Thailand, China agree on $5.2-billion rail project

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nong-khai
Nong Khai, Thailand’s border town to Laos

Thailand and China agreed a price of 179 billion baht ($5.2 billion) for the 250-kilometer-long first phase of a high-speed railway linking Thailand’s Eastern Seaboard with its many industries and Bangkok to Nong Khai at the Lao border in the country’s northeast, from where the railway will eventually be connected to the southwestern Chinese city of Kunming across Laos.

The agreement follows many years of haggling over the cost of the line, which is planned to bring Chinese tourists and manufactured goods to Thailand and transport mainly Thai agricultural exports to China. At a later point of time, it is also planned to enhance the line down to the Malaysian border, from where is could connect further south to Singapore. Another high-speed railway project is planned to lead to Chiang Mai.

Earlier this year, China put the project cost at 560 billion baht ($16.3 billion), which Thailand said was too high. Other areas of disagreement included investment-sharing, the interest rates to be paid on Chinese loans and development rights to land along the total 845-kilometer line.

thai-china-railSome analyst blame those disagreements and the postponement of the line as a cause for a significant drop in foreign direct investments from China in the first quarter of 2016.

In May, talks continued. The Chinese side estimated that the first phase would cost 190 billion baht ($5.4 billion), whereas Thais put it at 170 billion ($4.9 billion). In June, China raised its projection to 200 billion baht ($5.8 billion) and Thailand put it as 180 billion, which is close to where the deal was struck.

Thailand will bear full construction costs, while China will provide funds for technical systems, with construction starting in December.

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[caption id="attachment_28983" align="alignleft" width="300"] Nong Khai, Thailand's border town to Laos[/caption] Thailand and China agreed a price of 179 billion baht ($5.2 billion) for the 250-kilometer-long first phase of a high-speed railway linking Thailand's Eastern Seaboard with its many industries and Bangkok to Nong Khai at the Lao border in the country's northeast, from where the railway will eventually be connected to the southwestern Chinese city of Kunming across Laos. The agreement follows many years of haggling over the cost of the line, which is planned to bring Chinese tourists and manufactured goods to Thailand and transport mainly Thai agricultural...

Reading Time: 1 minute

nong-khai
Nong Khai, Thailand’s border town to Laos

Thailand and China agreed a price of 179 billion baht ($5.2 billion) for the 250-kilometer-long first phase of a high-speed railway linking Thailand’s Eastern Seaboard with its many industries and Bangkok to Nong Khai at the Lao border in the country’s northeast, from where the railway will eventually be connected to the southwestern Chinese city of Kunming across Laos.

The agreement follows many years of haggling over the cost of the line, which is planned to bring Chinese tourists and manufactured goods to Thailand and transport mainly Thai agricultural exports to China. At a later point of time, it is also planned to enhance the line down to the Malaysian border, from where is could connect further south to Singapore. Another high-speed railway project is planned to lead to Chiang Mai.

Earlier this year, China put the project cost at 560 billion baht ($16.3 billion), which Thailand said was too high. Other areas of disagreement included investment-sharing, the interest rates to be paid on Chinese loans and development rights to land along the total 845-kilometer line.

thai-china-railSome analyst blame those disagreements and the postponement of the line as a cause for a significant drop in foreign direct investments from China in the first quarter of 2016.

In May, talks continued. The Chinese side estimated that the first phase would cost 190 billion baht ($5.4 billion), whereas Thais put it at 170 billion ($4.9 billion). In June, China raised its projection to 200 billion baht ($5.8 billion) and Thailand put it as 180 billion, which is close to where the deal was struck.

Thailand will bear full construction costs, while China will provide funds for technical systems, with construction starting in December.

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