mobilization for the construction of the GCP through securitization has been
established as a new dimension in mega project financing. The method
generates no immediate need for a fiscal budget, no need to arrange foreign
loan and does not create public debt. GCP bonds have the highest rating and have received seven national
and international awards. This is a source of great pride for all parties concerned because,
as a government mega project, it serves as a role model for future projects in
the public and private sector.
The Cabinet agreed
in principle and on 8th October 2002, assigned the Treasury
Department to carry out surveys and proposals for a construction budget on
behalf of all agencies based on priorities, necessities, ultimate benefits and
cost efficiency. In
addition, the Government Complex would have to be a model energy-efficient
On 24th July 2003, the Organizing
Committee for the Management of the Government Complex imposed two major conditions: the project would not reply on state budget or any
loan; and the Government Complex would be an energy-efficient building. These conditions necessitated a new approach to
Emergency Decree on Special Purpose Vehicle for Securitization, B.E. 2540
the process by which certain types of asset are pooled so that they can be
repackaged into interest-bearing securities. The interest and principal payments from the assets are passed on
to the purchasers of the securities.
Asset, such as
residential lease contracts or concession rights from the construction of
roads, provide future revenue.
speaking, securitization is the process of taking an illiquid asset, or group
of assets, and through financial engineering, transforming them into a security
through the SPV.
The advantages of
the method were that there would be no government budget and no debt burden on
the fiscal budget because the government did not have to disburse the lump sum
of 19,016 million baht, it merely had to approve the obligated budget for 30
years capital and interest during the designated period totaling
82,114 million baht. Approximately 1,000 million baht was going to be paid by public
agencies as rent to private office building owners, the amount tending to rise
year on year. By
securitizing money for the complex, the government did not have to maintain a
yearly budget for rents and the Ministry of Finance had ownership of the
advantage was that there was no debt burden. The appointed
SPV was not for a specific government agency or state enterprise. The issuance of
debentures caused no direct public debt to the government nor was it linked to
from government loans. It was not a public debt according to the Public Debt Management
Act, B.E. 2548 (2005).
Management Act, B.E.
In this Act “public debt”
means any debt incurred by the Ministry of Finance, a state agency
or state enterprise through the raising or the guaranteeing of loans by the
Ministry of Finance, but not including any debt incurred by a state enterprise
that undertakes money lending – such debt is
not guaranteed by the Ministry of Finance.
Chalongphob Susangkarn, the then Minister of Finance (March 2007 to
February 2008), asked whether the mobilized budget from the
Government Complex should be included as a public debt or otherwise, since it
risked being a contingent liability in the future.
Subsequently, government liabilities were defined as public debt
and others; debt from the government complex project is one of them.