Thailand: China’s loan terms rejected – 14 Aug 2017

  • Financing details of the Sino-Thai high speed train remain unresolved, although the two governments have agreed that the first phase of the new route will be the Bangkok to Nakhon Ratchasima route, said Minister of Transport Arkhom Termpittayapaisith
  • Negotiation of loan terms continues with both sides holding different views about details related to Thailand borrowing funds from China to finance the 253km Bangkok-Nakhon Ratchasima route, which will need an estimated THB179bn investment.
  • “China wants to put tough conditions on the loan contract, demanding that the Chinese government could seize other assets of the Thai government if the Thai government defaults on debt repayments,” said Arkhom. Thailand proposes to borrow about 25% of the total project cost.
  • China’s negotiators argued that it would apply the same conditions agreed to by the Lao government for financing a high-speed rail linking that nation to southern China. The Chinese government will be able to seize five mine assets if Vientiane fails to repay the debt.
  • China’s government is also demanding a high interest rate from Thailand, higher than it granted Indonesia for a similar project. The two sides have put aside the financial issue for the moment, as they still have time for further negotiations.
  • The route is divided into four sections, with construction on the first 3.5km planned to start in Oct 17. After the first contract is signed, the two sides will start to work on a construction plan for the second phase, the 355km section from Nakhon Ratchasima to Nong Khai province, Akhom said.
  • The high-speed rail service between Bangkok and Nakhon Ratchasima would start around 2021 or 2022, he added. Then the service between Nakhon Ratchasima to Nong Khai province will open in 2022 or 2023, the same year as the route from southern China to Laos starts service.
  • Arkhom said he expected China would transport both goods and tourists via high-speed rail, as it could export its products to deep seaports on the eastern coast of Thailand.
  • He admitted it might take 30 years or longer before financial returns would be positive. However, a fast service would greatly boost economic returns, he said.

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