Easier access to capital will help cities outside Bangkok become metropolises: World Bank
Cities outside Bangkok can contribute to Thailand’s growth but will require access to private capital to improve their infrastructure, the World Bank said.
This comment was part of the “Thailand Urban Infrastructure Finance Assessment” report released on Friday. The study was conducted jointly by the bank’s Program Management Unit on Area-Based Development (PMU-A) and Khon Kaen University.
The report examines the viability of project proposals in five Thai cities, namely Chiang Mai, Rayong, Nakhon Sawan, Khon Kaen, and Phuket. The report also discusses policies and institutions that govern how city governments manage their finances, including raising capital for infrastructure investment.
Bangkok, according to the report, has long been the hub for Thailand’s economic growth and productivity. However, as that growth slows, cities such as Chiang Mai, Khon Kaen, and Rayong may pick up the slack with investments in mass transit systems, renewable energy, and other urban infrastructure, which will be critical for Thailand's competitiveness and ability to adapt to a changing climate.
Fabrizio Zarcone, World Bank country manager for Thailand, said that cities outside Bangkok cannot rely solely on central government budgets to improve their own infrastructure in order to maintain the country's efficiency.
Instead, he suggested, they should consider municipal borrowing and public-private partnerships.
“As Thailand strives for sustainable urban development, local fiscal autonomy emerges as a vital pillar. Enabling cities to generate and control revenue streams fosters innovation, accountability, and responsiveness to community needs, ultimately leading to more resilient and self-reliant urban areas,” he noted.
He explained that urbanisation will benefit both city and rural populations by improving transportation, electrification, and access to markets, education, and health care.
Good infrastructure would allow people, goods, and services to move efficiently within and across cities, promoting growth, jobs, and improving quality of life, he said, adding that public services like water and wastewater treatment, as well as solid waste management, provide environmental and health benefits.
“A more robust urban infrastructure will provide resilience against floods and droughts,” he added.
Poon Thingburanathum, deputy director of corporate planning at WB’s PMU-A, said what is required is a pragmatic national effort to attract private sector capital to invest in urban infrastructure.
According to the World Bank report, allowing Thailand's secondary cities to raise capital on their own would reduce the national government's fiscal burden.
Despite decentralisation legislation passed in the 1990s, Thai cities and local governments remain fiscally dependent on the central government for infrastructure investments. Municipalities, on the other hand, have tax bases and operating surpluses required to develop creditworthiness and borrowing capacity.
The study also calls for a “paradigm shift” to give secondary cities the authority, tools, and expertise to finance local infrastructure. The creation of government units to monitor and support local infrastructure projects and planning is one of the recommended steps.
Greater flexibility, fiscal autonomy, and accountability are required for secondary cities in order to develop their ability to attract investors and lenders, the report said.
Patricia Mongkhonvanit, director-general of the Thai Finance Ministry’s Public Debt Management Office, agreed. She said secondary cities can drive growth and alleviate rural poverty by providing accessible opportunities to those who live in rural areas.
As a result, she promised that the Finance Ministry would use the study's insights and findings to support growth in these cities in order to meet the needs of residents, businesses and industries.
