Transport Ministry turns to faster road and rail spending to prop up economy

Transport Ministry turns to faster road and rail spending to prop up economy

The Transport Ministry will build more expressways like this one linking Bangkok and Rayong. (Government House photo)
The Transport Ministry will build more expressways like this one linking Bangkok and Rayong. (Government House photo)

The Transport Ministry plans to accelerate spending on roads and rail projects in the fiscal year starting in October to aid an economy hammered by a slump in exports and tourism.

Key programmes include expansion of Bangkok’s mass-transit network and expressways linking several nearby provinces and the nation’s eastern seaboard to Bangkok, as about half of Thailand’s gross domestic product comes from the capital city though it has less than a 10th of the nation’s population.

Also high on the government’s transport agenda is a highway network connecting neighbouring countries and a high-speed rail that goes through neighbouring countries to China.

“I’m trying to expedite budget disbursement because government spending can generate a chain reaction that increases economic activities,” Transport Minister Saksiam Chidchob said in an interview.

Funds will be a combination of the Transport Ministry’s annual budget allocation from the central government, revenue from state enterprises and income from various funds, Saksiam said. The transport budget in the new fiscal year will be 232 billion baht, up about 32% from the current period.

One key is to actually spend the money, Mr Saksiam said. The disbursement rate for the investment portion of the government’s overall budget this fiscal year through mid-July was just 37%, according to the Finance Ministry. Specific figures for the Transport Ministry weren’t available.

Even before Covid-19, infrastructure spending was typically delayed by political wrangling and personnel changes. About 70% of the government’s investment budget was used in fiscal 2019, according to the Finance Ministry.

Fund disbursement

“Disbursement has declined in recent years,” according to Tim Leelahaphan, an economist at Standard Chartered. “And the government now appears focused on providing a short-term boost to the economy via private consumption rather than investment revival.”

Prime Minister Prayut Chan-o-cha reshuffled his Cabinet lineup this month. Though Mr Saksiam kept his job at the Transport Ministry, Predee Daochai was appointed finance minister and Supattanapong Punmeechaow was named deputy prime minister in charge of the economy -- a role that oversees many large infrastructure projects.

Among the most ambitious efforts is the Eastern Economic Corridor, a favourite of former deputy premier Somkid Jatusripitak. The EEC is a highly industrialized area near Bangkok that has been promoted by the government as the key area for investment in industries such as automotive, robotics, logistics, health care and medical tourism.

”We do not see a clear post-Covid development strategy for Thailand,” Standard Chartered’s Mr Tim said. “Measures such as the redevelopment of the EEC and some various other mega projects were started under Somkid. It remains to be seen whether these projects will be continued.”

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