Closer to home: China and Japan are helping to develop Thailand’s rail infrastructure

Thailand’s rail sector is set to experience significant changes over the next decade, with new lines scheduled to be built in as soon as three years. The lines will be high speed or near high speed and connect most corners of the country, including its industrial areas and ports. Most notably, they will link the country with its neighbours, including Cambodia and Myanmar, and also increase connectivity between the country and its large neighbour China.

The vision of rail reform has been a theme for a number of years, but it has never resulted in significant construction of new lines. That is now changing, and it seems that the plans being discussed will result in projects being completed. The new government is intent on getting the lines built, while China and Japan are also keen to support the projects, for their own needs and as a means of competing with each other.

Airport Lines

Thailand is quickly upgrading connectivity to its airports, and China will play a key role in this process. The State Railway of Thailand (SRT) has received permission to buy seven cars for the Airport Rail Link, a 29-km line which runs from Suvarnabhumi Airport to downtown Bangkok. Changchun Railway Vehicles, a Chinese state owned-company, won the contract with a BT4.4bn ($132.4m) bid. More trains are needed because traffic on the route has increased considerably since opening in 2010, with ridership climbing from 30,000 a day to 60,000.

The government has also started work on rail lines that will link the capital’s three airports – Suvarnabhumi, Don Mueang and U-Tapao. In the past, other governments had made similar proposals but failed to build any lines. The first leg of the “Super Link” project will run from Phaya Thai to Don Mueang. It will be built in two phases, Phaya Thai to Bang Sue and Bang Sue to Don Mueang, and is expected to cost BT31.1bn ($936.1m). The service is scheduled to commence in 2020. The Suvarnabhumi to U-Tapao rail link is projected to cost BT100bn ($3bn), with U-Tapao opening for commercial service in July 2016 due to overcrowding at Bangkok’s other two airports.

The new government has major plans for the country’s rail beyond just the airport lines. It has said it will spend $83bn over the next seven years to significantly improve cross-border connections, a project which includes the upgrading of rail, roads and Customs points. According to the SRT, seven rail lines will be constructed through 2021 and seven more after that. The overall strategy is ambitious and promises to transform rail infrastructure in Thailand. The Strategic Framework for Development of Thailand’s Transportation Infrastructure 2015-22 calls for building a rapid and efficient railway network by achieving better connections with ASEAN countries and making Thailand a regional transportation hub.

The China Factor

China is playing a major role in the upgrade of the national network. In June 2015, an agreement was signed for a China-Thailand railway that is set to alter trade routes and relationships in the region. The route will run for 867 km, from Kunming, in Yunnan Province to Bangkok. Trains on the line will travel at speeds of up to 180 km per hour.

It is expected that the line will significantly reduce the cost of travel and transporting freight between the two countries. According to a People’s Daily report, a ticket from Kunming to Bangkok will cost BT3600 ($108), about half the price of a plane ticket, and freight will be transported at one-ninth the cost of air cargo. The project is scheduled for completion in three years and will cost an estimated BT350bn400bn ($10.5bn-12bn).

The specifics of the China-Thailand railway have been adjusted and otherwise reconfigured over time, and talks are ongoing. In August 2014, Thailand’s new government signed the initial agreement. A similar deal had been struck with the previous government, but was cancelled after the coup that brought the current military government to power. Disagreements on topics such as the speed of the train and funding, have slowed progress. The original specifications called for a 250-km-per-hour train, but that was adjusted down to keep costs under control. The project was supposed to start in October 2015, but disagreements about financing led to delays. The Thai government was looking for a concessional rate from China on the loan for the project, while the Chinese want something closer to a commercial rate.

Japan Factor

Japan is also supporting the expansion of rail, but its vision is quite a bit different from that of the Chinese. China wants connections to ASEAN, while Japan wants its investments in the region better connected, according to the Economist Intelligent Unit. In May 2015, Thailand approved a Japanese railway project that will involve an estimated $12bn worth of investment. Included in the project is a high-speed rail line running 670 km from Chiang Mai to Bangkok. Construction on that line could begin as soon as 2016. Other projects include those that will connect Thailand to its neighbouring countries and those that will improve the connectivity of the industrial zones. One line will run from Kanchanaburi on the border with Myanmar to Aranyaprathet, at the Cambodian border. Another line will run from Mae Sot at the Myanmar border to the Laos border. The first project to begin construction is a 574-km route running from the Myanmar border to the border with Cambodia. Japan is currently conducting feasibility studies on the routes and is especially focused on the Chiang Mai route, as that service will be at the level of the Japanese Shinkansen (Japan’s high-speed rail network) and will take a considerable engineering and technological investment.

In late 2015, Deputy Prime Minister Somkid Jatusripitak went to Japan to discuss the projects and keep them moving forward. He suggested the Thailand Future Fund, a government infrastructure fund, be used in support of the proposed lines. Japanese companies have said they are very interested in developing freight operations in the country. Japan Freight Railway and Toyota Tsusho will conduct a feasibility study for the SRT on the reconditioning and upgrading of a 300-km route running from the Cambodian border to the Laem Chabang port. “Laem Chabang Port continues to increase in its importance to the region. The port saw an 9% increase in traffic in terms of twenty-foot equivalent units handled in 2014, followed by 3.6% growth in 2015. Chatchawan Ghettalae, vice-president of TIPS, a private container operator, told OBG. “With investment taking place to both improve container terminal quality and increase capacity, coupled with stronger regional economic links, growth prospects remain high.” At present, no more than 20% of that route is being utilised for freight. The plan is to have the Japanese partners introduce a service on the line that will follow a timetable and provide advice on proper maintenance.