In his keynote address to the EIC Conference on the “Future of Thailand under the New Era of Infrastructure Investment”, Somkid said the private sector had been reluctant to pull the investment trigger because it did not have confidence in the speed of the government’s investment measures to revive the economy.

“But they must dare to invest, because overseas, private companies dare to invest even though their economies are also not showing a recovery. Those companies look at long-term investment, while Thai companies need a sure [bet], so private investment has not happened,” he said.

Private companies park their cash in banks instead of spending it until liquidity in the banking system overflows, forcing banks to lower their deposit interest rates.

The ratio of private investment to gross domestic product at present is only 19 per cent, against 35 per cent before the 1997 financial crisis, Somkid said.

Injecting money to boost the economy is not the right solution for the current military-led regime, he said. Reform to boost competitiveness is essential.

The government is well aware that what it is doing may not bring the economy to recovery, but it wants to ensure that the momentum of the economy does not fizzle out, he said.

To sustain the economy, the government has relied on three points.

The first is major reform with the aim of reducing social inequality and strengthen competitiveness.

The second is investment in both physical and social infrastructure.

Thailand has not made much investment in its physical infrastructure for a long time, Somkid said.

Now, there are the projects of the Energy Ministry, which has a budget of Bt2.5 trillion until 2022. The Transport Ministry has a similar budget.

A Bt500-billion budget for digital infrastructure over five years will help the economy grow, he said, so the private sector should prepare to get involved with those government investments.

Pracha Rath

The third point is the support of external factors, which in this context is the Pracha Rath project, by collaborating with big private companies.

From now on, the government’s projects will be launched gradually. For example, three mass-transit lines are ready to open bidding this month. Somkid will start to follow the progress of the tendering process tomorrow with Transport Minister Arkhom Termpittayapaisith.

PTT and the Electricity Generating Authority of Thailand have huge budgets for investment – PTTwith more than Bt300 billion and Egat with Bt200 billion, Somkid noted.

Vichit Suraphongchai, executive chairman of Siam Commercial Bank, said the uncertain recovery of the global market was challenging to all countries including Thailand.

Quantitative-easing policies have not proved as efficient as expected.

The key for Thailand right now is government and private investment.

The government has attempted to encourage private investment by incentives and the public-private partnership fast track, Vichit said. Infrastructure investment is not only reviving the economy but also nurturing a new normal for Thailand, which is shifting to domestic consumption from exports.

Keeree Kanjanapas, chairman of Bangkok Mass Transit System (BTS), said during the panel discussion on “Investment Potential – Leverage the New Infrastructure” that the private sector should not leave the role of investor to the government, because it is too slow in making investments to revive the economy.

For example, in China, the private and public sectors have invested jointly for 30 years until China today has become a high-growth market.

However, to encourage the private sector to speed up investment with the government, the terms of reference (ToR) must be fair to them.

In his experience from joining the bidding for a subway project in Beijing, which his company failed to win, the ToR guaranteed a certain income to the bid winners.

Under the ToR, the Chinese government said the number of passengers per day must reach 850,000 in the first year of operation and go to 1.3 million in the following years.

He said he was happy that the Thai government was lending importance to the private sector joining in investing in infrastructure. BTS is interested in bidding for mass-transit projects including the Pink Line.

The government should be careful about the arrival of foreign investors to join the infrastructure projects, as their intention might only be to sell raw materials, Keeree said.