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Dr Anthony Diller
Etymologically Krung Thep (Thai for 'Bangkok') and Los Angeles may each be a 'city of angels' but urban dwellers looking heavenwards are apt to see only elevated expressways. Aeroplanes are almost as rare as angels.
Angel Air, Thailand's budget carrier, has left passengers grounded and upcountry runway contracts have been abruptly downsized or cancelled. While air travel malaise can easily be blamed on global factors, some of the nation's administrative-managerial ills seem to be locally induced.
Delays in a major southeastern expressway illustrate the structural issues that are of concern to Prime Minister Thaksin Shinawatra and to BBCD, the 80 per cent foreign-capitalised joint-venture engineering-construction consortium that has now completed the expressway.
A flashback to before the Asian currency crisis recalls ambitious infrastructure initiatives. Among them, transport was to be improved between Bangkok and the rapidly-developing southeastern seaboard, already a burgeoning recreational-industrial complex. The Expressway and Rapid Transport Authority (ERTA) was given the task of tendering construction for 55 km of elevated highway to be built over the top of an older multi-lane road. This pre-existing under-way was controlled by the Highway Department (HD). This up and down bureaucratic differentiation may have seemed inconsequential in the planning stages, since ERTA and HD are both ultimately answerable to the Minister of Interior.
Note, however, the historical tendency of Interior, especially under coalition governments, to fall into hard-to-coordinate subdivisions. Given Thai politics, Interior units often go to different political and/or economic interests. Perhaps of related relevance is the fact that the long-delayed southeastern expressway construction contract was signed only hours before a major government changeover.
Ensuing Interior redistributions brought a popular politician ('Ms S.') in as Deputy Minister in charge of transport. Although known both for charisma and tough management, she found the ERTA-HD relationship problematic. According to the Thai press, low-road HD stalled in granting high-road ERTA the right of overway, and the Deputy Minister took nearly a year to resolve the issue.
Meanwhile for BBCD, bureaucratic delay meant down-time and extra costs. However BBCD's lawyers had been alert, ensuring that hefty penalty payments were specified in the official, albeit hastily-signed, contract. Compensation would go to BBCD in just the sort of delay situation that actually transpired.
Thaksin has now reacted with consternation to the contract's fine-print, finding ‘devil in the detail’. The right to establish penalty liability was given to an engineering consulting firm close to BBCD. This firm has come up with a bill of over 6 billion baht - about a million A$ for each day of delay throughout eleven months. This penalty represents a hefty quarter of the entire 25 billion-baht expressway contract.
Thaksin has been reported as saying that the expressway penalty matter is no laughing matter - not ‘sanuk’. An Arbitration Court recently ruled in support of the huge payout to BBCD, but Thaksin refuses to pay. Instead, BBCD will need to wait for legal appeals and perhaps for the outcome of a Counter-corruption Commission investigation.
Thaksin's lack of ‘sanuk’ is partly due to the backgrounds of two key coalition identities:
1. The Deputy Leader of the New Aspiration Party (NAP), a close partner in government, is none other than the former Director of ERTA.
2. The current Deputy Leader of Thaksin's own Thai Rak Thai (TRT) Party is none other than 'Ms S.', the responsible Deputy Interior Minister during the expressway stall. She now holds the Ministry of Public Health portfolio and is experiencing slowdowns and conflicts even worse than those she had in transport.
In what the Thai press calls a 'duel on the expressways', 2. has pointed to 1.'s role in the ERTA/HD bureaucratic quagmire, while 1., or rather 1.'s high-profile daughter, has publicly shot back. Hardly ‘sanuk’ for Thaksin as he contemplates closer TRT-NAP ties.
WATCHPOINT: As new political configurations take shape with the opening of parliament in February 2002, will coalition politics, public-service procedures, and judicial-system rulings expedite infrastructure investment or will 'angel' investors fear to tread on bedevilled project sites?
About our company:
AFG Venture Group is an Asia and Australia based corporate advisory and consulting firm with over 20 years experience in creating alliances, relationships and transactions in Australia, South East Asia and India; including a 15 year history of corporate and equities advisory in Australia, undertaking merger, acquisition, divestment, fund raising and consulting for private and public companies.
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