On track to becoming Asean's rail hub
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On track to becoming Asean's rail hub

Located in the centre of Southeast Asia, Thailand occupies the natural intersection of Asean market trade flows and boasts an unique geographical location in the 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. With considerable development, Thailand has become the second-largest economy in the Asean bloc.

A Yala-bound train rests on the grass after derailing near Bangkok's Bang Sue station. Thailand urgently needs to upgrade its railway system to become a regional transport hub. PATTARAPONG CHATPATTARASILL

The global economic landscape has undergone major changes in recent years. Europe, the United States and other developed economies are continuing to suffer a decline in global trade and investment as a result of the debt crisis.

But with the further development of economic integration, intra-regional trade, and growth in investment and tourism, Asia has become one of the most dynamic regions in the world.

Thailand should grasp the opportunity of regional integration, exploit its advantages, and build itself Asean's trade and investment centre, as well as a transport and logistics hub. To this end, Thailand is to launch a new round of large-scale infrastructure construction. Upgrading the railway system — the weak link in the country's transport system — will be the focus of the current round of infrastructure construction.

The Thai rail system was initially built in the reign of King Rama V and has a history of more than 120 years. In 1930, Thailand converted all its railway tracks to metre-gauge. By 1946, Thailand had built 3,285 kilometres of railways and the national rail network as we know it had basically taken shape.

Since the end of World War II, transport infrastructure in Thailand has been deeply influenced by the American model, with lots of effort put into road and air transport, while railway development remained stagnant. The total length of Thai railways has increased only 1,000km in the past 70 years. At present the total mileage of Thai railways is only 4,363km, of which 3,755km are still single track.

There are also problems with old equipment, poor management and maintenance, low speed (freight trains average a speed of about 29 kph, while passenger trains do around 50kph), widespread delays, low capacity and poor security. Train derailments are not infrequent.

As a result, the annual volume of railway freight is less than a tenth of the total transport volume, while passenger trains are the last choice of travel mode due to being slow, unpunctual, unsafe and uncomfortable.

However, it is estimated that the cost of land transport is six times that of rail. Since rail doesn't offer an alternative, the logistics costs in Thailand are higher than those in other countries. According to a report by the National Economic and Social Development Board, Thailand's logistics costs make up 18% of GDP, way above the 10% in Japan and also higher than that of Malaysia, Singapore, and other Asean countries.

In order to build itself as an Asean transport hub, Thailand has to achieve wide-reaching connectivity for the country, while reducing logistics costs. This will save the time it takes to transport goods and make logistics more efficient. Therefore, the most urgent task is to upgrade and transform the present railway system by increasing its speed and expanding its capacity.

Previous governments have stirred controversy with various plans for high-speed train lines. Those who were in favour of the plans maintained that high-speed rail is fast and comfortable, would facilitate business and tourism, promote economic development along the routes and help narrow economic development gaps between different areas.

Yet those against the idea said high-speed rail is unnecessary since Thailand is a small country. Some raised concerns that the huge amount of investment required could leave a heavy burden on the national finances for a long time.

Others warned the high operational costs would equate to high ticket prices, beyond the affordability of most people. That would mean that only businessmen and tourists could enjoy the benefits of the service, and inadequate passenger numbers would eventually lead to great losses and no economic benefits.

After taking over the government in May, the junta halted the last administration's high-speed train plans and conducted a thorough review of the country's entire infrastructure development plan.

After listening to the opinions of different sides, the ruling National Council for Peace and Order formulated a national development strategy to cover transport infrastructure from 2014 to 2022, with a total investment of 2,400 billion baht.

The strategy covers five key areas including railways, roads, water transportation, aviation and mass transit. Demanding the largest slice of the budget, the railway strategy attracts most attention.

The rail strategy may be divided into two parts. The first part relates to the construction of six double track metre-gauge lines spanning 887km and costing 127.5 billion baht, which will be completed in 2020.

Standard-gauge rail tracks will increase train speeds. But there are still more than 4,300km of metre gauge lines in Thailand. It will take huge investment and a long time to transform them into standard gauge tracks, so the government has decided to convert the present metre-gauge single track lines into double tracks.

These will accommodate speeds of up to 90 kph, to break bottlenecks and quickly increase the national railway's capacity from the current 268 trains per day to 800 trains, including passenger trains and freight trains. 

The second part of the strategy relates to two new double-track lines. One is from Nong Khai, in the northeast of Thailand on Thai-Lao border, to the port at Map Ta Phut. This route will span 737km and cost 392.6 billion baht.

The other is from the Port of Chiang Khong on the Mekong River in the northern part of Thailand, also on the Thai-Lao border, to Phachi district. It will join up with the Nong Khai-Map Ta Phut line and will span 655km at a cost of 346.9 billion baht.

Both lines will be 1.435-metre standard gauge, with top speeds of 160-180kph, serving both quasi-high-speed passenger trains and freight trains.

Last month the cabinet approved a construction plan for 867km of standard gauge lines in the northeastern part of Thailand through government-to-government cooperation between Thailand and China. The lines include Nongkhai-Nakhon Ratchasima-Kaeng Khoi-Map Ta Phut (734km) and Kaeng Khoi-Bangkok (133km). The projects will cost 350 billion baht and are scheduled to be completed in the next four years.

The National Legislative Assembly also voted on Dec 4 to approve a draft Memorandum of Understanding (MoU) on the China-Thailand railway deal, which paves the way for work to begin on building the first 1.435-metre standard gauge rail. Although the cooperation model and ways of financing are yet to be decided, both governments want the construction to start at the beginning of 2016.

Such a major decision was not made easily. The current administration has weighed what to do based on studies carried out by the previous two administrations and on reviews of the leading technology around the world. China's offering stood out because of its high cost-effectiveness.

It is well known that China possesses the most comprehensive technology for high-speed railway systems, the best integration capability, the longest operating mileage, the highest operating speeds and the largest scale of railways under construction.

By the end of 2013, the total mileage of railways operating in China was 103,000km, including 11,000km of high-speed rail lines. A further 12,000km of high-speed rail lines is under construction.

China's railway technology has been widely recognised across the world. More than 100 countries have sent representatives to China to learn about high-speed railway technology, among which more than 50 countries have expressed their intention to cooperate on high-speed railway construction.

This year witnessed the completion of the second stage of the Ankara-Istanbul high-speed rail project (158km) and Angola's Benguela rail project (1,344km), both of which were contracted out to Chinese companies. Time will prove that the Thai government has made a wise decision by cooperating with China.

Compared with previous high-speed train proposals, the current double track rail plan will produce more economic benefits. The reduction in speeds from 250kph in the previous plan to 160-180kph this time around will cut the cost of construction and operations, and match the living standards of those who live along the lines.

Both passenger and freight trains will run on the new lines, which will increase useability. Since the standard gauge will have been applied, it will be easy to upgrade to high-speed rail in the future when there is sufficient demand.

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 will have easier access to the markets of China and the rest of the world,  as will industrial products. More and more tourists — both domestic and those from abroad — will be attracted to visit the east, and particularly the northeastern part of Thailand. The economy along the line will grow in leaps and bounds.

Furthermore, Thailand's railways will lead all the way to Europe via China's railway network, making the country the real Asean transport hub.

Huang Bin is head of the Chinese Department at the Kasikorn Research Center.

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