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How beneficial to us is the railway deal with China?

Nov 30. 2014
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By Sasithorn Ongdee

4,025 Viewed

As expected, the Thailand and Chinese government-to-government deal for the construction of the 867km dual-track electric railway linking the country's Northeast with southern China via Laos was given the preliminary nod by the Cabinet on Tuesday and the
A draft memorandum of understanding has been inked for the 734km Nong Khai-Kaeng Khoi (Saraburi)-Chon Buri-Map Taphut (Rayong) route and for 133-km Bangkok-Kaeng Khoi route.
The trains would operate on a 1.435m gauge with speeds of up to 180km/h. 
The routes would be part of the 2,000km Silky Highway linking Asean with southern China and passing through Laos, Thailand, Malaysia and Singapore. The highway that has been over a decade in the making is tantalising close to becoming a reality.
Thailand is set to get two rails systems – the new 1.435m gauge would join the existing metre gauge. There have been rows over this issue in every government for years. 
There are still many concerns about the deal, whether it would benefit the country as much as it should.
Transport Minister ACM Prajin Juntong has said several times that it was likely the government would apply an engineering, procurement, construction and financing contract to the deal. 
He said that by doing so China would be allowed to invest in its construction while Thailand would be allowed to operate it and then gradually pay back the loan to China over the long term. Thailand would have a 20-per-cent stake in it, he said. 
If the project were implemented, it could be used as a model for other routes in Thailand that Japan, German, the UK and France may want to invest in.
But although the ECPF seems to have advantages – the lender and the contractor should be the same person, thus limiting the funding risk and having the project delivered on time with the desired specification.
However, the government should think long and hard about the merits of the contract, especially under a government-to-government deal.
Some experts in the transport sector are concerned that a soft loan usually comes with a condition that results in an influx of contractors and a large number of imported materials linked to the lender.
About 80 per cent of every Bt100 invested in a railway project typically covers construction and the rest is for rolling stocks and signalling systems. 
If one looks into who would benefit most from the Thailand-China project, half of each Bt100 would leave Thailand, including money made by construction firms. 
Sometimes, the lender’s right to develop a project – which is a key driver of economic growth – is contained in the contract conditions.
The government must be asked the question: How many benefits would be left for us? 

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