The Nation
Bangkok
Saturday, November 15, 2003

Road loans to help poor neighbours
by Supalak Ganjanakhundee

In an attempt to turn Thailand into a Southeast Asian investment oasis,
Prime Minister Thaksin Shinawatra has committed to providing at least Bt10
billion annually to develop roads in Burma, Cambodia and Laos.

He expects the plan, which he considers a Thai version of Japan's Overseas
Economic Cooperation Fund (OECF), to be a powerful tool in transforming
troubled border areas into vibrant economic zones.

The fund was created in 1995 by Foreign Minister Surakiart Sathirathai,
when he was finance minister in the Banharn Silpa-acha government.

At that time, the Export-Import Bank played a key role in injecting money
into many development projects in neighbouring countries, including
billions of baht in loans for a modern airport in Mandalay.

The 1997 financial crisis forced Thailand to abandon those development
projects.

Surakiart revived the idea when he initiated his economic cooperation
strategy.

But the foreign minister added a political element to the scheme, one which
presented Thailand's billionaire premier as a knight in shining armour
riding to the rescue of poor neighbouring countries.

Kitti Limskul, the finance vice-minister, said the Cabinet recently
endorsed the establishment of a public organisation to run Thaksin's OECF,
which would arrange export credit for neighbouring countries that would
allow them to buy Thai goods for their development projects.

Hundreds of projects were queued up for financial support last week when
Thaksin unveiled the fund at a summit with Burma, Cambodia and Laos. The
Ayeyawady-Chao Phya-Mekong Economic Cooperation Strategy summit was held in
Pagan on Tuesday and Wednesday.

Kitti said the government expected to allocate between Bt8-9 billion
annually to finance projects in the three countries. Two road projects in
Laos and Cambodia have already been financed by the fund, he said.

The government signed an agreement with Vientiane in October last year to
extend a Bt1.3 billion soft loan to finance a road constructed to link Laos
with northern Thailand and south-west China. The 30-year loan includes an
interest exemption for the first 10 years and 1.5 per cent interest for the
rest.

Thailand, China and Laos have theoretically agreed to share the US$100
million (Bt4 billion) cost of constructing the 250-kilometre Bokeo-Bohan
road in northern Laos. But Vientiane has, in fact, to borrow from Thailand
and China. Chinese engineers are now surveying the road.

The Thai fund also financed construction of the 153-km road in Cambodia
linking Trat province with Koh Kong's Serei Ample district.

Kitti said the government is considering a Burmese request to provide Bt300
million to construct a road linking Mae Sot to the Burmese town of Pa-an.
The initial deal was made during the visit of Burmese No 2 Vice Senior
General Maung Aye in April.

The 160-km road is part of an ambitious plan to turn Thailand into a
regional link for the transport of goods and passengers from India to
Vietnam.

Under the project, which was suspended when border skirmishes erupted after
Maung Aye's departure, Thailand would provide grant aid worth Bt80 million
to upgrade the first 18km of the road from the Thai border.

Warmer relations between Thaksin and Khin Nyunt this year returned the
project to the spotlight.

The details, which have yet to be hammered out, include developing Burma's
southern port of Tavoy to facilitate goods shipment from western Thailand
through the Andaman Sea.

Thailand is also drafting two agreements to finance the construction of a
49km road from Huay Kon to Pak Beng in northern Laos and a 3.5km railway
from Nong Khai to Vientiane's Tha Nalaeng district.

An official at the foreign ministry said Bt870 million would be allocated
for the road and Bt197 million for the railway.

Thirty per cent of the total will be extended as grant aid and the balance
as a soft loan, with 1.5-per-cent interest over 30 years. The assistance
was conditional of Thai firms taking a leading role in construction. The
financial pact was to be signed by the end of this month, he said.

All these road projects would allow Thailand to transport exports if the
economy keeps growing. Thai construction firms will benefit from the
scheme, but neighbouring countries borrowing money will have to pay for at
least 30 years.[End]

**********************************************************
All parties are allowed to post, Camnews does not restrict political
speech.

To subscribe to or unsubscribe from camnews, please email
to camnews-request@cambodia.org with the word "subscribe"
or "unsubscribe" (without the quotes) in the subject line.

For discussions, please subscribe to camdisc-request@cambodia.org
**********************************************************