Mass Transit Loan From Japan Secured During Abhisit's Visit

[sriracha john]

Thailand Prime Minister Abhisit Vejjajiva and Japan Prime Minister Taro Aso

Abhisit wins backing for train deal

PM Abhisit has left Japan with a 63 Billion Yen (24 Billion Baht) loan secured by the Japanese government to help finance construction of a mass transit rail system in Thailand. Mr Abhisit, who yesterday ended his three-day official visit to Tokyo aimed at encouraging Japanese businessmen to invest more in Thailand and boosting trade between the two countries, confirmed the loan. The approval was made during his talks with Japanese counterpart Taro Aso, he said. The loan will be used for financing the long-delayed construction of the 66.8km Red Line electric train from Rangsit in Pathum Thani province, passing through Bang Sue and Hua Lamphong, to Mahachai in Samut Sakhon province. Japan is Thailand's largest trading partner and the two countries have close diplomatic ties, including warm relations between their Royal families.

Continued here:

http://www.bangkokpost.com/news/local/1363...-to-thailand-pm

Edited February 8, 2009 by PeaceBlondie
Correct destinaiton.

[sriracha john]

Japan approves 63 Billion Yen loan to Thailand for mass transit rail system

TOKYO, Feb 7 (TNA) -- The Japanese government has given the green light on providing 63 Billion Yen to Thailand to help finance constructing a mass transit rail system designed to improve urban communication and ease traffic congestion in the Thai capital, Prime Minister Abhisit Vejjajiva said on Saturday.

Mr. Abhisit, who is now on a three-day official visit to Japan aimed at encouraging Japanese businessmen to invest more in Thailand and boosting trade between the two countries, said the approval was made during his talks with his Japanese counterpart, Taro Aso, on Friday.

The loan will be used for financing the long-delayed construction of the 66.8-kilometre 'Red Route' from Rangsit in Pathum Thani province, passing through Bang Sue and Hua Lampong to Mahachai in Samut Sakhon province.

Mr. Abhisit said he had also discussed bilateral relations with Mr. Aso, while the Japanese leader expressed his wish to see countries in the Asian region respond to deal with the global economic meltdown as Japan also wanted the Association of Southeast Asian Nations (ASEAN) to support it in playing a significant role in the Greater Mekong Subregion (GMS) project.

Cambodia, China, Laos, Myanmar, Thailand, and Vietnam are members of the GMS development project which involves comprehensive cooperation in many areas – trade, tourism, telecomnunications, transportation, energy, and the environment.

Mr. Abhisit said Thailand and Japan will again cooperate on battling the world economic slump as they did before during the 1997 Asian financial crisis, which originated from Thailand.

Touching on Thailand's political changes, Mr. Aso told Mr. Abhisit that he expected Thailand could overcome political obstacles and the problem would not become a hindrance to cooperation between the two countries.

[sriracha john]

Japan approves 63 Billion Yen loan for Skytrain project

The Japanese Government has granted an approval on 63 Billion Yen loan for the Red Line Skytrain construction project in Bangkok.

Today (February 7), Prime Minister Abhisit Vejjajiva stated that the bilateral talk with the Prime Minister of Japan Taro Aso that was held last night had finally reached mutual consent to extend both of their economic and political partnerships, as well as development of ASEAN member countries to tackle the global financial crises.

In fact, Thailand has been recognized by Japan as a major partner in various dimensions of development and the ASEAN Economic Ministers' (AEM) plus three meetings would be used as venue to officially announce these cooperative acts Thailand and Japan have already agreed upon.

Furthermore, the Japanese Government also had approved the 63 Billion Yen loan to the Thai Government, which is to be used to finance the State Railway of Thailand (SRT)’s Red Line Skytrain construction project.

- ThaiNews / 2009-02-07

[sriracha john]

Map of Red Line as well as all proposed mass transit lines for Bangkok (courtesy of 2Bangkok):

http://www.2bangkok.com/2bangkok/MassTrans...0Plan%207.5.pdf

[sriracha john]

Thread sub-title should read:

from Pathum Thani to Samut Sakhon

[Seneque]

I suppose a loan is not the same as a gift!... so what are the implications on top of the fact that Thailand will have to pay back (despite zero interest rates ... with a possible depreciation of the baht on the way ... it might be costly to pay back if the yen maintains its firmness).

Japanese companies to build the project, Japanese equipments to be used (at what costs?), Japanese manpower (for management), etc.... is this part of the 220 billions this government wants to borrow to 'stimulate' the economy for Thais’ benefit ?

I believe development of infrastructures is essential for the future of Thailand, only if Thai companies are involved other than being just providers of workers ... which are probably going to be mostly from neighboring countries...

Hope we will get more info on this. However as most news here, there is rarely any follow up on the announcement

[stumonster]

I wonder if they first have to demolish the supports already there for the original elevated light rail project ?

and I hope it is completed faster than 3klms per 10 years.

and no plan for a line down chaeng wattana , ram intra to connect the other aide of rama 4 bridge to minburi

[animatic]

International investors in these big projects are typical.

governments or conglomerates. Governments take less interest,

but encourage more trade later.

