Thai-Chinese rail project: The arduous task of finding 'win-win' formula

[webfact]

Opinion

Thai-Chinese rail project: The arduous task of finding 'win-win' formula

By Suthichai Yoon 
The Nation

 

BANGKOK: -- Chinese Foreign Minister Wang Yi was in town earlier this week and, to nobody’s surprise, the main topic he raised with Prime Minister Prayut Chan-o-cha was the Thai-Chinese railway project.

 

The rail scheme has become more than just a running economic issue between the two countries. It has in fact been so politicised that when Prayut was left off the list of six Thai Cabinet members invited to the One Belt One Road Summit in Beijing recently, speculation arose that the Chinese government was in effect sending a warning to the Thai leader – and it had everything to do with the “delay” in the rail project.

 

There was an interesting diplomatic twist to the incident, though, when Chinese leaders extended an invitation for Prayut to join the BRICS (Brazil, Russia, India, China and South Africa) summit – which triggered rumours that Beijing had actually “raised the level” of the invitation.

 

But while in Bangkok, Wang Yi did underline Beijing’s serious concern over the project by urging that construction of the rail project should be sped up so that Thailand could connect to big markets in China and become a regional transit hub.

 

“Thailand is part of the important junctions both for land and marine transport in the One Belt One Road Initiative. Therefore, Thailand is a very important partner,” the Chinese foreign minister stressed.

 

The next Thai-Chinese meeting on the scheme will be the 20th in a series of discussions that have been plagued by tough bargaining on both sides.

 

Chinese envoys have complained to me about the “slow progress” and “bureaucratic haggling” that have frustrated their government. Thai officials have likewise put the blame on the inflexible stand taken by the Chinese, which, they claimed, was weakened by the lack of coordination among various organisations on China’s side.

 

The Thai government has been caught in a dilemma from the very start, having to balance the national interest against working out a “win-win” solution with Chinese apparently bent on cutting a deal that would put China’s engineering prowess on the world map.

 

Transport Minister Arkhom Termpityapaisith, sensitive to the danger of nationalistic feelings being roused by any suggestion the government is kowtowing to the Chinese side, insisted publicly last week that: “We are no ‘pigs’ [easy targets]. We have been striking a hard bargain all along. From Day One, the government refused to give up rights that some other countries might have been compelled to offer the Chinese side. We knew what the contracts said between China and those countries,” he said in an interview with Thai Post.

 

Insiders have told me that the prolonged negotiations at times veered into absurd roundabout arguments. 

 

A senior official who took part in some of the heated debates related a classic bureaucratic no-win situation:

 

“The Chinese side proposed a certain figure for the cost of the whole project based on their design. We said we could only consider that when they gave us all the details of the design. They said they didn’t have details because the work on the design hadn’t even started yet. We then countered that, since the contract hadn’t been signed, we could not possibly pay the design fee.

 

Then the Chinese side said we must first submit the project for Cabinet approval so that they could move ahead. We went back to them, saying that we couldn’t possibly submit the scheme for Cabinet approval if they couldn’t come up with the design … the talks went around and around, with no end in sight.”

 

In the end, the issue was resolved only when the Thai officials referred the matter to the transport minister, who contacted the China’s ministerial-level decision-makers. That’s when politics intervened – and the technical people as well as the bureaucrats went back to haggling over the details once again.

 

The barrier has apparently been brought down now that political will from both sides has overridden technical and economic considerations. But the railway project could still hit unexpected blocks unless all the conditions and details involved are revealed for public scrutiny and debate.

 

At one point, during the height of the closed-door debates, there was an ugly to-and-fro about whether China needed Thailand more – or the other way round.

 

That debate risked trespassing on dangerous political zones, especially given the interdependence of the international ecosystem. Hopefully, the right diplomatic balance has been restored – and all parties concerned can accept the fact that a mutually beneficial arrangement is the only way forward for both countries. 

