Bangkok Business news

Cabinet to amend business law Joint public-private venture value to rise Amendments to the joint public-private venture law aim to strike a balance between flexibility in state policy and safeguarding against potential interference and corruption, said Pongpanu Svetarunvra, the director-general of the Public Debt Management Office. Cabinet ministers yesterday agreed to draft a new law regulating joint ventures and business contracts between the state and private companies.

The new law would replace the 1992 law overseeing public-private ventures and include major infrastructure contracts and turnkey projects. The Finance Ministry would be empowered to stipulate the structure of investment and financing arrangements for projects. Critically, the new law raises the threshhold for projects deemed subject to special scrutiny and monitoring from one billion baht under the 1992 law to three billion baht.

Governmnet officials say the higher project value requirement aims to cut bureaucracy for smaller projects. The Finance Ministry and the National Economic and Social Development Board would also be authorised to review the project value rule every five years to reflect economic changes and government procurement and contract policies. In any case, projects under the three-billion-baht threshhold would have to comply with a standard Finance Ministry review.

Procurement and valuation procedures would also be set according to the ministry based on a single standard. The changes are aimed at minimising past practices of deliberately undervaluing a project’s value to avoid added scrutiny under the 1992 law. The duty-free concession awarded to King Power at Suvarnabhumi Airport, for instance, has been accused of deliberately understating the contract value by excluding stock items to avoid the public-private law.

Mr Pongpanu acknowledged that greater flexibility in managing state contracts resulted in potentially greater risk of political interference. ”It is a trade off between flexibility and political interference. Flexibility is important however, and we see that the 1992 law, enacted by the National Peace-keeping Council, stemmed from a distrust of politics,” he said.

”Yet while the law limited the possibility of political interference, it also sharply restricted flexibility in investment.”