Government to launch infrastructure fund, upgrade roads

infrastructure5The Finance Minister told reporters last week that the government will launch an infrastructure fund next year so domestic and foreign investors can invest in the country’s massive infrastructure upgrade, as the Department of Highways said it will spend nearly $60 billion over the next 20 years to upgrade the motorway network, with multiplier effects to the economy expected to be worth $160 billion.

Thailand is planning roughly $2.8 billion in investments in various types of infrastructure, mainly transport and water-related, and the government of Prime Minister Prayut Chan-o-cha has said it will use a Public-Private Partnership (PPP) approach to funding. China and Japan have already been negotiating to build some of the rail lines and European nations have also expressed interest in participating.

The infrastructure fund, which will be named the Thailand Future Fund, would also present the Thai public with an opportunity to invest in the projects and reap returns while supporting the country’s development. But Finance Minister Apisak Tantivorawong said the bulk of the investment in the fund, also to be valued at $2.8 billion, would come from institutional investors, both domestic and foreign, as they have the capacity for such large investments.

The fund will be similar to an infrastructure fund under a previous administration called the Vayupak Fund, which offered a minimum 3 percent return on investment. The minister did not, however, disclose proposed returns or terms of the new fund, except to say he expected that there would be a guaranteed return and a package of tax exemptions or deductions on dividends. Apisak said details of the new fund would be announced within a matter of weeks.

infrastructure6“Next year, as Deputy Prime Minister Somkid Jatusripitak has said, will be Thailand’s year for investment and the fund will be used to support our proposed investments,’’ Apisak said.

Peerapong Jirasevijinda, managing director at BBL Asset Management, said the Thailand Future Fund is the right concept as foreign investors, particularly from China, Japan and India, are looking to invest in infrastructures projects in region. He said the rate of return needs to be around 5 percent to 9 percent to be more attractive than other funds in the region.

Separately, the Department of Highways said last week it would also use a PPP model to fund its 20-year plan to further develop the country’s motorway network. The development plan for 2016-36 will cover 21 routes with a combined length of 4,108 miles.

“The plan is aimed at serving higher demand for travel and logistics transport, especially for tourist destinations and cross-border areas,” said Anon Luangboriboon, deputy director-general of the Highways Department.
The motorways would be designed to bolster connectivity with the region and be compatible with the planned rail networks, while also easing traffic congestion, especially around urban