Project Funding For Infrastructure Development in Bangkok Infrastructure Development in Thailand: The Way Forward Sun Vithespongse Deputy Director-General Public Debt Management Office (PDMO) MINISTRY OF FINANCE January 31, 2007, Shangri-La Hotel

PI/GDP projected to be around Public Sector Investments % Billion Baht Ongoing 205 218 258 Planned Megaprojects Crisis PI/GDP 11.6% PI/GDP projected to be around 6-8% in 07-09 This diagram gives you the overall picture of public sector investments between 1994 - 2005 and should assure you of Thailand’s capability of investing in Megaprojects in the next 4-5 years. Let me start at the crisis year in 1997, total public investments was at around 550 billion baht as indicate by the blue area. Due to the aftermath of the crisis, public sector investments decreased as a result of government resources being diverted to the rehabilitation of other sectors of the economy, in particular the financial sector. In the next five years however, public sector investments will increase significantly and will peak at nearly 800 billion baht due to the aforementioned megaprojects plus the ongoing megaprojects (projects that were large enough to be classified as mega but were implemented before 2005). In addition, we have made the assumption that other projects are worth around 200 million baht annually over the next five years. The red curve shows the public sector investments as a percentage of GDP, you can see that it peaked in 1997 at nearly 12% in comparison to less than 10 percent during Megaprojects years Other Investments =200 BNTHB P=Preliminary E=Estimates Source: BOT, PDMO

Financing of Megaprojects Borrowing External Domestic (Bond market) Securitisation Public-Private Partnership (PPP)

External/ Public Debt % Public Debt/GDP: 41 % FX Reserves: 62 US$ BN External Debt: 58 US$ BN Source: BOT, PDMO

Financing Strategy For Mass Transit Basic Infrastructures (Civil works/ Depots/ Stations/ Tracks) Financed by the Government International Competitive Bidding (ICB) Rolling Stocks/ Signaling/ E&M Encourage private participation in the form of Public-Private Partnership (PPP)

Financing Strategy For Mass Transit (Cont.) Financing Sources Unit: Billion Baht Lines Budget JBIC Domestic Loans PPP TOTAL 1. SRT, MRTA - Blue 11.3 33.9 17.2 73.6 - Purple 4.9 20.6 6.9 13.4 45.7 - Red 3.8 30.2 19.9 - 54.0 20.0 84.7 38.1 30.5 173.3 2. BMA External Loans - Light Green 1.4 13.5 7.3 22.2 - Dark Green 1.6 13.2 7.9 22.6 3.0 27 15.2 44.8 TOTAL (1+2) 23.0 149.4 218.1

Financing Strategy For Mass Transit (Cont.) Unit: Billion Baht   Civil Works Rolling Stock Blue 52.5 17.2 Purple 29.2 13.4 Red* 44.2 9.8 Light Green 14.9 7.3 Dark Green 14.7 7.8  TOTAL 165.4 45.5 Civil Works : Government – Budget (16%), Loans (84%) Rolling Stocks : PPP Remarks: * Government plans to finance both civil works and rolling stocks for the Red line

Issues of Concerns Bond Market Development Market size : 4,085 Billion Baht (50% of GDP) at the end of 2006 Total trading value : 6,955 Billion Baht in 2006 2nd Domestic Bond Market Development Plan Primary market development : benchmark bonds issuance Secondary market development Market infrastructure development : securitisation promotion

Issues of Concerns (Cont.) Public-Private Partnership Process/ Arrangement Enabling Environment Instruments/ Supporting Methodologies Institutions to Coordinate & Oversee PPP activities

Issues of Concerns (Cont.) Securitisation Waived SPV income tax Eliminating related problems such as legal framework and accounting standard Can be used to lower borrowing costs of the PPP projects

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