 

Source: http://www.nationmultimedia.com/detail/opinion/30321911

 

-- © Copyright The Nation 2017-07-27

[ChrisY1]

And the start date is still September this year??

Sounds a long way off at present!

[YetAnother]

3 hours ago, webfact said:

Insiders have told me that the prolonged negotiations at times veered into absurd roundabout arguments.

classic;  can certainly imagine that; so often here we find leadership using such tactics when they cannot argue the merits and demerits of a topic; they start spewing nonsense, understanding there would be no further discussion to nonsense 

[mikebell]

3 hours ago, webfact said:

They said they didn’t have details because the work on the design hadn’t even started yet.

Yet Thailand are committed despite there being no plans yet?

[smutcakes]

Lots of costly reports to be completed. And we all know those 'reports' require very large budgets, so large that even if the project is cancelled or does not proceed then huge amounts of money has already swilled.

[rkidlad]

'Thai-Chinese rail project: The arduous task of finding 'win-win' formula'

 

I don't think the Chinese will find getting a win-win situation for themselves very arduous. It's usually just par for the course when dealing with other countries. 

[bluesofa]

1 hour ago, ChrisY1 said:

And the start date is still September this year??

Sounds a long way off at present!

There must have been many "start dates" for this project in the past, that have come and gone.

I'll wait to see some construction starting before I believe it, and I don't mean that 5km or whatever show piece it is in the middle.

I really want to see it happen. However, when say, 50km plus has been built, I'll think there will be a reasonable chance it might keep going. Remember the pillars for the Hopewell project?

 

(edit)

Here's a link to a TV page, telling us it will start in September.....2016:

 

Edited July 27, 2017 by bluesofa

[jaywalker]

The Chinese have already invaded Pattaya.

 

Not sure what they are waiting for to take over the whole country.

[Rancid]

Hmm, so officials on both sides arguing about how to divvy it up?

[klauskunkel]

4 hours ago, webfact said:

At one point, during the height of the closed-door debates, there was an ugly to-and-fro about whether China needed Thailand more – or the other way round.

must have been confusing for the translators..., or hilarious.

[yellowboat]

Don't see Thailand in a strong position.  They have pretty much thrown their arms around the Chinese.  Since Thailand is a commodity producer and China is a commodity buyer, a rail line would be far better way to trade.  There is a tourism issues as well.  Thailand needs tourism, as it is the best way for the average Thai to participate in the economy.  The rest of the economy is controlled by the controlling 1%.  

[humqdpf]

To put this in context, the Chinese railway in Laos has already started and tunnels are being dug right now. The Lao will get a fantastic piece of infrastructure linking much of the country to China as well as Thailand. This is crucial in a land-locked country where the road infrastructure has always been a huge problem with key sections always being washed away during the rainy season.

 

Perhaps it is time that Thailand jumps on board . . .

[kannot]

2 hours ago, ChrisY1 said:

And the start date is still September this year??

Sounds a long way off at present!

Its  well under way by me (Prachuap), already fenced off the old rail  line with metal fence, constructed fly  overs for road  traffic so no level crossings.

[Cadbury]

6 hours ago, webfact said:

"......a deal that would put China’s engineering prowess on the world map".

What about Thailand's engineering prowess? There was a story only recently where it was decided by the Machiavellian Thai military that the Chinese engineers would have to gain Thai certification before they could work on this rail project. World class Thai Engineers would set the parameters for the certification and the Chinese would be tested and approved by same Thai engineers. For a big fat fee of course. 

 

That demand for certification implies the Thai engineers are the masters of railway engineering competency (  ) rather than the Chinese engineers. Face saving knows no bounds.

Edited July 27, 2017 by Cadbury

[bluesofa]

1 hour ago, kannot said:

Its  well under way by me (Prachuap), already fenced off the old rail  line with metal fence, constructed fly  overs for road  traffic so no level crossings.

