Thailand: Govt to invest B150bn in water management
Posted by Labels: Infrastructure, Thailand, Water Issues
(Bangkok Post) Thailand will invest at least 150 billion baht in water management infrastructure programmes over the next 12 months, deputy premier Kittiratt Na-Ranong says.
Mr Kittiratt, speaking yesterday following his return from the World Economic Forum in Davos, Switzerland, said a total of more than
350 billion baht would be invested in water management programmes.
Infrastructure improvements for the Chao Phraya and eight subsidiary river basins would cost 300 billion baht, with the remaining 50 billion earmarked for 17 other river basins across the country.
An emergency decree to help finance the infrastructure investments took effect on Friday following publication in the Royal Gazette.
The decree authorises the government to borrow up to 500 billion baht through to June 2013 to cover water management and infrastructure investments.
Another decree approved on Friday calls for the creation of a 50-billion-baht insurance fund to help provide flood insurance coverage to households and companies.
Flood insurance has become significantly more expensive or just even unavailable in the wake of last year’s Central Plains deluge. The new fund is aimed at helping local insurers continue coverage by sharing in potential risks.
Mr Kittiratt said a number of leading international insurers had expressed interest in participating in the public insurance fund programme.
”We have yet to discuss premium rates, but I am confident that premiums are unlikely to increase, as the government is moving forward with infrastructure improvements to ease the threat of flooding,” he said, adding that the 50-billion-baht fund is sufficient to cover insurance coverage of up to 1 trillion baht.
Thailand suffered the worst flooding in over seven decades last year, with more than a third of the country inundated and economic losses estimated at well over 1 trillion baht.
The floods heavily disrupted manufacturing activities in Ayutthaya, Pathum Thani and Nonthaburi provinces, as well as Bangkok, affecting supply chains at a global level for companies such as Western Digital, Canon, Toshiba and Honda.
But Mr Kittiratt said business activity and confidence should recover quickly, given the steps planned by the government to mitigate the impact of future floods.
He reiterated that the need for investment was critical and justified the use of emergency decrees for financing.
The opposition Democrat Party and a group of senators are expected to file a challenge against the decrees with the Constitution Court this week under the argument that the charter reserves the use of decrees only for time-sensitive issues related to economic or national security.
The lengthy time required for planning, vetting and executing large infrastructure programmes means that the funding requirements would be better planned through the annual budget process, critics say.
But Mr Kittiratt insisted that taking steps to prevent future floods does represent a genuine emergency.
”I am confident that the decrees will stand up, as it is something of utmost importance,” he said.
In addition to the decrees authorising new loans and establishing a flood insurance fund, a third will set up a low-interest loan programme to support rebuilding by flood-affected companies and households.
But the fourth decree is possibly the most controversial, as it transfers responsibility for 1.14 trillion baht in debt from the 1997 economic crisis from the Finance Ministry to the Financial Institutions Development Fund. The shift will free up some 65 billion baht a year in budget funds and give the government leeway to take on new debt to finance its investment programmes.
Mr Kittiratt said business executives and policymakers at the World Economic Forum remained uncertain about economic trends and how best to resolve the European debt crisis.
The uncertainties about the Euro zone will continue to weigh on the financial markets, at least for the next several months,” he said.
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