Long-needed overhaul for rail system

Some 90% of the 2.2-trillion-baht infrastructure investment programme will be devoted to upgrading the country's rail system, says Somchai Sujjapongse, director-general of the Fiscal Policy Office.

A vendor waits for customers at the Train Market in Bangkok on Saturday. The weekend flea market, which opens from 2pm to midnight, is located in a vast land plot owned by the State Railway of Thailand near Chatuchak Market. PATTARAPONG CHATPATTARASILL

Cabinet ministers will review a bill authorising loans to finance the investment programme on Feb 5.

The government says the investment, to be implemented over the next seven years, is critical for upgrading the country's basic infrastructure to support future economic growth and reduce logistics costs with the ultimate goal of raising Thailand's competitiveness.

Mr Somchai said Prime Minister Yingluck Shinawatra has emphasised to state planners the need for the programme to support broader strategies aimed at boosting "connectivity" between provinces and neighbouring countries to facilitate trade and investment.

The draft bill has two parts, with the first focused on the funding and debt-payments for the investment projects.

The Council of State is currently vetting the draft.

The second part will detail the investment programmes themselves, with details now being finalised by the Finance and Transport ministries.

Mr Somchai said the investment will be separated into two accounts, with the first outlining projects ready for immediate implementation and the second listing secondary projects.

Meanwhile, cabinet ministers will tomorrow discuss transport strategies for the next two decades.

Once the infrastructure bill is approved by parliament, the cabinet will be required to approve implementation of each individual project on a case-by-case basis.

Funding will be raised through both domestic and international borrowing.

Policymakers have long argued for upgrades to the country's rail, road and water transport networks to help improve efficiency across the economy as well as in the logistics system.

Logistics cost the country up to 1.64 trillion baht or 15.2% of gross domestic product in 2010 compared with just 8.3% in the US.

Some 90% of logistics costs were for transport expenses, network maintenance and warehousing expenses.

Rail improvements including new high-speed links nationwide, have received priority in the investment programme, as railways offer the lowest cost for transport compared with roads or air links.

Thailand depends on road transport for 94.3% of its logistics, with 4.1% for rail and just 1.6% for water transport.

About the author

Writer: Wichit Chantanusornsiri
Position: Business Reporter