World Bank identifies growth potential in Thailand’s secondary cities

The World Bank has highlighted the potential for growth in Thailand’s secondary cities such as Chiang Mai, Khon Kaen and Rayong in a recent study.

The report, Thailand Urban Infrastructure Finance Assessment, suggests that these cities could boost Thailand’s economy if they invest in urban infrastructure improvements, such as mass transit systems and renewable energy sources. However, the study points out that these cities will need to access private capital to finance these investments, rather than relying solely on central government funds.

Bangkok has traditionally been Thailand’s economic powerhouse, but its growth is decelerating. The World Bank suggests that secondary cities could take over as economic growth hubs if they can access the necessary private capital to improve urban infrastructure. The study points out that this would boost the country’s competitiveness and help it adapt to climate change.

The report was produced in collaboration with the Programme Management Unit on Area-based Development (PMU-A) and Khon Kaen University. It suggests that municipal borrowing and public-private partnerships could be viable funding methods for these cities.

Director-general of the Public Debt Management Office at the Ministry of Finance, Patricia Mongkhonvanit backed the need for growth.

“Secondary cities can drive growth and alleviate rural poverty by generation accessible opportunities for those living in rural areas.”

Urban growth in secondary cities

Urban growth in secondary cities would bring benefits to both city and rural populations. Improved transport, electrification and access to markets, education and health services would enable people, goods and services to move efficiently within and between cities. This would promote economic growth, create jobs and enhance the quality of life.

The report highlights the importance of public services such as water and wastewater management and solid waste management, which bring environmental and health benefits. It also emphasises the need for robust urban infrastructure to provide resilience against environmental challenges such as floods and droughts.

However, the study also highlights the fact that despite decentralisation legislation in the 1990s, Thai cities and local governments remain fiscally dependent on the central government for infrastructure investments. It suggests a “paradigm shift” is needed to give secondary cities the authority, tools and expertise to finance their infrastructure projects.

Deputy director of corporate planning at PMU-A, Poon Thingburanathum is confident in more urban growth in Thailand’s secondary cities.

“Municipal borrowing and public-private partnerships offer a reliable path to urban infrastructure development that has been proven in countries around the world.”

The study includes an assessment of project proposals in five Thai cities: Chiang Mai, Rayong, Nakhon Sawan, Khon Kaen and Phuket. It also discusses the policies and institutions that govern how city authorities manage their finances, including raising capital for infrastructure investment.

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