Indonesian state-owned corporation PT Industri Kereta Api (INKA) says it wants to strengthen its foothold in Southeast Asia by participating in the many railway megaprojects planned by the Thai government to compete with larger peers from China and Japan.
Countries in the region want high-speed and double-track railways to improve economic fundamentals over the long run, the company said.
PT INKA sees many positive factors in the Southeast Asia railway market, even as many foreign investors are labelling it a red ocean.
The East Java-based company produces a variety of locomotives, trains and cars. Its products have been successfully marketed in South Asia and Africa.
Founded in May 1981, PT INKA is interested in the State Railway of Thailand (SRT) contracts to construct seven double-track railways spanning 933km, projects worth a combined 113.66 billion baht.
Thananot Thunyaphongphaiboon, chief executive of Thanakorn Co, said the company has been appointed a business partner of PT INKA for its investment in Thailand. The partnership also covers both parties' presence in Cambodia, Laos, Myanmar and Vietnam.
"We have engaged discussions for cooperation in future business opportunities locally with the establishment of a joint venture firm, INKA Thailand Co, to handle the Thai government's megaprojects," Mr Thananot said.
Thanakorn owns a 59% stake in the local firm, while PT INKA holds the remaining 41%.
Furthermore, PT INKA plans to invest in train manufacturing by supplying new locomotives to the SRT; opening maintenance, repair and overhaul centres; and refurbishing and modifying existing SRT rolling stock.
"We have many business models to take part in the SRT's future procurement projects, such as forming a joint venture with local partners and partnerships in the form of both business-to-government and government-to-government models," Mr Thananot said.
PT INKA is ready to bid on the procurement of 100 diesel-electric locomotives and a lease agreement for 50 locomotives, worth 6.2 billion baht. This project has been submitted to the SRT board for acknowledgment. The new locomotives will replace an old fleet that will soon be decommissioned.
The project also aims to provide the extra locomotives to deal with several double-track railways that are set to be completed over the next few years, including the potential Jira-Ubon Ratchathani and Khon Kaen-Nong Khai rail lines.
In the past, PT INKA won the SRT procurement contract to ship 70 and 20 units of ballast hopper wagons in 1998 and 2000, respectively.
Mr Thananot said PT INKA's manufacturing facility has an annual capacity of 500 passenger and cargo carriers and 150 locomotives.
Moreover, PT INKA is keeping up investment in innovation and high technology to upgrade its business capability to serve customer demand in hybrid-diesel locomotives and hydraulic locomotives that are becoming a global trend.
Mr Thananot said Thailand has a strong position as an investment hub for Southeast Asia, while China is making headway with its One Belt One Road initiative, so development of railways to link routes to China is important for every country.
"We can serve the expansion of railway routes to other neighbouring countries in the near future to take advantage of China's initiative," he said.