Situated at the centre of Southeast Asia, Thailand, the natural intersection of trade flows in the 600-million-strong Asean market, also has a unique geographical location in the whole Asia-Pacific region.
The country has abundant natural resources, relatively comprehensive infrastructure and an excellent business environment, which have long attracted a large number of foreign investors, Huang Bin, head of the Chinese Department at Kasikorn Research Centre, said in recent research findings.
With considerable economic development, Thailand has become the second-largest economy in Asean.
The global economic landscape has undergone major changes in recent years, he said. Hit by the debt crisis, the proportion of worldwide trade and investment accounted for by Europe, the United States and other developed economies has continued to decline, he said.
On the other hand, with the further development of Asian economic integration, Asian intra-regional trade, investment and tourism have witnessed accelerated growth, and this has enabled the continent to become one of the most dynamic regions in the world.
Bin said Thailand should grasp the opportunity of regional integration, further exert its advantages, and build itself up as Asean’s trade and investment centre, as well as its transportation and logistics hub.
To this end, the government plans to launch a new round of large-scale infrastructure construction. Upgrading the railway system – the weak link of Thailand’s transportation system – will be the focus of the current round of infrastructure development, he added.
The rail system was initially built more than 120 years ago, in the reign of King Rama V. Taking the Chao Phraya River as a boundary, the rail lines are 1.435-metre gauge track on the eastern side, and 1-metre gauge on the western side.
Since the end of World War II, the overall length of Thai railways has increased by only 1,000 kilometres in 70 years.
The total mileage stands at just 4,363km, of which 3,755km is still single track. According to a report released by the National Economic and Social Development Board, the Kingdom’s logistics costs equate to 18 per cent of gross domestic product, far higher than 10 per cent in Japan and also higher than in Malaysia, Singapore and other Asean countries.
In order to build itself into the Asean transportation hub, Thailand has to achieve all-round connectivity within the country and at the same time reduce logistics costs, lower transportation periods and make its logistics more efficient, said the researcher.
Previous governments would draw up plans for high-speed train lines, but they caused some controversy in society. Those who were against the plans said it was not necessary to have high-speed rail since Thailand was a small country, and also worried that the huge amount of investment would leave the national finances with a heavy burden for a long time to come, he said.
After assuming power in May, the junta halted the high-speed train plan and conducted a thorough review of the overall infrastructure construction plans.
Finally, after comprehensively listening to the opinions from different sides, the ruling National Council for Peace and Order formulated a national development strategy for transportation infrastructure in 2014-2022, with a total planned investment of Bt2.4 trillion.
The strategy covers five key areas – railway, road, water transportation, aviation and mass transit – but with its high expenditure implications, the railway element attracts most attention.
The rail strategy can be divided into two parts. The first is six double-track 1-metre-gauge lines at a combined length of 887km, costing Bt127.5 billion and to be completed in 2020.
The second comprises two new double-track lines. One is from Nong Khai on the border with Laos in the Northeast to the port of Map Ta Phut in Rayong province on the Eastern Seaboard, with a length of 737km and an investment cost of Bt392.6 billion.
The other is from the port of Chiang Khong on the Mekong River in the North at the border with Laos to Phachi district in Ayutthaya.
This 655km line, which will join the Nong Khai-Map Ta Phut line, entails an investment of Bt346.9 billion.
Both lines will be 1.435-metre standard gauge and capable of carrying quasi-high-speed passenger trains with maximum speeds of 160-180 km/h, as well as freight trains.
Meanwhile, the Cabinet has approved the signing of a memorandum of understanding with the Chinese government to build the double-track line from Mat Ta Phut to Nong Khai, while the National Legislative Assembly voted to approve the draft MoU on China-Thailand Railway Cooperation on December 4.
Although the cooperation model and financing means have yet to be decided, both governments hope to sign the MoU as soon as possible, so that the construction can be started at the beginning of 2016, said Bin.
Such a major decision was not taken easily. The current administration has weighed the matter over and over again, based on the studies done by the previous two administrations on the leading technology available around the world.
China stands out, however, because of its high cost-effectiveness. By the end of last year, the total length of railway operating in China was 103,000km, including 11,000km of high-speed rail lines – and there are still 12,000km of high-speed rail lines under construction.
Compared with Thailand’s previous high-speed train plans, the current double-track rail plan will produce more economic benefits. The reduced maximum speed from 250km/h in the previous plan to 160-180km/h will cut the cost of construction and operation, as well as better suiting the living standards of those who live along the lines, said the researcher.
It is foreseeable that when the line is connected with the China-Laos railway, regional trade, investment, financial exchanges and tourism will boom.
Rice, rubber, cassava, fruit and other agricultural products, as well as industrial products, will have easier access to the market of China and other countries around the world.
Furthermore, Thailand’s railways will lead all the way to Europe via China’s rail network, which will make the Kingdom the real Asean transportation hub, he predicted.