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Friday , February 22 , 2008

Question about Samak's Government financing mega-projects

Posted by Tawan , Reader : 955 , 14:49:46

I have a question about the financing of the Samak’s Government 500 Billion Baht mega-projects. The news reports that foreign participation is required to finance the mega-projects and thus the Finance Minister Dr. Surapong needs the capital controls to be lifted. My question is what does foreign participation mean and how is it financed? Surely, the financing of the mega-projects does not mean the traditional raising of taxes to pay for the municipal bond debt or will the return on investment in the infrastructure be enough without raising taxes? Does foreign participation mean loans from the IMF or World Bank? Exactly who will provide the loan? Or does foreign participation mean investors? Will the financing require municipal bond Wraps from monoline insurers like Ambac Financial Group allowing the bonds to be sold in the global marketplace? If so given today’s investment climate, which investor would be interested after Moody’s and others downgraded to negative watch 170,000 munis in the USA alone. Maybe, foreign participation was defined somewhere and I missed it. I would like to see the mega-projects successful just curious about the details.

I have a question about the financing of the Samak’s Government 500 Billion Baht mega-projects. The news reports that foreign participation is required to finance the mega-projects and thus the Finance Minister Dr. Surapong needs the capital controls to be lifted.

My question is what does foreign participation mean and how is it financed?

Surely, the financing of the mega-projects does not mean the traditional raising of taxes to pay for the municipal bond debt or will the return on investment in the infrastructure be enough without raising taxes?

Does foreign participation mean loans from the IMF or World Bank? Exactly who will provide the loan?

Or does foreign participation mean investors? Will the financing require municipal bond Wraps from monoline insurers like Ambac Financial Group allowing the bonds to be sold in the global marketplace? If so given today’s investment climate, which investor would be interested after Moody’s and others downgraded to negative watch 170,000 munis in the USA alone.

Maybe, foreign participation was defined somewhere and I missed it. I would like to see the mega-projects successful just curious about the details.

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comment 10
Tawan date : 27/02/2008 time : 06.29
http://blog.nationmultimedia.com/tawan3

Khun Dalmasian,
Thank you for your comment.
Interesting you have experience in megaprojects in Asia. The only experience I have had came from a very nice Swiss Engineer who helped design the Sky Train in Bangkok. He was kind enough to give me a copy of the final proposal to help with my school project. He is now retired in living in America.
At this time we ordinary Thais can keep asking questions to keep the issues on the front page of the world press and with help from our foreign friends things will improve.

comment 9
Dalmasian date : 26/02/2008 time : 23.22

Khun Tawan, the amount being floated now is Baht 700 Billion instead of the original Baht 500 Billion. having been involved with private and government engineering projects of various sizes in my career, I am very sure that this amount wil continue to escalate upwards until the day all of the projects are finally completed.

My guess is the grand total amount will not be less than Baht 1,200 Billion to Baht 1,500 Billion at that time (maybe more). Of course about 30% of te final amont will represent various "leakages" and these mega-projects will surely create more billionaires and millionaires than you and I would care to count among those officials who are involved in granting the contracts and selecting the equipment and supplies for the projects.

Who is going to provide financing? The Thai people, that's who. It really does not matter whether the government gets foreign development banks' loans, suppliers' credits or issue more bonds to raise the money up front, the end result will be the same. Thai people and their children, grand children and their great grand children will be left holding the bag long after the corrupt officials disappear from the face of Thailand and hide/relax with their millions and billions in Australia, New Zealand, UK, USA, etc.

It is most sad for anyone to think about the situation here, but who am I to say anything? I am just a poor and powerless farang in a sea of Thais who don't care and/or don't want to do anything to improve the situation in their own country, and you may be just one of these people if you do not take any actions to help your own country.

comment 8
PasaNINJA2499 date : 25/02/2008 time : 00.29
http://blog.nationmultimedia.com/PasaNINJA2499
Keep walking forward. Don't give up. Don't fed up.

comment 7
Tawan date : 23/02/2008 time : 09.29
http://blog.nationmultimedia.com/tawan3

Khun Dalmasian, well with half billion baht possiably going to the Northeast, it has naturally peaked my interest.

comment 6
Tawan date : 23/02/2008 time : 09.04
http://blog.nationmultimedia.com/tawan3

Vodcast very good on policy summary. I was looking for a little more detail. As much as I hate to will have to research further starting with the Ministry of Finance.

comment 5
Tawan date : 23/02/2008 time : 08.55
http://blog.nationmultimedia.com/tawan3

Thank you Khun Pasa.

comment 4
PasaNINJA2499 date : 23/02/2008 time : 02.49
http://blog.nationmultimedia.com/PasaNINJA2499
Keep walking forward. Don't give up. Don't fed up.

http://blog.nationmultimedia.com/vodcast/2008/02/22/entry-1

comment 3
PasaNINJA2499 date : 23/02/2008 time : 02.47
http://blog.nationmultimedia.com/PasaNINJA2499
Keep walking forward. Don't give up. Don't fed up.

Tawan, I've read your blogs twice....
But my tiny brain can't help me find any answers. ^^
but I found the related news on vodcast. It would be useful

http://blog.nationmultimedia.com/vodcast/2008/02/18/entry-1

comment 2
Dalmasian date : 23/02/2008 time : 00.47

Tawan, why are you asking all these questions? I thought you already have an MBA or DBA from Wharton School of Finance? Or is it Sam Houston University where Toxin received his doctorate degree in "how to be a mother of all criminals without other people knowing about it until it's too late?"

comment 1
Tawan date : 22/02/2008 time : 15.52
http://blog.nationmultimedia.com/tawan3

I just read the answer here. The Japan Bank for External Cooperation will be providing Thailand with a soft loan for the Subway. Thank you Nation's staff.

Japan also promised to start investing in Thailand again. You can always count on the Japanese.
Looks like the Samak Government is on the right track. Glad to see Thailand will not be joining the repackaged debit schemes.

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