Thailand must closely consider its railway development deal with China: The Nation columnist

People at a railway track in Bangkok.
People at a railway track in Bangkok. PHOTO: ST FILE

This is not really the time for the government to be coy about what it really wants in relation to the joint development of the 873-kilometre Sino-Thai medium-speed railway project in the Northeast. At the 10th Thai-China steering committee meeting scheduled for the end of this month in Beijing, Thailand should convince China to be responsible for at least 70 per cent of the project value. The other option would be to make China responsible of all parts of the project under the build, operate and transfer scheme, which would require it to transfer all assets to the Thai government once the contract is due, say maybe in 30 years, Democrat Party's deputy leader Korn Chatikavanij suggested in a post on Facebook.

"We must admit that the State Railway of Thailand does not have enough skill in the operation of high-speed railways," he pointed out.

Though the project is expected to be beneficial to both sides, China stands to gain more in terms of strategic results. Also, China has more money and operating skills than Thailand. Many people are concerned about the deal, fearing that Thailand might be at a disadvantage if the government gets China to develop the project as well as borrow from it to finance it. Moreover, technology like rolling stocks and signalling system as well as contractors and workers will have to be imported from China. In the end, Thailand may have to be responsible for all or most of the risk of investment. Before the upcoming meeting, the Chinese side is expected to provide a feedback on whether it is ready to agree on Thailand's recent proposals. Thailand has proposed that China adjust the original joint venture or Specific Purpose Vehicle (SPV) of a 60:40 share to a new one in which Thailand holds 30 per cent and China takes the rest. However, the SPV will cover almost all of the investment, including civil-engineering work, track-and-signal system installation as well as operation and maintenance.

On the other hand, China has also proposed to scale down the construction of the Nakhon Rachasima-Nong Khai route from dual- to single-track and has delayed the construction of the Kaeng Khoi-Map Tha Phut route. As is widely known, the Thai-China railway project, which is part of China's 5,500km Trans-Asian railway running from southern China to Malaysia via Laos and Thailand, is not only meant for Asean connectivity, but is also a geopolitical matter.

However, Thailand still has the time to study this matter thoroughly as the memorandum of understanding will be valid for five years after signing, which means it has until December 2019. There really is no need to hasten the project unless it is too much of a priority or if we have enough money to go ahead with it. If it is Asean connectivity that we are aiming for, then we are still able to connect with our neighbours as most of them run a one-metre gauge railway. Plus, Thailand is also improving the existing railway to dual-track from the current single-track setting.

The government may have made a mistake by deciding to adopt the EPC (engineering, procurement and construction) deal or maybe it is afraid that some may oppose Chinese ownership when discussing the SPV at the early stages of negotiation. In addition, the unclear purpose of what exactly the railway will be used for - passengers or cargo - has made the project cost more than the original estimate of 400 billion baht (S$ 15.7 billion) to approximately 530 billion baht. This also possibly led to the project's design to opt for speeds of 160-180 kilometre per hour, but this speed is made-to-order technology, which is not available to store shelves, according to an industry expert. Therefore, looking at the deal in detail, the government has to do its best in further negotiations and ensure public interest is maintained as much as possible.