Economic deals expected to boost ties with China

A number of agreements to strengthen Sino-Thai economic ties will be signed when Chinese Premier Li Keqiang arrives in Bangkok today.
Li begins his three-day official visit with a meeting with his Prime Minister Yingluck Shinawatra at Government House.
One memorandum of understanding will be signed by the Board of Investment and China Development Bank Corporation to promote direct investment by both countries. The other concerns the partial payment for a Chinese rail system with Thai farm products. A joint working will be set up to discuss this matter further.
Industry Ministry Prasert Boonchaisuk said yesterday that Yingluck and Li would witness the BOI-CDB signing ceremony.
Only a few Thai companies have made their presence felt in China, such as Charoen Pokphand Group, Bangkok Bank and Kasikornbank. However, some Chinese companies have established operations in Thailand.
From 2007 to 2012, Chinese investors with 188 projects worth Bt177.7 billion applied for the BOI’s tax privileges.
The first eight months of this year saw 28 Chinese investment projects worth Bt18 billion applying for incentives. China is now the biggest source of foreign direct investment after Japan.
Transport Minister Chadchart Sittipunt said after meeting with the director of China’s State Railways Administration, Lu Dongfu, that he would today sign the MoU that would consider allowing Thailand to repay China for part of the construction cost of a high-speed-rail project with farm products, such as rice and rubber.
“The two sides will discuss the possibility of such a barter arrangement. More still needs to be done at the government-to-government level,” he said.
China was particularly interested in the proposal to build a high-speed railroad between Bangkok and the northeastern border province of Nong Khai, as that line would be connected with a rail link between Kunming in southern China and Laos, he said.
“China has studied the feasibility of this route, but there will be careful discussion about benefits for Thailand and the law,” he said.
After the MoU is signed, a committee to be chaired by Chadchart will be formed to determine which kind of Thai agricultural products should be used as payment. The members will include representatives from such agencies as the Commerce and Agriculture ministries.
“Decisions will be made on what kind of farm produce should be used and which part of the train project would the barter payment be made for,” he said. “We will choose the conditions that benefit Thailand the most.”
If a study finds that the barter deal is inappropriate, the government will not opt for this alternative, he said, adding that an MoU was not binding.
A possibility is to barter farm produce with trains and related equipment to be used in the high-speed-rail project. It has been estimated that those costs would account for 20-30 per cent of the total project cost, or about Bt140 billion to Bt210 billion.
Thailand has no problem with funding the high-speed-rail project, as it comes under the transport mega-projects to be financed by some Bt2 trillion to be borrowed by the Finance Ministry, Chadchart said. “We have enough money to fund the project,” he said.
However, he added that it was worthwhile to study whether the construction cost could be partially paid with agricultural produce. Thailand has not chosen any particular foreign country to build the project, he said.
“All the projects must be subject to bidding in line with international standards.”