The Asian Development Bank (ADB) has suggested that the reform of state-owned enterprises (SOEs) could be undertaken alongside public investment, especially in regard to the State Railway of Thailand, whose reform could take place in parallel with the construction phase of the six dual-track rail routes.
The military-led government said last year that it was close to finalising the contract-signing process and hoped to commence the construction phase of planned transport-infrastructure projects for land, air and sea worth Bt68 billion combined by the first quarter of this year.
The Transport Ministry is expected to invest about 31 per cent of the Bt68 billion on rail projects in Bangkok to reduce road traffic, and on rail projects nationwide including standard-gauge railways, connections between provinces and double-tracking.
Construction of the six dual-track rail routes was expected to start last year, but so far no tangible progress has been made.
Meanwhile, the ADB has lowered its 2015 growth projection for the Kingdom's gross domestic product from its December prediction of 3.9 per cent to 3.6 per cent currently, mainly because the recovery in merchandise exports is slower than expected.
"The dual-track railway project is nothing new and it was approved two or three governments ago, but there has been no implementation. This is the first piece of investment that should be looked at, alongside the reform of the State Railway of Thailand," Luxmon Attapich, the ADB's senior economist for Thailand, said yesterday after the release of the bank's "Asian Development Outlook 2015".
"They could be undertaken together right away, since the State Railway of Thailand knows that it has to change, knows what to do - and the investment would add some capital to the economy almost immediately," she explained.
Luxmon said well-designed public-service programmes executed through SOEs would continue to act as an effective stimulus for the economy. The effectiveness of SOEs is, therefore, crucial and the ADB is working with the Finance Ministry to lay the regulatory foundations for the Public Service Account (PSA) in order to increase the level of transparency within state enterprises, she said.
"With the PSA, the government will be able to find out how much each SOE project would cost in order to compare it to the benefits that they think it would create, and the PSA could truly calculate how much compensation the government really has to spend," she said.
Besides cutting its economic-growth target for the year, the ADB has lowered its forecast for Thailand's export expansion from 3-4 per cent to 1-2 per cent. This is because merchandise exports declined by 3.5 per cent in January and, while shipments of manufactured goods rose, exports of commodities remained weak.
Thai merchandise exports contracted by 0.3 per cent last year.
The development bank said the tourism sector and government spending could be the heroes for the Thai economy this year, as the recovery of domestic consumption has remained weak because of high household debt and there are risks that the export sector could worsen from a possible deepening of recession in Russia and slower-than-expected growth in China and other major trading partners.
The ADB said the tourism sector, with its long supply chain, could support the service sector, which accounted for 40 per cent of GDP.
It also expects government spending on investment to increase by 7.5 per cent this year after a contraction of 6 per cent in 2014, while private consumption is expected to expand by around 2.5 per cent, compared with meagre growth of 0.3 per cent last year.
Luxmon said it would be hard for the military government to reach its target budget-disbursement rate of 90 per cent this year, and that a rate of around 80-82 per cent would be more realistic.
Industrial sentiment down
Meanwhile, the Federation of Thai Industries (FTI) yesterday reported that the Thai Industries Sentiment Index (TISI) had dropped for a second consecutive month.
The sentiment of industrial operators - and of small and medium-sized enterprises in particular - has apparently fallen because of the slowdown in domestic consumption brought on by people's reluctance to spend and weak purchasing power.
The TISI declined from 92.7 points in December to 91.1 points in January, followed by a further fall to 88.9 points last month, with 100 being the base point.
FTI chairman Supant Mongkolsuthree has been urging the government to accelerate public spending since January, after poor budget-disbursement performance in the first fiscal quarter of 2015, which ended in December. He made the point again yesterday, urging the government to hasten its spending and investment projects to support the fragile economic recovery.