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25 June 2022






In a nutshell many Overseas companies have tendered for Thailand infrastructure jobs like bridges, airport work, roading and railway contacts to name a few. Many of these companies do not read each word of the contracts and never understand the laws and ins and outs of what they are committing to let alone know full well that they may hit many brick walls in the process. In fact the tender process is prone to corruption, lacks arbitration, can be stalled by whatever means the government wishes to put into place has a floored Attorney general office x2 & can virtually exhaust ones energy due to amibuities of the process right to the attorney general signing at the end!!!! or court cases that can take up to 10 years to resolve.

If you think you can tender the answer is DON'T unless you are a Thai Joint venture or you can set aside a $1m fund in case of arbitration and court cases that may go against you on the way through. You will see only joint Thai/overseas companies who tender or Thai companies who tender. As at 2010 30% of all Government tender budget proposals are prone to political interference and corruption has increased to some 45% as at 2010.

PPP projects are mean't to implement and function, both public and private sectors have to work together to share roles and responsibilities in their respective positions. In some cases, contrary to the popular belief, government has a bigger role to play for making PPP projects successful. Experiences with PPP projects have not always been pleasant and there are numerous examples to substantiate this. Many PPP projects are either held up or terminated due to reasons such as wide gaps between public and private sector expectations, lack of government commitment, lengthy decision making process, poorly defined sector policies, inadequate regulatory frameworks, poor transparency, corruption, against the interests of the country or government -- just to name a few. Effective PPPs recognize that the public and the private sectors each have certain advantages, relative to the other, in performing specific tasks. The government’s contribution to a PPP may take the form of capital for investment (available through tax revenue), a
transfer of assets, or other commitments or in-kind contributions that support the partnership. The government also provides social responsibility, environmental awareness, local knowledge, and an ability to mobilize political support. The private sector’s role in the partnership is to make use of its expertise in commerce, management, operations,
and innovation to run the business efficiently. The private partner may also contribute investment capital depending on the form of contract.

PUBLIC Private Partnerships (PPPs) implemented on projects 1billion baht and over. But the Thai experience: Bangkok Elevated Transport System (BETS) in Thailand is one such example. BETS was conceived as a BOT-type PPP project -- a 60 km elevated rail system and a road through the heart of the capital of Thailand. Hopewell, the concessionaire, was granted the right to collect tolls for 30 years and to develop 900,000 square meter of land along the proposed route. This project was ultimately terminated by Thai government. Sudden changes requested by the government and the lack of governmental assistance in resolving the conflicts with a nearby competitive toll way were some of the causes identified as project failure and the other was the Government wanted a slice so changed the goal posts. With these things in mind for an Overseas company to try to bid is not a good idea in Thailand due to the lack of assistance and stumbling blocks which will appear as some persons interests are in jeopardy perhaps.

Bangkok’s BTS Skytrain (1999) or Bangkok Skytrain,

started 5th December 1999, and was a PPP project. Its an elevated rapid transit system serving downtown Bangkok. The line is 28.7 km with a further extension from On Nut underway in 2010 and supposedly financed from fare revenues with the Bangkok Metropolitan Authority providing all the right-of-way for free by allowing the line to be built over important arterial streets. With a price tag of over US$1.5 billion, which was to be purely privately financed,the project saw many international Companies vying their interest. With the dgree of nepotism existing in the Government political arena Foreigners are normally not counted or for some reason cannot fathom the paperwork. Tanayong Corporation, a Thai real estate company, won this 30-year concession. partly because it had offered the lowest fare —12 baht (increased to 15 baht in 1992 after negotiations began). Tanayong started a separate company (usually the norm), called the Bangkok Mass Transit System Public Company Limited (BTS), to build the system and own the concession. The concession contract provided for fare increases every 18 months thereafter with the increase in consumer price index.
There were also provisions for increases in the event of exceptional circumstances, including major changes in foreign exchange rates.Project implementation was far from smooth: there were lengthy disputes over the site of the train depot, going underground or remaining elevated, as well as location of support pillars. Financiers for the projects grew to include Siemens, the German government’s international development bank, a syndicate of Thai banks, as well as the International Finance Corporation, the World Bank’s private sector lending arm. The Asian financial crisis and the Thai baht devaluation hit the BTS hard as many foreign loans, construction and equipment costs were in foreign currency, while its revenues were primarily in baht. A controversy over fares that BTS could charge had to be brought before an arbitration panel. And all these were before Skytrain opened for service in December 1999 (at fares ranging from 10 to 40 baht), some three years later than as stipulated in the 1992 concession contract (Perez 2004). While fare revenue has been sufficient to cover operating costs, the ability of BTS to service its substantial construction debt remains a source of continuing concern.

But Thailand is can be a trap for the unwary traveller so be careful wherever you go.



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