Announcement of Loans to Thailand on December 21, 1962

WORLD : . , INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT 1818 H STREET, N.W., WASHINGTON 25, D. C. TELEPHONE: EXECUTIVE 3-6360 Bank Press Release No. 62/44 SUBJECT: Loans to Thailand December 21, 1962: The World Bank today made two loans totaling the equiva.l.ent of $9 million to Thailand for projects -ti;o increase agric,lltural production through irrigation. A loan of $5.6 million was made to assist in the execution of a further stage in the development of irrigation over nearly 2 million acres of the Chao Phya. area in the central Plain, Thailand's chief rice producing regi,m. The second loa.tx, amounting to $3~4 million was for a project to irrigate about 130,000 acres of the Petchburi Plain southwest of Bangkok on the Thai peninsula. • Private commercial banks are participating in both loans wlthout the guarantee of the world Bank. Eight banks a.re participating in the $5. 6 million Chao Phya loan for a total amount of $645,000 1 representing a..11 of the first three maturities tmd part; of the fourth which fall due between November 1965 and May 1967. The partici- pants in this loan are The Mitsui Bank., L:tmited, New York Agency; Bank of America National Trust and Savings Association, San Francisco; Grace National Bank of New York; First Ma.tional City B~}lk, New York; Girard Trust Corn Exchange Bank., Ph:l.la- delphia; The Bank· of Tokyo, Ltd., New York Agency; The Bank of Tokyo Trust Company, New York; and Crocker-Anglo National Bank, sa.n Francisco. Girard Trust Corn Ex- change Bank, First National City Bank, New York and The Mitsui Bank, Limited, New York Agency are participating in the $3.4 million Petchburi loan for a tot8:,l amount of $110:., 000 representing the first maturity and part of the second which fall due in 1 •• November 1966 and May 1967 .. Most of Thailand's working. population is employed in agricw.ture., fisheries or forestry, with agricultural output accounting f'or over 9CY'/o of the country's exports. Rice, the staple food of' the population a.nd,the chief source of' foreign exchange earnings, is grown on three-fifths of the,total. cultivated area of' 17 million acres.  ~- / - 2 - Most of the farmers, however, have to depend on rainfall for the growing of rice ~ since only about 4 million acres are under irrigation. Because of the importance of rice to the Thai economy, the Government is continually trying to increase produc- tion, mainly through such measures as irrigation since there is little undeveloped land suitable for rice growing. The ~rejects beiug carried out with Bank assistance will help to achieve this objective by providing works for the efficient control and distribution of water, together with improved agricultura.l practices. $5.6 million loan for Chao Phya Irrigation Project The stage of the r.hao Phya project which today's loan will assist consists mainly of works to complete the water distribution system, giving control of water delivery to individual farms. The project includes the construction of 12,000 miles of distribution ditches and of the necessary drains; the construction of farm dikes; the dredging of existing navigation canals; the construction of about 165 miles of feeder roads to transport production from the area; and the purchase of maintenance equipment. Three existing experimental farms ~-:ill be reorganized, and extension • services improved and expanded to ensure full use of the irrigation facilities and more efficient agricultural practices. A study of the operation and maintenance organization of the Royal Irrigat:,ion Department will also be unJ.ertaken. This project will complement earlier projects connected with the irrigation 1 ~ ~· the Chao Phya Plain. A Bank loan of $18 millior~ ?~!i..~ made in 1950 for the const:roc-: t ion of a divers ion dam at Chainat and a system of main and lateral canals, and the Ya.nhee multi-purpose project, for which a loan of $66 million, primarily for elec- tric power development, was made in 1957, will regulate the :.low of the Chao Phya Rivt~r on which the irrigation system depends. When the three projects are completed, • f~mers in the area shouJ,J:°t be able to raise their output of paddy rice by nearly a million tons a year over their previous ('i..1.tput ~d to achieve substantial increases • - 3 - in the production of other crops such as sugar cane, groundnuts, soy beans and corn .. The Chao Phya project is being carried out principally by the Royal Irrigation Department of the Ministry of Agriculture. The total cost of the works being assisted by today's loan is estimated at, the equivalent of $12 million. The :Bank loan of $5.6 million will cover most of the foreign exchange requirements and the ';. (; remaining costs will be met by the Government of Thailand. The loan is for a term o:r 15 years and bears interest at the rate of 5·1/21, per annum, il.icluding the 1% commission which is allocated to the Bank's Special Reserve. Amortization will begin in November 1965. $3.4 million loan for the Petchburi Irrigation Project The project to be assisted by this loan provides for the irrigation, drainage • and flood control of 131,000 acres in the Petchburi Plain. About three-fifths of the area is now und.er flood irrigation, but i,s subject 1D periodic floods and an in- adequate water supply in thf:! dry season. Dry farming in the project area suffers from recurrent droughts. The key feature in the works now being undertaken is the construction of a storage reservoir to improve the availability of water throughout the year. A dam will be built at Kang Kracha.n on th··; Petchburi River to create a reservoir with an effective storage capacity of 595 million cubic meters. Other works include an enlargement of the existing canal system; the construction of an ad~quate drainage system; the construction of ditches to delivP.r water to the farms; the construction of about 8o miles of farm-to-market roads i.;h:toughout the project area; the estab- lishment of an experimental. farm and great1y expanded extension services to bring • about improved agricultural practices •  J • - 4- The project will serve about 13,000 farm families who will be able to achieve a greater return through increased production. With a regulated flow from the reservoir and water control provided through the fa.rm distribution system;, the farmers will be able to apply water to fields when needed and :.x· quantities to 1 ' meet the requirements of different crops. Rice will continue to be the main crop and the output of paddy is expected to increase by 45,000 tons annually. The area under bananas, fruit trees, coconuts and vegetables can be doubled and the increased output should be readily absorbed by the :ttangkok market. The works included in the project will be constructed by the Royal Irrigation Department, with the assistance of consulting ·engineers. The total cost is esti- mated at the equivalent of $11 million. The Bank loan of $3.4 million will cover most of the foreign exchange costs of imported equipment, materials and services, and the remaining costs will be met by the Government of Thailand. This loan is for a term of 20 years and bears interest at the rate of 5-l/2i. per annum including the 1% commission which is allocated to the Bank's Special Re- • serve. Amortization will begin in November 1966. •