Thailand wants Chinese loan for railway project to be charged with lower than 2% rate

[webfact]

Thailand wants Chinese loan for railway project to be charged with lower than 2% rate



BANGKOK: -- The joint committee on railway cooperation between Thailand and China is due to meet in Beijing during October 27—29 during which a memorandum of cooperation is expected to be signed.

An informed Transport Ministry source said that China has wanted a contract to be signed by the Thai side has wanted to wait as there are some points which need to be cleared up.

The source expected that the two sides could reach an agreement on the interest rate charged by China for the project which is over 2 percent and on the survey and design of the first section of the rail route from Bangkok to Kaeng Khoi and the third section from Kaeng Khoi to Nakhon Ratchasima.

China has of late reduced the interest rate for loan to 2.5 percent but the Thai side has wanted the same rate charged by China for Indonesia which is lower than two percent, said the source.

However, the source said that although the two sides could resolve on the interest rate issue, signing of the contract would still have to wait as the total construction cost of the whole project needs to be determined.

Source: http://englishnews.thaipbs.or.th/thailand-wants-chinese-loan-for-railway-project-to-be-charged-with-lower-than-2-rate

-- Thai PBS 2015-10-26

[noitom]

Thailand is kicking China's butt on a better loan rate. Thais are tough. No one would want to be in those Chinese banking shoes going up against Thais.

[chainarong]

The Indonesian track is 600 klm shorter for starters and isn't the same design , one really doesn't know if Thailand is talking about Standard gage American, OZ style freight and passenger 90/ 120 / 160kph or dedicated high speed track 450 kph with concrete sleepers 16 cm apart and no freight , however if you have to haggle over 2% interest I think you are on the wrong train.

[daveAustin]

Thailand is kicking China's butt on a better loan rate. Thais are tough. No one would want to be in those Chinese banking shoes going up against Thais.

Tight is more the word that springs to mind. Thais are tight, not tough.

[MZurf]

Thailand is kicking China's butt on a better loan rate. Thais are tough. No one would want to be in those Chinese banking shoes going up against Thais.

Tight is more the word that springs to mind. Thais are tight, not tough.

Tight, tough or thick?

[Hawk]

The Thai government is trying to borrow a huge sum of money so 0.5% will indeed make a lot of difference.

[Ricardo]

I wonder what rate China is charging poor Laos, for their section of the line, which mainly (not totally) serves Chinese economic-interests ?

[NongKhaiKid]

Not sure it's a good idea to make public what you are trying to negotiate with China as they too are big on face and won't like it to seem LoS is trying to negotiate them down especially as it's the Thais who want the money.

Wouldn't be LoS though if someone couldn't keep quiet.

[sfokevin]

If I were the Chinese I would only agree to the rate if the both the Thai Government and the King agrees to guarantee the loan if the project is not completed...

[ratcatcher]

If I were the Chinese I would only agree to the rate if the both the Thai Government and the King agrees to guarantee the loan if the project is not completed...

Since discussion of the Higher Institution is not allowed on TVF, let us not discuss the fact that the H.I. is never involved in these kind of matters.

[NCC1701A]

why do commies charge interest? they can build this for the people using slave labor from China.

[Pib]

Maybe the Thai govt has hired some Thai loan sharks to do their interest rate negotiations. But instead of extracting the highest interest rate possible which is what loan sharks normally do, instead, they have been directed to extract the reverse--the lowest interest rate possible. Heck, the Thai govt may end up with a negative interest rate...China paying Thailand interest.

[waldroj]

In yet another piece of quality reporting from Thai BPS, we are told that an “informed” Transport Ministry source has advised of a delay in signing the MOC.

Apart from haggling over interest rates, another reason now being raised for the delay (after all the propaganda about the project’s importance) is the Thai side believes some points need to be cleared up.

And what might these be, you ask? Well, according to our MoT source the total construction cost of the whole project needs to be determined. What a surprising revelation at this late stage in the project, at least it will be been the final figure is revealed.

Could we still see this project derailed?

Aah, Thai BPS, The Broadcaster You Can Trust (to make you laugh)!

[Somtamnication]

The less you pay the devil, the more you owe him. Just sayin' .

[zaphod reborn]

In yet another piece of quality reporting from Thai BPS, we are told that an “informed” Transport Ministry source has advised of a delay in signing the MOC.

Apart from haggling over interest rates, another reason now being raised for the delay (after all the propaganda about the project’s importance) is the Thai side believes some points need to be cleared up.

And what might these be, you ask? Well, according to our MoT source the total construction cost of the whole project needs to be determined. What a surprising revelation at this late stage in the project, at least it will be been the final figure is revealed.

