Infrastructure's Military Might

Breakbulk Magazine cover with eery head overlaid with lights, graphs, etc. "Technology's Heavy Load"By Jaya Prakash

In the days following the military takeover in Thailand in 2014, the ruling junta unveiled a major spending program. Thai democracy may be weak, but the infusion of new projects may, rightly or wrongly, redeem the very military officers who suspended democracy in the name of expediency.

While the ousting of the democratically elected former Prime Minister Yingluck Shinawatra in 2014 – now a fugitive from the law – potentially threatened to cap hard-won economic gains, the kingdom has demonstrated remarkable resilience even without noticeably functioning democratic institutions.

Nor have sporadic acts of terror and a weak drainage system, resulting in massive floods and deaths this year, dented confidence in the resilience of the country. The World Bank forecasts Thailand’s economic growth to rise 3.2 percent in 2017 amid all the upheaval that had at times threatened to tear the nation apart.

But there is a caveat. To remain competitive, Thailand needs to embark on extensive reform of the economy to lay down a future for the country in areas such as infrastructure and advanced manufacturing, Kobsak Pootrakool, vice minister for the Office of the Prime Minister, noted in the World Bank report.

“And remaining competitive” was the catchphrase lying behind the colossal drive to pump some US$25 billion into the nation’s economy in a drive to spruce up the country, rejig and revive the economy and in the process, remove congestions and bottlenecks that have long dogged the nation, and gnawed at the nation’s gross domestic product, or GDP.


Blame It On The Tourists

Thailand’s increasing popularity as a tourist destination has played a surprising role in pushing more investment into infrastructure. During the first four months of 2017, Thailand was visited by 12 million tourists, generating more than 800 billion baht (US$24 billion). Tourist revenue of that scale is of course welcomed with outstretched hands, but that scale of tourism has also exposed the creaking infrastructure of Thailand. That has led to a necessary blueprint for the massive renovation of airports and seaports, and the development of better overall connectivity within and out of the kingdom.

“It is not about productivity, but about economic growth and connectivity,” Ruth Banomyong, director, Centre for Logistics Research Thammasat Business School at Thammasat University, told Breakbulk.

“With its strategic geopolitical position and significance as the second-largest economy in the Association of Southeast Asian Nations, or ASEAN, Thailand does play a commensurate role promoting regional cooperation and integration,” added the Asian Development Bank, or ABD. It also noted that Asia may be on the cusp of a major infrastructure development push over the next 10 years amounting to more than US$1 trillion.

But mystery remains – unfortunate for project cargo and breakbulk operators keen to get a foothold in this massive Thai infrastructure spending program. The country’s government public relations department simply stated: “The transport sector will facilitate connectivity to, within, and around Thailand and its neighboring countries.”

Thailand, the agency says, is in the process of developing its transport infrastructure and by doing so, aims to become Southeast Asia’s aviation hub – an accolade which now belongs to Singapore and one which Thailand has long had in its sights.


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Bangkok construction site of Skytrain red line from Bang Sue to Rangsit.
Bangkok construction site of Skytrain red line from Bang Sue to Rangsit. Credit: PongMoji / Shutterstock.com

All About Connectivity

Academic Kriengsak Chareonwongsak was able to shed some light on the plans. “Even though there are many projects in the government’s plan, the priority projects would be double-track railway projects. The government is now focusing on restructuring the Thai transportation system by accelerating the expansion and improvement of the railway network in order to correct the country’s lopsided dependence on road transportation.”

A cursory look at statistics from the nation’s Ministry of Transport website reveals why rail transport is a national concern. The country has just 3,763 kilometers of single-rail track in a landmass nearly equal to Britain, while double and triple tracks cover only 280 kilometers. By comparison, Great Britain has 16,209 kilometers.

Further, with population increases and rising commerce on the back of ASEAN connectivity giving yet another potential shot in the arm, it is becoming that much more essential to add double-track railways. It would also offer the promise of lowering transport costs, which at the prices posited in 2013 stood at 7.4 percent of total GDP costs.

The national Holy Grail to develop the country will mean raising the quality of overland travel to connect Thailand with its neighbors in the Greater Mekong Subregion, especially Laos, Cambodia, and Myanmar.

These drivers lie at the root of what Chareongwongsak described as Thailand’s “in-principle” agreement to approve some 36 large-scale infrastructure projects for 2017, worth 895.8 billion baht (US$25.2 billion).

The government also has 10 infrastructure projects out of a total 20 infrastructure projects worth 1.4 trillion baht (about US$30billion) planned for fiscal 2016, which have yet to start. Those delayed projects will start in 2017.

By embarking on delayed and envisioned projects the plan is, firstly, to capitalize on Thailand’s tourism potential. Then, Bangkok will begin allocating and assigning designated and strategic locations within the country to cater to the multitudes of air and sea travelers the country aims to entice.

Also within the ambit of infrastructure renewal are grandiose plans at snagging “various world-renowned tourist attractions in neighboring countries, which are all within three to four hours flying time, similar to European countries,” the country’s PR agency said.


Air And Road Transport

And Thailand is not just banking on rail and sea transport ancillaries. Building up aviation transport, added Juthaporn Rerngronasa, acting governor of the Tourism Authority of Thailand, is just as crucial. The main gateway at Suvarnabhumi International Airport is expected to see passenger arrivals rise exponentially before 2020, while Don Muang International Airport is slated for redevelopment along with Phuket International Airport.

Road transportation improvements are also being targeted. Thailand has one of the worst records in the world for safety. According to the World Health Organization’s Global Status Report on Road Safety, Thailand was ranked third in the world for road accidents. The World Bank estimates the annual cost of accidents to be up to 232,000 million baht. Fatalities accounted for 5.3 million baht, while disability injuries were at 6.2 million baht.

A master plan has been devised to “bring about unity of the national transport and traffic policy,” according to the Transport Ministry, and that will include improvements in road infrastructure and safety. Four-lane road networks are planned to access key economic nodes, as are new motorways and expressways and plans to develop road facilities for trucks. Another focus of the plan is on developing the inter-city rail network that is hoisting up public transport access within Bangkok.

Not to be forgotten in the grand scheme of things are Thailand’s seaports. Plans are underway to build facilities at opposite ends of the Gulf of Thailand and the Andaman Sea.


Counting the Cost

According to the Public Debt Management Office, 52 percent of the total investment of these infrastructure undertakings will come from government and state-owned enterprise borrowings.

Breakbulk understands that the projects will be financed through US$455 million in borrowings with the rest from the government budget, public-private partnerships, or PPPs, and an infrastructure fund.

“For investments in the form of PPPs, there are now many foreign investors interested in investing in Thailand’s infrastructure, especially investors from Hong Kong who recently came to talk with the Minister of Finance in Thailand about this issue,” Chareonwongsak said.

To support more foreign investment, Thai law has been liberalized, according to Chareonwongsak. Amendments to the Private Investments in State Undertakings Act have shortened the joint investment period between Thai nationals and foreign investors under PPPs. Such developments hammer home the Thai government’s desire to recast the country; project cargo and breakbulk operators would do well to keep a weather eye on its progress.

Jaya Prakash is a Singapore-based maritime analyst with wide-ranging knowledge on Asia.

 

Photo credit: lazyllama / Shutterstock

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