Thailand's location drives transport investment plan
A modal shift in transport for greater competitiveness is the name of the game behind the government's massive infrastructure development programme, which will be kicked off this year with the tendering of four high-speed-rail projects.Under the grand plan, 55 projects worth Bt2.27 trillion (US$66.29 billion) are to be completed by 2020.
These projects are part of the government's long-term development plan but are being expedited by a commitment to infrastructure investment, the opening up of Myanmar, and the implementation of the Asean Economic Community (AEC).
The Finance Ministry is expected to submit a draft Bt2.2-trillion borrowing bill for the Cabinet’s approval this month.
In the 2013 fiscal year, infrastructure spending of Bt100 billion is earmarked, according to Transport Minister Chadchart Sittipunt.
"The infrastructure development projects are designed to make Thailand the true centre stage of Asean. Under this plan, Bangkok will no longer singly represent Thailand. Major cities will gain greater prominence, thanks to the AEC, which will allow us to expand our territory without having to go to war, and extend regional connectivity," the minister said in an interview.
Of the total budget of Bt2.2 trillion, 64 per cent will fund 31 rail-related projects, 24 per cent will go to 13 road projects, 7 per cent to seven water-transport projects, and 4.75 per cent to four air-transport projects.
Ultimately, these projects are expected to improve linkages between Thailand and its Asean neighbours, reduce logistics costs, deal with growing traffic congestion, and boost tourism revenue.
Chadchart envisages Thailand as the centre of Asean through its presence in the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (Bimstec), the Greater mekong Subregion (GMS), the Ayeyawady-Chao Phraya-Mekong Economic Cooperation Strategy (ACEMECS), and the Indonesia-Malaysia-Thailand Growth Triangle.
To benefit fully from these connections, Thailand requires a new seamless network and new rules to facilitate cross-border transport.
Thailand will be linked with the regional groups through the Southern Economic Corridor (Bangkok-Phnom Penh-Ho Chi Minh City), the East-West Economic Corridor (Malamang-Phitsanulok-Khon Kaen-Savannakhet-Danang), and the North-South Economic Corridor (which links Thailand with Kunming, China, via Laos and Myanmar). Through Route R9, Thailand will link Vietnam, Cambodia and Myanmar.
The road links are expected to boost border trade, which totalled $22.7 billion in the first nine months of 2012.
"We need to be friends with all our neighbours and must not take advantage of them. This can be a win-win deal for all sides," Chadchart said.
New investments in rail projects are designed to reduce logistics costs, which now account for 15.2 per cent of gross domestic product, against 8.3 per cent in the United States.
The cost is high as freight transport is 86 per cent by road, though this mode is the most polluting and most dangerous to life.
From 71 billion kilotonnes equivalent of carbon emission in 2010, 35 per cent came from goods transport and 36 per cent from the manufacturing sector.
Shipment by rail and water, currently at 12 per cent and 2 per cent respectively, will be promoted because of their lower costs compared to road transport.
"Rail transport should be tentatively raised to 40 per cent," Chadchart said.
Costing a total of Bt900 billion, the four high-speed-rail routes will help the government achieve that goal.
While the high-speed trains will speed up travel for individual commuters, they will also promise a shorter transport period for goods.
In Bangkok, where new roads cannot be built, the combined length of the electric-train routes will be expanded by 10 times from 40 kilometres to 468.8km. Tendering of the MRT Pink Line is expected to take place next month.
"If the tendering of all 10 new projects can be launched within two years, they will all be completed seven years from now," he said.
In the air-transport segment, some airports will be improved to attract more tourism revenue.
"There are 38 airports in Thailand, but 72 per cent of tourist arrivals are seen through Suvarnabhumi Airport," Chadchart said.
"The bottleneck must be tackled. In this regard, the Mae Sot airport could be used for travel to Myanmar."
He said there was plenty of fiscal room to finance the projects.
"We can issue 3-per-cent bonds to finance the infrastructure projects.
"This is worthwhile as it will reduce energy consumption, pollution and logistics costs. We can invest first and pay back the investment through profits reaped from the projects," he said.
The government tentatively plans to finance 8 per cent of the needed funds through revenue of involved state enterprises, 69 per cent through borrowing by government and state enterprises, 9 per cent through annual fiscal budgets, and 14 per cent through public-private investment.
Unlike the Bt350-billion budget for the water-management scheme, which is backed by a borrowing decree, the minister said it was necessary for the government issue a law to back the Bt2.27-trillion transport-infrastructure investment.
"We need a law as we want to make it a national agenda, turning the projects into contingency plans that will bind all [subsequent] governments to follow through. It's a necessity for the nation. Whoever becomes the government must continue with it, as it will benefit the entire country."
To Chadchart, dealing with environmental concerns is key to the success of the scheme. Without public acceptance, the projects could face delays.
As much of the investment will go to rail projects, the government also needs to make sure that the State Railway of Thailand is capable of handling the projects.
He said the new SRT governor Prapat Chongsanguan and the labour union had started to see the urgency of restructuring, as few want to take a train ride because of poor service.