Thailand rebuffs railway deal with China

Failure of deal highlights challenge facing China's 'Belt and Road' plan

Mr Arkhom speaking at an interview in Bangkok last Friday
Mr Arkhom speaking at an interview in Bangkok last Friday . PHOTO: BLOOMBERG

BANGKOK • Chinese President Xi Jinping is so devoted to his Silk Road project for China to deepen economic ties across Asia that he recently had top Communist officials attend a "study" session on the millennia-old history of the route.

References to the initiative, launched by Mr Xi in 2013 and known as the "Belt and Road" plan, have become ubiquitous in China, down to even in-flight magazines on its aircraft. As part of the Communist party chief's vision of moving China beyond a century of humiliation at the hands of foreigners, the plan would strengthen trade and investment ties, especially with Central and South-east Asian neighbours.

In many ways, the idea makes sense. Those regional neighbours need trillions of dollars' worth of investment to build roads, railways, utilities and airports. And China has surplus industrial capacity, along with access to capital.

Yet the recent failure of a deal for China to help build and finance a rail project in Thailand - a nation at the heart of the old maritime Silk Road - offers a sign that things may not all come together so easily.

Conditions on the offer of Chinese funding and construction help - at least in the Thai case and according to that country's government - were strings that its neighbour wasn't comfortable accepting. Chinese officials pressed for the right to develop commercial property at the stations and along the forthcoming railway track, from Bangkok to the north-eastern city of Nong Khai near Laos.

"We told the Chinese there is no granting of the land rights," said Thai Transport Minister Arkhom Termpittayapaisith in an interview in Bangkok last Friday. "Thailand is not the same as Laos," he said, citing concerns about the terms of Chinese investment in his country's smaller neighbour.

China acquired commercial-land development rights and requested further collateral for funding, according to Mr Arkhom. An official at the Lao ministry of foreign affairs declined to immediately comment.

Mr Arkhom stressed that the "door is still open" to Chinese financing, such as through Beijing-based Asian Infrastructure Investment Bank. Yet there has not been any indication that discussions are under way.

Mr Xi, in the study session with members of the Communist Party's Central Committee last Friday, indicated some recognition of the need to adapt the Silk Road initiative.

"While taking care of our own interests, we will give more consideration and care to the interests of other countries," he reportedly told the group. "I hope people in all countries along the Belt and Road will actually feel the benefit brought by the initiative."

Economic returns from rail projects are complicated by long payback periods, which can be decades, said Mr Arkhom.

"This project belongs to Thai people," he added. "Domestically, we have plenty of money."


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A version of this article appeared in the print edition of The Straits Times on May 05, 2016, with the headline Thailand rebuffs railway deal with China. Subscribe