Singular Infrastructure

Thailand's national infrastructure, particularly its transport network, is set to undergo a long-awaited transformation over the next eight years, following the approval of a US$75 billion (Bt2.4 trillion) master plan by the country's ruling military regime. The National Council for Peace and Order (NCPO) agreed in principle to implement a set of projects known as the "Strategies on Thailand's Infrastructure Development in Transportation (2014 - 2022)", as proposed by the Ministry of Transport. Concerned public agencies are to lay out their long-term plans based on the Strategies. The NCPO also approved the need to initiate immediately certain critical phases of the Strategies in 2014 and 2015. For instance, transportation connectivity between commercial/primary cities and Bangkok (plus environs), and upgrading railway transportation through the construction of dual-gauge rail infrastructure for logistics purposes and for capacity enhancement of local trains.

The primary goal of the government is to restructure the Thai transportation system by accelerating the expansion and improvement of the national railway network to correct the country's lopsided dependence on road transportation. Thus, 78% of the Bt2.4 trillion budgeted for investment in the transportation infrastructure of Thailand over the next seven years would be devoted to railway development. Among other aims, the government seeks to cut Thailand's logistics costs from 15.2% to 13.2% of GDP, create 1.6 million jobs; and raise annual GDP growth by 1%. The real benefit to be derived is the enhanced competitiveness of the country after Thailand's transportation and logistics have been restructured.

Another major component is to expand Bangkok's mass transit system by 400km from the current 80km by 2017. Construction of new roads is part of the plan to link Thailand to a road network covering the six countries (southern China, Thailand, Myanmar, Laos, Cambodia and Vietnam) of the Greater Mekong Sub-region.

Thailand's transportation infrastructure is road-oriented. There are 462,133km of roads in the country but less than 4,000km of railroad track. Water transportation also is under-utilized as waterways comprise only 5,000km. Thailand ranks 48th overall for infrastructure under basic requirements rankings (WEF Global Competitive Report 2014-2015). Comparing the different modes of transport, by road is the most expensive, estimated at Bt2.12 per ton per km (t/km), followed by rail at Bt0.95/t/ km and water 0.65/t/km. The issue is that 87.5% of Thailand's freight is transported by road and only 1.4% by rail. As a result, transportation consumes as much as 31% of Thailand's energy use (industrial production by comparison accounts for 41%). Typically, transportation accounts for about 15% of total energy use in advanced countries.

It was reported by the Bangkok Post that the NCPO has approved two high-speed train projects (with a maximum velocity of 160 kilometers per hour) at a total cost of Bt741.4 billion. Indeed, the two routes approved are intended to serve as a transport link between Thailand and southern China. The Nong Khai-Map Ta Phut route will be 737km in length and cost Bt392.5 billion while the Chiang Khong-Ban Phachi route will be 655km long and cost Bt348.8 billion. The construction of these two high-speed train routes is part of the eight-year infrastructure development scheme beginning this year.

Ms. Soithip Traisuth, permanent secretary for transport, declared that these projects are intended to improve connections within the country's transport network, which includes gateways to border trade, key cities, Bangkok, its surrounding provinces, seaports, airports, and cargo rail transport centers. Recently, the Ministry of Transport has been allocated a budget of Bt112.38 billion for fiscal 2015, up 11.7 per cent from the previous fiscal year, making it the second-largest recipient of State funds.

Furthermore, the Highways Department will be allocated about Bt61 billion for fiscal 2015, up from Bt52 billion from the previous fiscal year, in a bid to improve the transport logistics system. Apart from the Bt9 billion investment on upgrading Thailand's main highways network, projects linking the various regions of the country (Bt2.5 billion) and projects dealing with ASEAN connectivity (Bt1.2 billion) were included. Moreover, the Bt40 billion budget of Rural Roads Department would focus on carrying out expansion of the road network into underdeveloped areas of Thailand. Of that, Bt544 million was set aside for rural road development for tourism purposes.

The position of the government is that the high-speed trains will be much more than a public service, arguing that the sharp fall in commuting time to and from nearby provinces will decentralize Bangkok further, bringing with it better quality of life and greater economic opportunities for Thais. The high-speed train also will carry high-value and time-sensitive (perishable) cargo. Currently, 30% of agricultural products carried by trucks need to be written off as a loss as they reach the market either damaged or spoilt. Apart from constructing the rail routes, the urgent infrastructure development plan also includes plans to buy 106 new locomotives to serve existing lines.

At present Bangkok is served by a mass transit system comprised of four lines with a distance totaling 80km. The 10 mass transit lines, construction of which is expected to completed by 2019, would add another 410km. Of these, four lines (100km) are under construction and should be completed by 2017.

More specifically, the 23km Purple Line (Bang Yai-Bang Sue) should be completed by next year. On the other hand, the 27km Blue Line extension (Bang Sue-Tha Phra-Bang Khae), the 12.8km Green Line (Bearing-Samut Prakan), and the 26km Red Line (Bang Sue-Rangsit) are all expected to be completed by 2017. The other electric rail route projects are still pending either the bidding process or the pre-bidding preparation process, which includes an environmental impact assessment as mandated by law.