I didn't realise the route had been firmly agreed for this dual track standard gauge line - or is is it now single, I've lost track (no pun intended)?

I got the impression it would mostly be on new land, rather than running next to the metre-gauge?

[Chris Lawrence]

So the contractor is pulling the strings. Or someone has been telling porkies/big noting themselves.

 

These guys fight wars, they don't build railways. They probably have the project management all tits up. Where is the money coming from and has it been locked in?

 

When are estimates of costs to be released?

[Srikcir]

7 hours ago, webfact said:

The next Thai-Chinese meeting on the scheme will be the 20th in a series of discussions that have been plagued by tough bargaining on both sides.

Still no final agreed cost estimate nor financing arrangements with the Chinese from whom Prayut wants to borrow 100% of the project cost. Even while he says the nation can afford to self finance the project.

 

Tough Bargaining? Prayut invoked Article 44 to bypass the mandatory economic analysis to determine whether the project would be self sustaining or an economic White Elephant on Thailand's treasury for the next 20 years. Thus far, Thai academics expect the rail system will fail profitability unless Thailand is able to export its soon to be had new knowledge of Chinese High Speed Rail technology to other countries in competition with China, France, Germany and Japan.

 

 

[Ricardo]

3 hours ago, Srikcir said:

Still no final agreed cost estimate nor financing arrangements with the Chinese from whom Prayut wants to borrow 100% of the project cost. Even while he says the nation can afford to self finance the project.

 

Agreed, the final financing-deal will need to be at an interest-rate which enables the whole project to be profitable, and there needs to be some incentive for China to send a reasonable-level of freight down-the-line to Laem Chabang & the other ports.

 

Or risk having Thailand taking all the risk, and over-paying on the loans, for a project which ultimately is mainly for China's economic-interest.

 

Meanwhile Thailand needs, and should expect to pay something, to upgrade its domestic-passenger link to Isaan, also for the economic-benefit which will accrue from exports (both agricultural & manufactured-goods) Northwards to China.

 

That deal has yet to be done or unveiled, the Chinese have seen earlier-offers rejected by Thailand as too expensive, so the pressure is now being applied, on the other hand they're already committed by the investment in the line through Laos.

 

So some serious haggling still to be done, hopefully resulting in a deal with which all parties are happy.

[chainarong]

The Chinese are applying pressure because  Chinese rail has had cancellations left right and center on H/S, at the moment export contracts read zero, even the Indonesia 2nd stage was dropped by the government and then taken up by a private consortium just to finish the project, the Chinese thought the world would come running, but costs and  problems on the Chinese systems have scared off other countries, the so called profitable area 2 to 3 hours trip duration, isn't what everyone wants, not for the cost.........................................

[The Deerhunter]

On 27/07/2017 at 11:44 AM, bluesofa said:

I didn't realise the route had been firmly agreed for this dual track standard gauge line - or is is it now single, I've lost track (no pun intended)?

I got the impression it would mostly be on new land, rather than running next to the metre-gauge?

All those questions and more need to be answered.  Also the Chinese wanted huge free land concessions next to the lines.  That was at one stage a major stocking point.

[Ricardo]

On 27/07/2017 at 10:33 AM, kannot said:

Its  well under way by me (Prachuap), already fenced off the old rail  line with metal fence, constructed fly  overs for road  traffic so no level crossings.

The new Chinese-Thai medium-speed heavy-freight standard-gauge line doesn't go anywhere near to Prachuap, I suspect that what you're seeing is preparations for the SRT metre-gauge track-doubling, the contract for the Hua-Hin to Prachuap section was just awarded to Ital-Thai a couple-of-days ago ?

 

 

Edited August 1, 2017 by Ricardo

[wakeupplease]

Railway > Azerbaijan, Pray tell what is that creating for the locals there, they where promised lots of work and jobs but hey ho all the jobs have gone to the Chinese and very little to the local people.