The Thailand government has pledged to conclude the construction of a long-awaited high-speed rail link to China via Laos within the next six years. The delayed rail network, which will yield mutually beneficial economic and trade benefits, is on track for completion by 2028. Government officials have said the first of two critical stages of the project would be finalised by 2026, costing approximately 434 billion baht.
Some 378 miles of track will be constructed from the capital of Bangkok to the north-eastern border province of Nong Khai. From here, a new bridge will be erected over the Mekong River, hooking up Thailand’s rail network to the China-Laos line. The Laos government invested almost $6 billion to conclude its tie-up with mainland China.
High-speed rail project was originally due for completion last year
The concept for this project was first revealed in 2014, as part of the Chinese government’s ‘Belt and Road Initiative’. Fresh impetus has been given to the project following a meeting between Thai Prime Minister, Prayut Chano-cha and Chinese Foreign Minister, Wang Yi. Arjaree Sriratanaban, director-general for the Department of East Asian Affairs at the Ministry of Foreign Affairs, said the government “emphasises the importance” of the rail link and the country’s endeavors to “support regional connectivity”.
The bold approach to this high-speed rail route and the increased investment comes when the Thai baht fell to a five-year low against the US dollar. Sluggish growth in the global economy has the potential to derail some of Thailand’s economic recovery. In forex trading, many retail traders seek the US dollar as a relative ‘safe haven’ to shield funds during periods of global economic volatility. The USD/THB forex pair is one of dozens of forex pairs traded daily and is supported by the MT5 trading platform that gives domestic and overseas traders the ability to buy and sell the baht against the US dollar 24 hours a day, five days a week. With some 88% of the first stage of the high-speed rail project still to be completed by 2026, the weakening baht may still put paid to the government’s lofty ambitions.
Pichet Kunadhamraks, director-general of the Department of Rail Transport, says a test run of the first stage of track is slated for 2026, with 2027 ring-fenced as the year the line will enter public service. The first stage of the project will cost the government 180 billion baht, running from Bangkok to the Nakhon Ratchasima province.
No firm date for the completion of project’s second stage
The second and final stage of the project – which does not have a scheduled date for completion yet – will cost a further 254 billion baht and run from Nakhon Ratchasima north-east to the Laos border. The belief is that this infrastructure project will mark the commencement of direct links between mainland China and Southeast Asia, including economic hubs such as Singapore and Malaysia.
The route, once complete, will travel through a host of Thailand’s primary agricultural regions. Some of Thailand’s key Free Trade Zones are also positioned along the provisional route, which could prove hugely beneficial for the nation to attract offshore investment from those looking to diversify from China while keeping direct access to its consumer market.