[geriatrickid]

I believe that a condition of the loan is that it is to be used to purchase Japanese hard goods and materials for use in the project. Translation: Trade subsidy for Japanese manufacturers & engineers.

[Nordlys]

I believe that a condition of the loan is that it is to be used to purchase Japanese hard goods and materials for use in the project. Translation: Trade subsidy for Japanese manufacturers & engineers.

Not unless it is a grant aid. In this case it is a yen loan, therefore untied. Bangkok MRTA development was also financed largely by loans from Japan Bank of Int'l Cooperation (JBIC). Trains used for MRTA is not Japanese made, but German Siemens.

Edited February 8, 2009 by Nordlys

[theworldislikearide]

Can anyone explain what this actually is. Is the red line an extension of the BTS, MRT, a standard train line or a combination of the three?

[SmugFarangBore]

The debt for the initial BTS project stood at THB38billion.

Now the extensions have been built and this loan has been taken on board the debt must be of ridiculously high proportions.

[Gravelrash]

Thailand can do with the infrastructure, seems all pretty normal stuff to me. Besides if they use Japanese contractors or parts at least it will work right.

[marquess]

The whole thing is a work of fiction they have been talking about these various lines for years, and as far as I am aware no construction has even begun on any of them. Come back in ten years and you might just be able catch a train across Bangkok.

[Heng]

For every Japanese company that is a household name... there are another thousand or so that are pretty much freely doing business here because of these frequent Japanese loan/aid/etc. etc. packages you hear about. It's no different than when you hear of any other country investing in another country at a gov't level.

[jbowman1993]

Abhisit has done more in 2 months than the PPP did in 12 months. Most good, some bad. Stimulus bill, ASEAN revival, securing the red line loan, renewing the confidence of the rest of the world. So nice to have a semi-competent person in charge.

Or perhaps you would rather have Charlerm guiding us through this rocky time.... Someone? Anyone? Yeah, I thought so.

[geriatrickid]

I believe that a condition of the loan is that it is to be used to purchase Japanese hard goods and materials for use in the project. Translation: Trade subsidy for Japanese manufacturers & engineers.

Not unless it is a grant aid. In this case it is a yen loan, therefore untied. Bangkok MRTA development was also financed largely by loans from Japan Bank of Int'l Cooperation (JBIC). Trains used for MRTA is not Japanese made, but German Siemens.

And if you look at the financing of the rolling stock you will see that Germany helped pay for it. However back to Japan. Japan has always tied its ODA and funding to reinvestment in goods and services or votes (e.g. aid to the Carribean in return for pro whaling votes)

Rather than me citing historical references such as the JICA press archives, how about we just go to the Bangkok Post article of January 23, which sums up some of the key issues? http://www.readbangkokpost.com/business/au..._transit_in.php

There may be further delays because details in the loan agreement with the Japanese: "some conditions require Japanese firms to play a key role in the construction. They also stipulate at least 30% of the construction materials must be bought from Japan...the conditions might violate the 1999 act on bids....We will suggest the cabinet amend the loan conditions and allow for an interest rate higher than 1% - or we'll just look for a new loan source..."

I am not stating anything that isn't already a known part of Japanese foreign loan strategies. It makes sense for the Japanese but is still at its core, a subsidy to Japanese companies.

[Nordlys]

I am not stating anything that isn't already a known part of Japanese foreign loan　strategies. It makes sense for the Japanese but is still at its core, a subsidy to Japanese companies.

Well, not when I was working on 5.5 billion yen ODA project in Sri Lanaka on JBIC loan (railway rehabilitation project) through a trading company in Japan in late 90's. Hardly anything was supplied from Japan then (except for civil engineering work). We would not have won the tender had we made the bid on bill of materials full of items that are of Japanese origin. In those days, JICA provided grant aid (tied), and JBIC (was called OECF then) the yen loan (untied).

But apparently you're right. The law has since changed in 2002 to include the provision in loan contract that 30% of the loan value be spent on procurement of equipment and material (or service) of Japanese origin. It's called Special Terms for Economic Partnership, or STEP (I'm not posting link here as I only have Japanese languae source). I actually do welcome this move. However, Japanese yen loan through OECF/JBIC has traditionally been untied in principle since 1978 from what I remember. 90% of it untied and 10% tied on projects awarded JBIC loan in 2005 according to one source I'm quoting from. And I wouldn't call subsidy to the Japanese companies to be at the core of Japanese ODA when only 30% of the loan value is required to go to Japanese firms.

Edited February 8, 2009 by Nordlys

[geriatrickid]

My cynical view of the original report arose because it left the impression that funding was the result of economic genius by the current government, when it is in fact motivated by Japan's need to keep its manufacturing sector afloat.

[Thai at Heart]

As a simple question, why are the borrowing instead of buying?

Is the current govt worried to purchase because of a strengthening of the baht? Will the last xxbn dollars of borrowing have a net zero or minor negative effect on the baht?