 

Thailand's road system is already well-developed and the annual budget to build and maintain roads is already sufficient. Therefore, investment in roads as part of the Bt2.4 trillion infrastructure plan is more modest. In particular, it is meant to complement the Asia Development Bank's Greater Mekong Subregion project (started in 1990) aimed at linking by road countries such as China, Myanmar, Thailand, Cambodia, Laos and Vietnam.

On the Thai side, the proposed road projects include: the Southern Economic Corridor, which links Bangkok to major cities in Cambodia and Ho Chi Minh City in Vietnam; the East-West Economic Corridor, which links Myanmar, north/northeast Thailand, Laos and the port of Da Nang in Vietnam; and the North-South Economic Corridor, which links northern Thailand through Laos and Myanmar to Kunming in southern China. All in all, there are 27 projects involving the three countries, which share their border with Thailand. There are 11 projects involving Laos, 3 projects involving Cambodia, 5 projects involving Malaysia, and 8 projects involving Myanmar.

For Thailand, the second-largest economy in Southeast Asia after Indonesia, there is a need for infrastructure improvements, particularly because trade and commerce with neighboring ASEAN members Cambodia, Laos, Myanmar and Vietnam (CLMV) is becoming increasingly more important to the Thai economy.

It must be mentioned that trade with the CLMV countries comprised up to 8.3% of Thailand's exports in 2013, up from 5.7% just five years ago (2008). That means that when considered as export markets the CLMV bloc is nearly as important as the comparatively enormous European Union, which consumes about 10% of Thailand's exports.

Thailand's border trade with Myanmar, Laos, Cambodia and Malaysia amounted to about US$25bn in 2013 or 10% of total exports. Trade with Malaysia accounts for nearly 53% of total border trade. However, the trade with Myanmar, Laos and Cambodia has grown quickly in recent years and it is likely that there is significant under-counting of actual trade given the long and unmarked border between Thailand and its neighboring countries. Moreover, other economic activities such as tourism and investment are likely to rise as connectivity is enhanced.

Overall, the rationale of the government's transportation investment program is to engineer a modal shift from road to rail. Furthermore, the new infrastructure projects are likely to tap the fiscal budget, borrowing and public-private partnerships (PPPs). Dr. Chula Sukmanop, director-general of the Office of Transport and Traffic Policy and Planning, commented to the Bangkok Post that the construction of four-lane roads, ports, motorways and the Skytrain extension should be paid for by the fiscal budget, while mass-transit routes and some dual track railways could rely on domestic and foreign loans.

Apart from the railway infrastructure, State funds will be tapped for airport and seaport improvements. For instance, Thailand's newest scheme to boost air transport capacity calls for raising efficiency standards at Suvarnabhumi International Airport, promoting more the country's regional airports, advancing domestic aviation industries, and improving the use of Thai air space. The government also intends to improve water infrastructure to prevent devastating floods like the ones that inundated Bangkok and surrounding areas in 2011. According to Arkhom Termpittayapaisith, deputy minister of transport and secretary-general of the National Economic and Social Development Board, some elements of the Bt350 billion water management plan are worth keeping, especially irrigation expansion in Phitsanulok and Phichit, which would help increase arable areas.

Additionally, development of telecommunications infrastructure is geared to provide high-speed internet service covering all areas of the country and creating more opportunity for Thais to be connected. Moreover, the Government Information Network (GInet) will be developed further to support large companies and SMEs in utilizing it efficiently, thereby improving their competitiveness and generating greater income. In fact, the Ministry of Information and Communications Technology was allocated a budget of Bt5.723 billion for fiscal 2015. Its main roles are to manage and develop ICT infrastructure and promote ICT use in many areas.

Likewise, improvement of public infrastructure is another target. The water supply system in rural areas and economic zones as well as waste water management systems will be enhanced to stimulate proficient utilization of resources and their measured consumption by the public as well as the manufacturing and service sectors.

Setting dual track rail lines, building four-lane highways to nine key border points, and even adding more truck terminals would do more to boost trade with neighboring countries and improve transportation logistics. Planned construction is likely to boost Thailand's GDP and - as a knock-on effect - lead to significant private investment. Industrial and real estate firms will step up their own investments in private projects as a result of the Thai government's plans. Similarly, it is expected there would be more business opportunities in the service sector, such as hotels and logistics.

Capitalizing on Thailand's geographical location and extensive infrastructure, the potential of ASEAN connectivity gains could be tremendous. Road linkages with Myanmar and Cambodia are currently inadequate and rail connections insufficient, but exports to Myanmar, Laos, Cambodia and Vietnam are increasing every year. Ocean vessels carry significant proportions of Thai products to Myanmar and Vietnam, while poor connections make exports to Cambodia a cumbersome venture. With ample road and rail links, exports to neighboring countries could see a significant uplift, thereby resulting in economic growth and the transformation of Thailand into a genuine ASEAN hub.

 

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