Could we still see this project derailed?

Aah, Thai BPS, The Broadcaster You Can Trust (to make you laugh)!

Yes, last month it was reported that the Chinese estimate on the cost of constructing the railway was about 30% higher than the Thai estimate. This was due to the fact that certain parts of the railway will need tunnels or bridges to be constructed. Of course, the Thai engineers never thought about that, because that would have required knowledge of terrain, limitations on train climbing and turning capacities and track geometry planning. I haven't seen any discussion of resolution of this key issue, and I'm assuming that is pending negotiation of the kickbacks that will be received by the Thai governmental authorities and their Chinese counterparts. More money = more kickbacks.

[realenglish1]

Hey if the Chinese are not going to lower the rate then Thailand has other options Japan makes great train systems and I am sure they would love that contract

Anyways if it says Made in China or Made in Japan which one would you pick ? I Rest my case

[Vandadavid]

Well the quality tourists they send spend so much money in Thailand from China... Millions flock there right ?

I can't see a problem of Xhina not making a buck of your country LOL

[Srikcir]

The Indonesian track is 600 klm shorter for starters and isn't the same design , one really doesn't know if Thailand is talking about Standard gage American, OZ style freight and passenger 90/ 120 / 160kph or dedicated high speed track 450 kph with concrete sleepers 16 cm apart and no freight , however if you have to haggle over 2% interest I think you are on the wrong train.

It's not just the Indoneasian financing.

2015-02-06

"the Ministry of Transport had requested the Chinese government to extend the grace period of the loan, and also lower the proposed 2-4% interest rate which was considered too high compared to the 1.5 percent offered by the Japan International Cooperation Agency (JICA) which was the major creditor of the Airport Rail Link construction."

Ten months now and still no acceptable finance terms. And the Chinese current cost estimate is 20-30% higher than their original estimates with no projected revenues that would pay for the project.

[slapout]

the best/only hope the Thai government has on even appearing to get a good deal is if the Chinese thai who control this country

( finance/business wise, etc.) have common ancestors to the representives of China who will be involved/ benifet.

[The Deerhunter]

And even at 30 or 50% dearer it could still be a better deal when quality and longevity are factored in. Chinese over Japanese cars, anyone?

[Srikcir]

The Junta brought on itself project delay over interest rates.

The railway project was first planned by the Abhisit regime in 2010. But the original MOU signed by the two governments called for a joint venture to develop the line. In the JV the Thai government might for example have only a 30% stake together with private Thai firms having another 30% stake and Chinese state enterprises having a 40% stake in the JV.

bilateral agreement wherein the high-speed rail projects would be partially paid for in rice, as well as through loan funding - See more at: http://www.asiabriefing.com/news/2014/08/china-thailand-high-speed-rail-project-back-track/#sthash.gEpK0hKa.dpuf

bilateral agreement wherein the high-speed rail projects would be partially paid for in rice, as well as through loan funding - See more at: http://www.asiabriefing.com/news/2014/08/china-thailand-high-speed-rail-project-back-track/#sthash.gEpK0hKa.dpuf

Each stakeholder would then share the financial burdens of the entire project which was crucial as it would "be difficult to get a return on investment from some parts of the line." - former finance minister and Democrat Party MP Korn Chatikavanij. Each stakeholder would provide their own financing (ie., corporate and treasury bonds) and thus, the Thai taxpayers would not shoulder the entire cost for any cost overruns. The Chinese would be motivated to hold down any cost increases. Yingluck had further reached a bilateral agreement to partially pay the Chinese in rice for Thailand's stake.

But according to the junta's new MOU between the two countries, the Thai government would instead borrow funds from the Chinese to finance the project. Eight meetings and ten months layer, the Prayut government is still arguing financial terms and now faces a 20%-30% cost increase with no firm revenue projections! What a mess.

[anotheruser]

If Thailand manages to get lower interest rates out of China they will be trading their first born son to do so. Thailand doesn't have the leverage here.

[Ricardo]

The railway project was first planned by the Abhisit regime in 2010.

I believe you're mistaken, the project to improve rail-transport between China and Singapore has been under-discussion for much longer than 2010.

https://en.wikipedia.org/wiki/Kunming%E2%80%93Singapore_Railway

"The concept originated with British and French imperialists, who sought to link the railways they had built in southwest China, Indochina and Malaya, but international conflicts in the 20th century kept regional railways fragmented. The idea was formally revived in October 2006 when 18 Asian and Eurasian countries signed the Trans-Asian Railway Network Agreement, which designates the Kunming-Singapore Railway as one of the Trans Asian Railways."