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Bombshell World Bank Analysis: Thai’s Second-tier Cities Could be the Next Economic Powerhouses!

In a recent study conducted by the World Bank, secondary cities of Thailand like Chiang Mai, Khon Kaen, and Rayong have been highlighted as potential growth engines for the country’s economy. The study, named Thailand Urban Infrastructure Finance Assessment, indicates how these urban locations could amplify Thailand’s economic performance if critical upgrades in urban infrastructure, such as public transportation systems and consolidation on renewable energy, are realized.

Notably, the World Bank analysis underscores the necessity for these cities to utilize private capital to finance these prospective enhancements, mitigating the current heavy reliance on central government funding. While Bangkok has consistently been a major player in driving Thailand’s economy, increasing economic stagnation in the capital city has led the World Bank to identify secondary cities as future economic growth centres, provided they can source the requisite private capital for urban infrastructure augmentation.

As per the report, such a move would not only elevate Thailand’s competitive stance globally but also aid in its pivot towards a more climate-conscious strategy. The publication was a result of a joint effort with the Programme Management Unit on Area-based Development (PMU-A) and Khon Kaen University, that pointed towards municipal borrowing and public-private alliances as possible mechanisms to fund these cities.

Patricia Mongkhonvanit, Director-general of the Public Debt Management Office at the Ministry of Finance, emphasized the urgency for such growth. In her words, “Secondary cities can boost growth and refine rural poverty by creating accessible opportunities for those residing in rural territories.”

Furthermore, the urban development in these secondary cities would offer advantages to both city dwellers and the rural populace. Enhanced transportation facilities and access to markets, healthcare, and education services would expedite the movement of people and services within and amongst cities, fostering economic growth, job creation, and overall improvement in the quality of life.

In the report, significant attention is also given to the crucial role that public utilities such as wastewater management, solid waste management, and water supplies would play in promoting environmental and health benefits. Concurrently, it emphasizes the importance of strong urban infrastructure in maintaining resilience against environmental threats such as floods and droughts.

The study, however, does not shy away from presenting some existing hurdles. It notes that although decentralisation policies were adopted in the 90s, Thai cities and local governments still predominantly depend on the central government for infrastructure investments. As per the report, a drastic “paradigm shift” is required to empower secondary cities with the authority, proficiencies, and tools to finance their infrastructural projects independently.

Poon Thingburanathum, Deputy director of corporate planning at PMU-A, expressed optimism for urban growth in Thailand’s secondary cities. He advocates municipal borrowing and public-private partnerships as reliable solutions that have historically proven effective in urban infrastructure development in numerous nations worldwide.

In conclusion, the study offers a comprehensive evaluation of project proposals in five Thai cities: Chiang Mai, Rayong, Nakhon Sawan, Khon Kaen, and Phuket. It also reviews the policies and directives controlling how city authorities manage their finances, particularly concerning raising capital for infrastructure development.

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