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A Comparative Infrastructure Development Assessment of the Republic of Korea and Kingdom of Thailand

Publication | October 2014
A Comparative Infrastructure Development Assessment of the Republic of Korea and Kingdom of Thailand

In the Republic of Korea and Thailand, as in other countries of the region, development is best assisted by infrastructure investment that follows an integrated plan at the national level, supported by long-term sector master plans. 

The quality of such plans depends on whether they are based on thorough comparisons of the likely benefits of possible projects with respect to efficiency, productivity, and social and environmental objectives, compared with the likely costs. The practicality of the plans depends on whether they are consistent with medium-term fiscal strategies and annual budgets. Following the Republic of Korea’s example, Thailand must form a comprehensive territory or land use plan aligned with the national infrastructure investment plan.

The book reviews the infrastructure development that Thailand has achieved in key infrastructure subsectors such as power, roads, and water supply and its plans for the future, including in particular the role of private sector investment in infrastructure projects. It also looks at the experience of the Republic of Korea as a leading and sizeable developing member country as well as a member of the Organization for Economic Co-operation and Development.

Lessons from the comparative assessment can create a useful body of knowledge for Thailand and other developing and emerging Asian economies. These include:

  • Spending Levels. It is difficult to assess from year to year what amounts of infrastructure spending will be optimal, either in the aggregate or as portions of government and state-owned enterprise investment. Multilateral development banks recommend that at least 5%–6% of GDP be spent per year on infrastructure, but they acknowledge that individual cases will vary according to fiscal circumstances and indications obtained from cost–benefit analyses of major proposals.
  • Separation of Policy Making and Regulation. Several recommendations in this study addressed specifically to the Republic of Korea and Thailand are based on the assessment that both countries would benefit from a clearer separation of sector regulation from policy formulation and implementation, with more protection for the independence of regulatory authorities. The need for a separate, independent regulator is especially important when the implementing agency has responsibility for contracting.
  • Private Sector Participation. Similarly, in several infrastructure subsectors, both countries would benefit from more competition to drive improvements in service quality and efficiency. Furthermore, they would obtain more private financing for new investments if their policies and regulations provided a more reliable basis for private participation. This would involve the long-term ability of operators to set user charges that fully recover the costs of investment, operation, and maintenance. Alternatively, this could depend on well-specified, sustainable subsidies. Experience in both the Republic of Korea and Thailand has shown the importance of these changes for the financial viability of PPPs.
  • Cost–Benefit Analysis.Their experience with PPPs also suggests that, to obtain the most effective investments and protect the public from unduly high user charges, social cost–benefit analysis should be applied to all proposals, with assistance from national planning bodies.

Contents 

  • Executive Summary
  • Infrastructure in the Republic of Korea and Thailand
  • Institutional Arrangements
  • Infrastructure and Competitiveness
  • Pricing of Infrastructure Services
  • Investments and Financing
  • Lessons
  • Recommendations