Thailand railway project offers a cautionary tale

This was intended to be the first section of a planned 845-km high-speed railway running from the Thai-Laos border to Thailand’s industrial seaboard, for which a Chinese loan had been agreed after nine rounds of painstaking negotiations between Beijing and Bangkok over two years.
Thai Transport Minister Arkhom Termpittayapaisith said on March 25 that China should offer “friendship” terms on the interest rate of the loan and project costs. He suggested the interest should be reduced from 2.5 to 2 per cent, the same rate China offered Indonesia last year for a high-speed rail project, and that should China bear the bulk of the costs of a project it would also benefit from.
However, the fact is that Thailand has not offered the same terms as Indonesia to secure a loan.
As part of its agreement with Indonesia, Chinese companies are entitled to develop some land along the Jakarta-Bandung high-speed railway through joint ventures with Indonesian partners. But Thailand has refused to give China such opportunities.
Reports also suggest that Thailand is suspending the rest of the project. If this is the case, the project will be much smaller and of less significance to the Southeast Asia nation than was planned, and it is the Thai economy alone that will be the main beneficiary.
Certainly, Thailand has every reason to make decisions according to its financial and economic situation. But the twists and turns of this project should persuade China to adjust its strategies and approach, so other countries better understand its Belt and Road strategy.
As a supplier of the world’s best cost-for-performance high-speed trains and related services, China has the technology and experience to attract customers. It does not need to surrender the benefits it should yield in exchange to do so.
Introduced as a programme to promote win-win cooperation, the Belt and Road Initiative is not a vehicle for different countries to strive for China’s financial assistance, but is based on equal and prudent cooperation that involves uncertainties and risks undertaken by both sides.
In this sense, a shrinking high-speed railway project in Thailand could be a slow but sure step forward for China’s outbound endeavours.