BANGKOK, Sept 10 – The government’s Bt2 trillion investment in mega projects will be the potion to stimulate growth, both Thailand’s and in the wider region, a senior Thai official said today.
Ekniti Nitithanprapas, deputy director of the Fiscal Policy Office (FPO), said the Bt2 trillion borrowing will put Thailand’s public debt at 44 per cent of gross domestic product (GDP) – a volume which can be handled within the financial discipline framework.
Speaking at a seminar on investment in Thailand, he said the country’s economic growth this year was predicted at 3.8-4.3 per cent given volatile global capital market and political uncertainty in the kingdom.
In the long run, the government will have to change Thailand’s export structure with an emphasis on the CLMV group which includes Cambodia, Laos, Myanmar and Vietnam, he said, adding that Thailand’s first year of trading with the group saw an overall exports 8 per cent higher than with the European community.
Trading with the CLMV group will help cushion the global economic volatility while the public sector should invest in infrastructure to connect Thailand with countries in the region, he said.
Regional connectivity will boost Thailand’s efficiency in the long run and contribute to rural development, said Mr Ekniti, adding that the government has so far reduced public investment from 10 per cent to only 5 per cent – diminishing the country’s efficiency and the country’s revenue.
“The bill on Bt2 trillion loans, if passed by Parliament, will be the major driving element for Thailand’s economy and strengthen foreign investors’ confidence on Thailand,” he said.
“If the government does not invest, the country’s GDP will shrink. Public debt against GDP will increase even though the government does nothing.”
Mr Ekniti said strengthened US and Japan economies would contribute to economic growth in the future while Thailand’s tourism has enjoyed a satisfactory expansion of 20 per cent each month, and at 28 per cent in August.
The low unemployment rate, and strong public and private financial status are positive factors for investment in infrastructure projects, he said.
Smith Panomyong, executive vice president of Siam Commercial Bank, said household debt, whether from houses, cars or personal loans, has increased while the Thai economy overall remained volatile due to sliding exports.
The Thai economy will grow by only 2.2 per cent in the fourth quarter, he said, adding that savings in the banking system in the last 6-7 months expanded by only 3 per cent.
This year’s total savings would possibly expand by 7-8 per cent, or more than Bt13 trillion, a decrease from last year’s growth at 11-12 per cent, he said.