Interview: Sombat Kitjalaksana
To what extent will government infrastructure projects continue to drive Thailand’s GDP growth in the short to long term?
SOMBAT KITJALAKSANA: I believe that infrastructure development in Thailand is perhaps the most important economic success factor at present, and the government has selected the right direction in emphasising and prioritising investment in infrastructure moving forward. While Thailand has undergone great levels of development – especially over the past 40 years – the world is always moving forward and Thailand must evolve accordingly. I believe infrastructure development is a form of economic self-determination. While other GDP contributors such as exports and private investment are without a doubt necessary, investment in infrastructure is one avenue that the government can push forward at will, largely regardless of global economic trends, foreign investment and financial support.
Infrastructure also has very positive economic knock-on effects by generating employment and stimulating construction materials demand, so this will not solely be a short-term focus, but one that continues in the long term. The government has put forward a strong vision for investment in the next 20 years, so the outlook is very positive in this regard.
What advantages does private sector participation in infrastructure projects hold?
SOMBAT: The public-private partnership model is of great benefit to the large-scale infrastructure projects that we are seeing presently; the government cannot invest in such undertakings by itself. Thai contractors and developers are extremely strong and competitive on a global scale. They already have the capacity necessary to undertake major projects abroad, and this is applicable to domestic development as well.
The proposed infrastructure projects at the moment can be broken down into two categories – those that are both essential to the nation and are feasible in their undertaking, and those that are less essential or are perhaps more difficult to implement. The private sector has a great deal to contribute to both, as it not only mitigates risk from the government by undertaking a portion of that uncertainty for more difficult projects, but also serves to bring its expertise and timely processes to those projects that are essential. So long as the roles and responsibilities of both the government and private sector are clearly outlined, such a model is ideal when it comes to infrastructure.
Furthermore, now more than ever there are many private sector mechanisms that may be tapped in order to bring these projects to fruition, from project finance to infrastructure funds and bond issuance. Concurrently, Thai lenders continue to be very strong and demonstrate good use of cash flows. Thus, the variety in funding mechanisms available is only growing and serves to give the government all the tools necessary to implement infrastructure projects while easing the risk associated with such ventures.
How do you assess the advantages inherent in synchronising the development of both national rail and road networks across Thailand?
SOMBAT: When it comes to urban mass rapid transit, rail linkages are becoming increasingly important across Thailand. Urban rail developments are still a nascent industry in the nation. Up to this point, the prevailing mode of transportation in Bangkok has been road travel, and the emergence of rail transport necessitates the synchronisation of both networks in order to achieve the desired outcome for the city.
Reducing reliance on road transportation in Bangkok will serve to ease congestion in the city while providing a convenient and suitable alternative. However, road networks will remain necessary to connect suburban areas with the city centre. Thus, concurrent development of both networks is key in reducing traffic bottlenecks and ensuring efficiency of transportation.
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