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Thailand’s economy continues to show some strong and positive indications of growth. And Thailand is aggressively taking advantage of the economic situation and lining up development and investment projects in an attempt to lure more foreign investors into the country.
And to support that, Thailand has passed a Public-Private Partnership or PPP law to foster infrastructure investment. This new law encourages large – scale PPP projects in a country that has long been badly associated with a difficult partnership regime. Thailand aims to develop and establish clear and firm procedures for both foreign and domestic investors in relation to upcoming PPP projects.
The new PPP law was specifically passed to encourage private investment in infrastructure projects. Additionally, the new law is expected to allow companies to break ground on new projects in a much shorter time of 10 to 12 months from the start of negotiations. Prior to the passing of the PPP law, it takes 20 to 30 months instead, according to Areepong Bhoocha-oom, the Permanent Finance Secretary.
Thailand is serious in wanting to attract more private investment for infrastructure. Aside from the new PPP law, the government has created so-called “infrastructure funds” through which the government can raise funds in return to a steady yield for investors. The objective is to reduce spending of the government in infrastructure development projects. The general public is enjoined to participate in these fundraising activities. The raised funds will survive on the projects’ performance after they are completed and become operational. The Thai Securities and Exchange Commission is the regulatory office tasked to manage the infrastructure funds.
This is not the first time that Thailand engaged in a number of profitable PPPs – with domestic and foreign partners. Some of these PPP projects include the Electricity Generating Authority of Thailand, the BTS SkyTrain in Bangkok, and the Don Muang Tollway. The Thai government has a seven-year infrastructure development plan that will see 4.2 trillion Thai Baht invested. Over this 7-year period, the Thai government hopes for the investment to boost GDP growth by an additional one percent every year and generate half a million jobs.
Under the new PPP framework, Thailand is hoping to get the first project up to send positive signals to the private sector and reinforce that the government is serious in its undertaking pertinent to the PPP endeavor.
The prospective projects that the government is counting on to find the right partners under the PPP framework include:
a high-speed rail link between Bangkok, Chiang Mai and Nong Khai, connecting the capital to Laos and China
improved road networks
For this to gain ground, investors, foreign and local will need to build confidence in the entire process considering the not-so-pleasant reputation the Thai government endured in the past. Investors will have to see measures indicating sound and strict regulation. Investors need institutional capacity in government to identify, develop and implement PPP projects alongside the private sector.
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