China, Thailand foster high-speed link
By Michael Mackey
BANGKOK - Thailand and China have agreed to proceed with rail connections that
will connect the two countries through neighboring Laos. The planned links aim
to enhance rising trade flows sparked by the new China-Association of Southeast
Nations (ASEAN) free-trade agreement and facilitate with modern infrastructure
the region’s move towards a common ASEAN market.
Thai Prime Minister Abhisit Vejjajiva emphasized his government's plans for new
logistical and infrastructure projects, with rail expenditures prominent among
them, during a roadshow in New
York in late September. He said in a speech that his government had approved a
framework for Thailand-China cooperation in building a high-speed train route
connecting Thailand's poor northeastern region through the Thai border town of
Nong Khai to China.
The plan also calls for high-speed routes connecting Nong Khai to Bangkok and
then eastwards to the industrially driven Thai Eastern Seaboard, with a third
line linking the capital to the country's southern region near the Malaysian
border at Padang Basar.
"These high-speed trains will not only facilitate the rapid movement of goods
and people, but will provide even more benefits to Thailand once ASEAN becomes
a single market and Thailand becomes a stronger production base for the
Economic Community," Abhisit said.
The three confirmed routes will connect to a conventional railway China is
building to its southern border and across Laos. Beijing has provided
concessional loans for that link, although no sums or timetables have been
mentioned for the project, which will go from Vientiane, the Laotian capital,
to Boten near the Chinese border in Luang Namtha province in northern Laos. Lao
Minister for Planning and Investment Sinlavong Khouthphaythoune is pushing for
the link to be built within five years, according to official media.
Once these missing links are in place, China's existing rail network will
become connected to Thailand and eventually onward south to Malaysia and
Singapore. Beijing believes its all doable within three years; Thai politicians
are more cautious. "If there is any delay, I suspect it will be at our end, not
theirs," said Thai Finance Minister Korn Chatikavanij over the summer.
His guarded timetable speaks to the projects' still many unanswered questions,
including the role of Chinese finance and labor in building the new lines. "The
main issue is the missing links. The other is money," said Pierre Chartier,
economics affairs officer at the United Nations Economic and Social Commission
for Asia and the Pacific's transport and tourism division.
Chartier also looked beyond the China-Thailand connection.
"There is no physical rail connection between China and Laos, China and
Myanmar, Myanmar and Thailand, Thailand and Cambodia, Cambodia and Vietnam,
Vietnam and Laos. There's a lot of work to do" said Chartier. "The good news is
that all feasibility studies have been completed."
It's still unclear whether Bangkok will accept Chinese export credits or
government soft loans to help fund the estimated US$10 billion railway
projects. Such financing is usually conditional on accepting Chinese labor - a
condition that makes sense in technically challenged countries like Laos, but
less so for Thailand's more developed work force.
Noting that some 64,000 Chinese workers are working on the railroad in Laos,
one State Railway of Thailand official chafed at the suggestion that even 100
Chinese engineers be dispatched to Thailand for the project.
"We're actually working to try and create jobs for Thai people and Thai
engineers, to develop our own expertise," said the official. "I don't believe
that [bringing Chinese workers in Thailand] will be done easily."
There are also inter-operability concerns. "Most Southeast Asian countries are
developing meter gauge. Whether they are going to move to a standard gauge like
they have in China is difficult to say," said Chartier.
Some of the feasibility studies, he said, include plans for the track to have
an envelope large enough to accommodate later changes if necessary. That embeds
higher logistical costs to trade, as China is incurs with Mongolia where
inconsistent gauges mean ore exports must be loaded into new train cars at the
border.
Interlinking uncertainties
The bigger question surrounding Thailand's plans are of commercial viability.
Thailand's Office of Transport and Traffic Policy and Planning, which foresees
four rather than three high-speed rail lines, projects daily passenger numbers
of 128,000 by 2017, rising to 192,000 in 2032. Those projections fail to
indicate with specifics the projects' target market and whether passengers in
poor regions will be able to afford the ticket prices that will need to be
charged to re-coup the sizable running costs and capital investments.
The project's cargo-moving potential makes more economic sense. However,
analysts note that most cargo does not require high-speed lines unless it is of
exceptionally high value, including components used in just-in-time
manufacturing processes. They say cargo volumes generally require a decent but
not breakneck speed and reliability. Identifying exactly what cargo will be
moved in relation to the current and future needs of Thai industries is key to
justifying the investment in high-speed lines, they say.
The Thai side is beset with political problems that could eventually derail
Abhisit's plans. His coalition government is unstable, and pushing major
infrastructure spending into the geographical territory of the political
opposition raises political risks before a general election due by the end of
2011. Already one of the opposition parties, Pheua Thai, has questioned the
lack of transparency surrounding the plans.
The crucial implementing decisions will likely be made by the next elected
government. Either way, it will face a tough internal test from the Thai
bureaucracy, which has become reluctant to sign off on big-ticket
infrastructure projects on the fears of officials that with a change in
government they could be prosecuted for corruption - as happened to certain
officials after the 2006 military coup that ousted premier Thaksin Shinawatra.
Part of the problem is Thailand's mixed track record with so-called public
private partnership (PPP) investment schemes. Some have made money while others
have incurred losses, including expressway projects in Bangkok. Deputy finance
minister Pradit Phataraprasit recently acknowledged, "Historically, we have not
been able to leverage PPPs well."
Other countries in the region, including Cambodia, are moving more quickly with
an eye towards greater regional connectivity. A southern 240-kilometer line
running between the Cambodian capital of Phnom Penh to the deepwater port of
Sihanoukville is expected to start operations next May, said Peter Broch,
senior transport economist with the Asian Development Bank (ADB).
It is one of two major rail restoration projects underway in Cambodia - the
second being a 350-kilometer northern line that will link Phnom Penh to Poipet,
just across the border from the Thai town of Aranyaprayet. Work on the line is
due to start "very soon, right after the rainy season", said Broch, who
predicted a May 2012 completion date. Together the two re-established lines
will cost US$142 million, with the ADB leading and Australia's international
aid agency, AusAID, contributing $25 million of the sum.
However, other high-speed rail ambitions recently came undone in Vietnam amid
rising market concerns about the country's financial management. A proposed $56
billion north-south line that aimed to reduce rail travel times between the
capital, Hanoi, and the commercial hub of Ho Chi Minh City from 30 hours to six
ran into resistance and was scrapped on the drawing board by the National
Assembly.
Others see a more hopeful model in Malaysia. The country's national railway
company, Keretapi Tanah Melayu Berhad (KTMB), operates commuter, inter-city and
freight services on peninsular Malaysia and has held its commercial own amid a
rapid expansion in car ownership. While passenger numbers roughly halved from
7.6 million to 3.7 million from 1992-2007, freight loads rose from 3.6 million
tonnes to 4.7 million tonnes over the same period.
KTMB notes that total tonne kilometers, a measure of both freight and passenger
loads, rose from over 1 billion to 1.4 billion over the same time. KTMB is now
pursing a strategy of mixing consolidation and growth, according to chairman
Tan Sri Dato' Sri Lim Ah Lek.
Thailand's grand plan would eventually link with Malaysia through high-speed
lines, creating a north-south link that reaches to China. As Asian economies
look more towards regional rather than Western trade for future growth, it's a
forward-looking plan with the potential to position Thailand as a highly
efficient regional hub connecting China to Southeast Asia. But politics and
nationalism could yet derail those economic ambitions.
Michael Mackey is a Bangkok-based freelance journalist.
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