BANGKOK - Thailand has long aimed to
establish itself as a regional trade and
investment hub, leveraging into the country's
central Southeast Asian geography and East meets
West openness. While a political push and
expanding regional trade has given new life to
those ambitions, its not clear to most analysts
Thailand will any time soon supplant Singapore as
the region's reigning hub.
Thai caretaker
Prime Minister Abhisit Vejjajiva has played up
Thailand's role in rising regional "connectivity"
during his recent speeches to foreign audiences.
During a March 21 presentation to the Foreign
Correspondents Club of Thailand, Abhisit
emphasized that Thailand was engaged in a number
of infrastructure investments, including
high-speed trains and road upgrades, aimed at
establishing Thailand as mainland Southeast Asia's
hub. In a speech to the American Chamber of
Commerce that same
month, he emphasized plans to
upgrade the existing rail network and negotiations
with China to develop within four to five years a
high-speed rail network that connects southern
China to the Thai-Malaysian border. Significantly,
the multi-billion dollar plans are designed to
stop at the Malaysian border and not extend to
Singapore.
To be sure, it's not the first
time Thailand has advanced ambitious hub designs.
The idea of cutting a transportation-promoting
canal, similar to the Suez or Panama canals, was
first broached in the 1700s for the country's
narrow Kra Isthmus in the south. The scheme, which
would necessarily undercut Singapore's port
position as a shipping and transshipment hub, has
been revisited in different forms by several Thai
governments but never come to fruition because of
high costs and technical difficulties.
Establishing Thailand as a regional rail
and road hub, one that leverages into the recently
implemented China-Association of Southeast Asian
Nations (ASEAN) free-trade agreement, is more
feasible but likewise faces several high hurdles.
Top among them now is the country's fractured
politics, which in 2008 saw one protest group
close down Bangkok's international airports and
another occupy and block access to the capital's
main shopping and hotel district for nearly two
months.
The political uncertainty,
including whether upcoming elections will achieve
stability or devolve into more chaos, has
apparently has given pause to Chinese investors,
whose financing will be crucial to Thailand's
ambitions. According to the Nation newspaper,
China did not respond to an official invitation to
further talks on a memorandum of understanding
(MOU) for the high-speed rail project because of
the government's plans for early Thai elections,
which are now set for July 3.
The draft
MOU calls for the establishment of a new state
enterprise, a 51%-49 Thai-China joint venture,
which will develop land along the proposed route
and manage the project under a 30-year concession
from the State Railway of Thailand. The draft
agreement states that the original concession may
be extended by 20 years. However, because of the
country's fraught politics, much of the
complicated, international-oriented legislation in
parliament has been postponed.
Significantly, the delay in the high-speed
rail project comes at a time China is helping
Thailand's neighbors ramp up of their own
infrastructure plans. One of the assumptions
behind Thailand's new hub ambition is that it will
serve as the geographical and logistical center of
the new China-ASEAN free-trade area. Neighboring
and less-developed Cambodia and Myanmar are
expected to provide access-opening infrastructure
that relies on Thailand's central position and
superior road and railways to facilitate more
trade, including with China.
In some
respects, Thai premise is being tested with the
development of what could be viewed as competing
rather than complementary infrastructure in
neighboring countries.
For example,
Cambodia's ports are fast expanding with work
recently commencing on a new container terminal at
the capital's Phnom Penh Autonomous Port, which
will be the country's second largest according to
media reports. The terminal will take two and a
half years to complete and is being built by the
Shanghai Construction (Group) General Company,
according to one specialist port publication.
Also under construction and on course to
be finished are new Cambodian railways being
financed by China. The first line to be completed
will link Phnom Penh with the ocean port of
Sihanoukville. The view is that income from the
line will first come from passengers and
commodities and later move into container traffic.
Analysts say the point is not what will be
conveyed insomuch as China is building a web of
parallel transport infrastructure that could make
certain of Thailand's plans redundant.
At
the same time, Thailand is steaming ahead with its
own plans to challenge Singapore's port supremacy.
Thai construction company Ital-Thai Development
has pledged to build a US$8 billion mega-port at
Dawei in southern Myanmar, which if built to
proposed scale will put the facility on the global
shipping map. One revealing detail of the
deepwater port, which will be dug to a depth of 18
meters, is that it is being built not for the
present generation of large ships but the next
bigger generation.
Ital-Thai is also
putting in place the infrastructure for a special
economic zone attached to the port which will
include a 35-square kilometer petrochemical
complex, a power plant and factories where cell
phones, steel and fertilizers, among other
products, will be manufactured. All of these
facilities are scheduled to be connected to both
Thailand and China by road and rail.
Yet
Thailand is arguably falling behind in developing
the logistical infrastructure needed for hub
success. Despite Thailand's strong reputation in
certain service industries, logistics giant DHL
recently opened a value-adding Fashion and Apparel
Center of Excellence in Phnom Penh rather than
Bangkok, which has made pretensions of
establishing itself as a fashion capital.
DHL has established several similar
value-adding centers in Bangladesh, Hong Kong,
India, Pakistan, Sri Lanka and Vietnam - ie
anywhere where labor-intensive industries require
fast logistical servicing. That Thailand is not
home to one of these DHL centers, some analysts
say, is revealing to its still unrealized hub
ambitions.
So, they say, is Thailand's
lack of modern airfreight services. Air cargo
handling is generally acknowledged to be a success
in Thailand, but a new obstacle looms large:
e-freight. Thailand was one of four countries
urged earlier this year by International Air
Transport Association director general Giovanni
Bisignani to work on legislation to legally
recognize electronic documentation. The other
three laggards were Russia, Indonesia and Vietnam.
Thailand's response to that goad has so
far been muted. "I would assume that it would
still be quite a while for Thailand to have the
systems ready to support e-freight," said one
official with the national airport operator
Airports of Thailand.
A number of factors
feed into reluctance. Vested interests like the
Customs Department, long viewed as one of the
country's most corruption-prone agencies, is one.
Thailand's booming exports, which were up 28% in
the first quarter of this year, has damped down
any urgency on the need for reform. There is also
a reluctance to define rules when officials earn,
as one source within a logistics company
diplomatically put it, extra by "thinking on their
feet".
Singapore cleaned up corruption in
its customs department long ago. While Singapore's
airport is a model of efficiency, Thailand's new
Suvarnabhumi Airport, which was partially designed
to challenge Singapore's position, lacks the same
efficiency due to its mass scale and lack of
internal transport. It's also significant that
many foreign investors in Thailand have clauses in
their contracts that allow for third party
intermediation in Singapore rather than Thai
courts to settle disputes.
"We have not
yet developed ourselves to be a trading nation,
although we are situated right in a terrific
location in the center of Southeast Asia and being
a country with two sea-fronts," said Pridiyathorn
Devakula, a former Thai deputy prime minister and
central bank governor, in a recent speech. "We
are, quite the opposite, trading only on products
produced or used by ourselves."
Michael Mackey is a
Bangkok-based journalist.
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