"Thailand still have a manageable level of public debt, so it is able to borrow more to invest in these projects," said Mr Hasan.
The Public Debt Management Office reported Thailand's public debt was 6.34 trillion baht at the end of May, representing 42.9% of the country's GDP -- below the 60%-ceiling set by the law.
He said the government can raise an additional $3 billion annually for big-ticket infrastructure investment both through borrowing and increasing government revenue by raising energy taxes.
For the remaining $5 billion gap, the government can raise fund from private sector through the public-private partnership model and the Thailand Future Fund, which have already been implemented, said Mr Hasan.