Thailand uses public-private partnerships to fast-track transport construction projects

Recognising the need to tackle infrastructure deficiencies as part of plans to develop high-value industries and meet growing tourism demand, the government has shifted its construction targets from power and utilities to transport infrastructure. Indeed the government’s five priority areas for construction work between 2015 and 2022 target various modes of transport, specifically urban connections, rail links, the upgrading of airports, the expansion of seaports, and extending and improving the road network.

In addition to addressing the ever-evolving goals of attracting investors and improving the business environment, the transport initiatives are in part driven by the desire to stay competitive in the ASEAN Economic Community by becoming a major logistics hub that will serve the entire bloc.

Transport Focus

In 2017 Thailand pursued 36 infrastructure projects worth over $25bn, and late in the year the government said it would initiate BT1.5trn ($43.4bn) worth of additional projects over the next 12 months. Transport is at the top of the agenda for both businesses and residents. The Ministry of Transport’s infrastructure development plan calls for ongoing expenditure of BT103bn ($3bn) in 2018. Under the programme, light rail projects are being pursued in Phuket, Chiang Mai, Nakhon Ratchasima, Khon Kaen, Phitsanulok and Udon Thani. The Phuket light rail will run 60 km, have 23 stations and cost BT24bn ($694.7m). The Chiang Mai light rail will cover more than 75 km and cost BT107bn ($3.1bn). Other projects likely to commence in 2018 include a highway connecting Bangkok and Mahachai, improvements to the airports in Krabi and Khon Kaen, and the building of a dry port at Khon Kaen.

Also planned or already under way are new and extended routes for Bangkok’s rail and subway system, the double-tracking of existing rail lines, and expansions and upgrades at the Suvarnabhumi, Don Mueang and Chiang Mai airports (see overview).

Implementation

The rate of project implementation has been inconsistent in recent years. According to a February 2018 report by the National Economic and Social Development Board, 15 out of 21 projects outlined in the 2016 Transportation Action Plan were under construction that month.

The plan for 2017 included 34 projects. In early 2018 one was complete, two were under construction and one was in the bidding process. Bids were being prepared for two additional projects, while the Cabinet was still considering 13 projects, 10 were being pitched to the public-private partnership (PPP) committee and five were still subject to feasibility studies.

PPP

One method for large-scale construction is via the PPP model. In addition to transport, Thailand’s PPP Master Plan 2015-19 targets investment in telecommunications, irrigation systems for agriculture, waste management, educational facilities, hospitals, convention centres and scientific infrastructure. However, the country’s PPP structure is complex and finalising a deal is often a lengthy process, posing a challenge to securing investment. Efforts have been made to address these concerns. The Act on Private Investment in State Undertaking 2013, also known as the PPP Act, was updated in 2016. A fast-track system was implemented, with the goal to reduce approval time from just over two years to about nine months.

In March 2017 the PPP committee said that it would fast track six projects worth nearly BT600bn ($17.4bn). These are the Purple Line rail extension in Bangkok, running from Tao Poon to Kanchanaphisek Ring Road and valued at BT131.2bn ($3.8bn); the construction of the capital’s Orange Line (BT195.6bn, $5.7bn); the rail line connecting Phuket International Airport to Chalong (BT39.4bn, $1.1bn); the Nakhon Pathom to Cha-am highway (BT80.1bn, $2.3bn); the Bangkok-Rayong high-speed rail (BT152.5bn, $4.4bn); and a mass-transit rail system in Chiang Mai, to which no cost was given at the time of the announcement.