Politics Knocks rail link off tracks

PUBLISHED : Monday, 26 March, 2012, 12:00am
UPDATED : Monday, 26 March, 2012, 12:00am


Beijing's bold plan to build a vast cross-border rail network linking southern China with continental Southeast Asia all the way south to Singapore has run into the quagmire of regional political rivalries.

The resulting delays may cost Chinese state firms billions of dollars in lost high-speed railway deals in Thailand, though chances remain of winning contracts in Vietnam, said speakers at the recent Asia-Pacific Rail conference in Hong Kong.

In Bangkok this month, Thai transport ministry officials told visiting Chinese officials that the new Thai government had decided to reduce Chinese participation in the country's high-speed railway project to just 'technical co-operation'.

'Thailand will not have Chinese companies build the high-speed rail,' Ek Sittivaekin, chief of the policy planning research and development bureau of the State Railway of Thailand, told conference delegates.

'At the moment, Thailand and China will co-operate more on technical aspects, though Thailand will not be required to use Chinese technology. And technology from Germany, France, Japan, and others will be welcome.'

The Thai government has gone further and capped Chinese investment in Thai high-speed railway projects to 15 per cent of the network's total cost, according to Ek.

'The government also intends to spend its own money so that it can be financially independent and have broader options.'

In many countries, it is the normal practice for Chinese state-owned banks to supply most of the financing of infrastructure projects that Chinese state firms build.

Dennis Li, director of local transport consultancy MetroSolutions, said technical contracts would be worth much less than construction contracts, which could be worth billions of dollars. Before the former railways minister Liu Zhijun was arrested for suspected graft last February, Beijing proposed to Bangkok that Chinese state firms build five high-speed rail lines in Thailand with a total length of 3,133 kilometres at a cost of US$32.8 billion.

'The previous government wanted Chinese companies to build high-speed railways in Thailand, but the government has changed,' Ek said, adding, however, that the terms of high-speed railway co-operation between both countries may change further.

Without Chinese involvement, the high-speed railway link between Bangkok and Nong Khai near the Laotian border would take six years to build, double the time with Chinese financing and construction, Ek said.

The delay in the Bangkok-Nong Khai high-speed section will affect China's plan to create a 3,900-kilometre rail link from Kunming, the capital of Yunnan province, through Laos, Thailand and Malaysia down to Singapore.

Separately, Hanoi and Beijing are jointly conducting feasibility studies on five railway projects in northern Vietnam worth a total of US$8.7 billion, according to Han Nhu Quynh, director of international co-operation at Vietnam Railways.

There was a high likelihood that Chinese firms would win the US$8.7 billion of contracts, but that could not be guaranteed, Quynh said.

The five projects involve the upgrading of two railway links. One rail line connects the northern Vietnamese port of Haiphong with Hanoi, Vietnam's capital, and Lao Cai in northwest Vietnam near the Chinese border, from where it will be linked to a Chinese rail line to Kunming.

Another rail line connects Hanoi with Dong Dang in northeast Vietnam near the Chinese border.

In Malaysia, a Sino-Malaysian railway project was being delayed because of Malaysian politics, said Hilmi Hasan, general manager of Keretapi Tanah Melayu, the Malaysian state railway firm. The project to double-track the single-track railway between Gemas and Johor Bahru would exceed 10 billion ringgit (HK$25 billion), Hilmi estimated.