Asia Minute: Thailand Weighs Payment Options for Rail

Apr 29, 2019

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Credit Xiengyod / CC BY-SA 4.0 / Wikimedia Commons

Here’s a question that’s familiar to residents of Oahu: what’s the best way to pay for a multi-billion dollar rail project? It’s a question that’s also coming under increased focus in Thailand.

For about five years, government leaders have been talking about a rail project that would link Thailand, Laos and China. The rail line is part of China’s massive “belt and road initiative” — infrastructure projects stretching from East Asia to Europe. This piece would run more than 500 miles, and expenses would be shared.

At the end of last week, officials from the three countries signed a memo of cooperation agreeing to some technical details.

But the financing piece still isn’t precisely clear.

The first section of the railway in Thailand is about half finished at a price of more than 5-billion U.S. dollars. The estimate for Thailand’s share of the total project tops 12-billion dollars. And as any taxpayer familiar with the cost of a rail project is aware, those estimates often rise.

Three years ago, Thailand rejected an offer of Chinese financing — Reuters says that decision was made because of high interest rates.

More recently, the Export-Import Bank of China has offered a low-interest loan, but there’s been no announcement of a decision on the part of the Thai government. 

The South China Morning Post reports 80% of the loans would be in Thai baht — removing any concern about currency fluctuation.

That doesn’t ease another concern: how long it will take the rail connection to turn a profit for Thailand.