12-10-2023 (BANGKOK) A recent World Bank study emphasizes that secondary cities in Thailand, beyond the capital of Bangkok, can serve as engines of growth, but to do so, they must explore avenues to access private capital to bolster urban infrastructure. While Bangkok has long been the epicenter of economic growth, emerging cities like Chiang Mai, Khon Kaen, and Rayong hold the potential to foster economic development through investments in mass transit systems, renewable energy, and other urban infrastructure improvements.
The report, titled “Thailand Urban Infrastructure Finance Assessment,” underscores the necessity of these investments to bolster the nation’s competitiveness and resilience in the face of a changing climate.
Funding for such essential investments should not be solely reliant on central government budgets, suggests the report. Instead, secondary cities should consider options like municipal borrowing and public-private partnerships. The study, prepared in collaboration with the Programme Management Unit on Area-based Development (PMU-A) and Khon Kaen University, highlights the significant benefits that urban growth can bring to both city dwellers and the wider population, such as enhanced transportation, electrification, market access, education, and healthcare services.
Solid waste management, improved water and wastewater systems, and heightened environmental resilience against floods and droughts are among the additional advantages of robust urban infrastructure. However, the report stresses that secondary cities must gain the ability to attract investors and lenders independently, preventing undue strain on national government fiscal resources.
While decentralization legislation was introduced in the 1990s, Thai cities and local governments still heavily depend on the central government for infrastructure investments. To promote local fiscal autonomy, municipalities should develop creditworthiness and borrowing capacity based on their existing tax bases and operating surpluses. The report calls for a “paradigm shift” that would empower secondary cities with the authority, tools, and expertise to finance local infrastructure.
Key recommendations include articulating a national strategy to draw private investments into public infrastructure projects, as well as establishing government units to oversee and support local infrastructure initiatives and planning. By enabling secondary cities to control revenue streams, Thai authorities can foster innovation, accountability, and responsiveness to community needs, resulting in more resilient and self-reliant urban areas.
The study evaluates the feasibility of project proposals in five Thai cities: Chiang Mai, Rayong, Nakhon Sawan, Khon Kaen, and Phuket. It also delves into the policies and institutions governing how city authorities manage their finances, including mechanisms for raising capital to support infrastructure investment. Deputy Director of Corporate Planning at PMU-A, Poon Thingburanathum, underscores that municipal borrowing and public-private partnerships offer a reliable path to urban infrastructure development and emphasizes the need for a concerted national effort to attract private sector capital for these vital projects.
