An intriguing use of Thailand’s plans for rail links to China – one creating a potentially huge new export industry – has been outlined at a conference in Bangkok.
Thailand is expected next month to sign a memorandum of understanding with China to develop its rail network. This will, in the first instance, involve double-tracking a rail link from Thailand’s North to the South using Chinese money and expertise ahead of developing a more extensive high-speed rail system.
High speed rail is usually seen as a people mover, and the double-tracking as allowing Chinese goods to be moved into Southeast Asia more quickly than via a sea corridor, with some commodities such as rice and rubber going back on the return.
What’s new is a view that Thailand might be in a position to send value-added goods.
One example given was processed food, which is in high demand in China where urbanization is creating new opportunities, especially in the west of the country.
“I think Thailand has huge opportunities and we can certainly take advantage,” said Sarasin Viraphol, executive vice president of food conglomerate Charoen Pokphand Group, stressing later that the opportunity is in processed food and not in raw materials.
“We are known for our food, our brands,” he said of both Thailand and CP Group.
China is not the only country being scoped in this way. India, accessible by a marine corridor, and Russia are also on the list, although Viraphol acknowledged Russia and Europe – he specifically noted Rotterdam – would come into play later.
If this goes ahead it could be a major rewriting of Thailand’s exporting industries. The country is a major rice exporter and takes a fair slice of the computer parts sector, but has so far yet to move into adding value to the commodities it produces. Its other sizable exports include rubber and fruits.
Helping matters is the government’s support for the food industry and China’s growing demand for food, especially meat and other value-added products. Also to be factored in is China’s aim to reduce the amount of the country given over to cultivation in the next five-year plan.
Also helping the plan was China’s ambassador to Thailand refuting criticisms of the upcoming agreement. The deal had been criticized in Thailand because of its financial terms and because of China’s extensive role in its actual construction.
Instead, China will follow the practice of equal consultation, equal construction and mutual benefits, Ambassador Ning Fukui told the conference. “China will never do any selfish things,” he said via an interpreter.
Ning also refuted the idea that China is to do much of the construction work for the proposed North-South route, saying China would only build what the Thai side are unable to construct.
Arkhom Termpittayapaisath, Thailand’s transport minister, speaking at the same conference, detailed this announcement, saying that Thailand would be doing the work on the plains, which should be the lion’s share of the work, with China tackling features such as tunnels and stations. The minister also added that Thai standards are to be adopted and used.
“We have now decided on an optimized route so the EIA study will not have to be redone. This will save time,” Termpittayapaisath added.
The route has been divided into four sections, three of which can be started at once, he said, with only the southern route from Map Ta Phut to Rayong needing further study. (This area represents the eastern seaboard, where the CP Group, the Thai government and other food companies are looking to develop the industry.)
Addressing the important issue of interest rates, Ning pointed out that the interest rate Beijing was levying on the loan was for a US-dollar-denominated amount and, at 2.5%, was “significantly lower” than available on the Thai domestic market or internationally.
He directly addressed the view held by some Thai sources that Japan, which offered financing at 0.1%, was a better option for Thailand. Interest rates on the US dollar are quite different to those on the yen, he said through an interpreter. “We shouldn’t compare 2.5% with 0.1%.”
China, he stressed, is “flexible” and is willing to discuss the rates levied.
Ning also moved to squash the view that China has asked for development rights of one kilometre either side of the new track, which comes south from Nong Khai in northern Thailand to the country’s industrial zone at Map Ta Phut.
The two sides have not discussed the issue, he said, adding that he doesn’t know where such news had come from.
Ning put the plans in a tantalizing international context, saying work on a China-Laos rail link would start soon, and the issue of links, including high-speed, were being discussed with Vietnam.
By Michael Mackey
Southeast Asia Correspondent | Bangkok
