Civic groups to fight loans bill
Democrats to launch alternative budget plan
The People Assembly Reforming Thailand (Part) looks set to launch a legal challenge to the government’s 2-trillion-baht borrowing bill for infrastructure development projects.
The assembly, which is made up of a network of 57 civic organisations, said it was likely to petition the Constitution Court against the bill.
The Democrat Party says it also intends to launch legal action.
The assembly met at the National Institute of Development Administration (Nida) yesterday.
The civic groups which make it up say the political reform body will work in parallel with the government’s reform assembly to push for a ‘‘just, secure and happy society’’.
Its formation is seen by observers as a snub to Prime Minister Yingluck Shinawatra’s political reform initiative that kicked off in the absence of the opposition Democrat Party.
One of Part’s leaders, former core member of the People’s Alliance for Democracy (PAD) Somkiat Pongpaiboon, said yesterday the assembly believes the borrowing bill contravenes the constitution.
Mr Somkiat said the assembly will hold forums in 77 provinces nationwide to gather public input.
The bill, which authorises the Finance Ministry to seek loans totalling 2 trillion baht for infrastructure development projects, passed its third reading in the House of Representatives on Friday night by a vote of 287-105.
The bill is expected to be passed on to the Senate for deliberation by senators this week.
Thaweesak Sutakawathin, president of Nida’s teachers council, said government spending is regulated by budget laws, but the borrowing bill evades the regular budget procedure and the normal fiscal system.
He said the assembly does not oppose the development projects, but it was wrong for the government to manage spending by avoiding proper budget channels.
Pichai Rattanadilok Na Phuket, a lecturer at Nida’s school of social and environment development and one of the Part’s leaders, said the assembly has paid close attention to a wide range of issues covering politics, environment, and energy which affect the public.
The borrowing bill will have longterm repercussions for future generations, Mr Pichai said.
Mr Pichai said the reform assembly yesterday also discussed other issues including the rising cost of living, the amnesty bill, and the charter amendment bill.
The assembly is also monitoring the government-initiated reform assembly which has invited prominent figures to discuss ways to heal the political divide, Mr Pichai said.
Preeda Tiasuwan, head of the Businessmen for Democracy and Environment Club, said the executive and legislative branches are unable to address the country’s problems properly.
The People Assembly Reforming Thailand wanted to do its part.
Mr Preeda, chairman of Pranda Jewellery, stressed the need to decentralise power so people can determine their own future.
Land should be distributed to the landless poor, who can make better use of it.
It should not be kept in the hands of only a few.
Meanwhile, a Senate committee on monetary, fiscal affairs and banking has released a study on populist policies and public debt.
The study showed the Yingluck Shinawatra government’s populist policies have created a fiscal burden of more than 544 billion baht during the past year.
The policies include tax reductions for first-house buyers, which created a fiscal burden of 12 billion baht, a tax rebate for first-time car buyers, which led to a fiscal burden of 30 billion baht, a cut in corporate income tax, which created a burden of 52 billion baht.
The Democrats will today launch their ‘‘Thai Khem Khaeng 2020’’ national development master plan to challenge the borrowing bill.
Earlier, it announced its move to petition the Constitution Court to consider whether the bill violates budget control regulations in the charter.
Democrat spokesman Chavanont Intarakomalyasut said the Thai Khem Khaeng 2020 plan would serve as a model showing how money under budget laws could be better spent.
About 90% of the government’s 2-trillion-baht scheme will go on rail development, but under the Thai Khem Khaeng 2020 plan, money will be spent more broadly, on education, public health and transport.
Icouldn’t agree more with the Bangkok Post reader who said investment bankers might already be counting how much they stand to earn from the estimated 3.16 billion baht in interest on the 2.2-trillion-baht loan the government intends taking out.
The government intends securing the loan from foreign and local banks and other financial institutes to overhaul the transport system over the next seven years.
The loan would be repaid over 50 years, minus the first seven-year debt-servicing grace period.
Since the government will act as the guarantor for the Finance Ministry, which will sign the loan contracts with the lending banks, investment bankers can rest assured the enormous debt will be serviced with taxpayers’ money.
So, it didn’t surprise me a bit when Supavud Saicheua, of Phatra Securities, suggested the other day that the government should speed up implementation of the transport infrastructure projects, namely the high-speed trains and dualtrack rail system.
He said these projects would help cut logistics costs and ease travel for both passengers and freight. He warned, however, that the government must make sure the economic growth rate is kept at about 5%, or public debt could escalate.
In short, the transport megaprojects sound perfect, cost-effective and worthy of the investment, according to this investment banker.
Doubts raised by the opposition Democrats and Thailand Development and Research Institute, such as the lack of any feasibility studies on many of the projects and questions about their costeffectiveness, were overlooked, as if they were insignificant.
One interesting detail is that of the 2.2 trillion baht in borrowing, the largest share — 1.2 trillion baht — will go to the State Railway of Thailand (SRT) to overhaul the national rail network.
The big question is, can the SRT be trusted with such a large share of the money? A look at the track record of train derailments, the poor quality of services, huge operating losses and the shameful Airport Link says it all about the SRT’s trustworthiness.
I wonder whether an individual with the SRT’s track record, or one who walks empty-handed into a bank to apply for a loan, would even have his application considered.
A banker may argue the Finance Ministry is different from an individual because the former has a credible
Derailments, the poor quality of services, huge operating losses and the shameful Airport Link says it all about the SRT.
guarantor in the form of the government, which will ensure the loan will be repaid.
But does that mean a good guarantor is sufficient for a loan to be granted, even if the project itself might not be economically feasible?
Does that also mean good governance practice should not be applied if the borrower is a government agency?
As far as the high-speed train megaproject is concerned, there is a high likelihood the project will sustain a substantial operating loss. For instance, the train fare, which could be as much as that charged by low-cost airlines on the same routes, will not be affordable for most Thais.
Even middle-income earners who can afford a low-cost air fare may be reluctant to switch to high-speed trains if they have to pay so much.
Experts say a successful high-speed service would need multiple urban centres along the routes, a high per-capita income, and potential routes within a 100-500km radius. But the government’s project looks weak in all these areas.
The off-budget borrowing proposed will give the government more freedom in implementing the infrastructure projects and ensure continuity.
There is, however, a big loophole for this type of borrowing — that is the absence of any oversight of the spending to ensure there is no corruption, or that the money is used for the projects intended.
How manypeople knowthat thesouthern high-speed train route does not reach Padang Besar, enabling it to link to the Malaysian train system, but stops merely at Hua Hin? The northeastern route ends up at Nakhon Ratchasima and not Nong Khai, as originally planned. And it is still uncertain whether the northern route will end in Chiang Mai or in Phitsanulok.
How many people know that more borrowing will be needed after the first seven years to complete all the halffinished high-speed train lines?
Taxpayers and their children and grandchildren will have to service the debt for the next 50 years. How many more years will be needed if the borrowing has to be increased?
For taxpayers to service the debt created by the government may not be a problem if the government can be counted on as being transparent and accountable.
But the real problem is that the government lacks both transparency and accountability.
A glaring example is that the state-run NBT TV station operated by the Public Relations Department did not provide live coverage of the debate in parliament last week on the borrowing bill, despite the government’s proclamation that the infrastructure problems are the future.
How ironic is that? If the projects are billed as important to the country’s future, then the public has the right to know about them.
They shouldn’t have to rely on a onesided story from the government. The most convenient way to be informed is through watching the House debate. (The independent Thai PBS was the only station to provide live coverage of the debate).
Why muzzle the NBT?