Thailand planning an infrastructural overhaul aimed at improving regional transport links to boost the economy

October 23, 2021 at 12:21 am
by Joseph O' Connor
in Economy, Foreigners, More News from Thailand, Thailand
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Plans for a landbridge between the coast of Chumphon and Ranong linking the Gulf of Thailand and the Andaman Sea which would cut two days off the freight journey through the Malacca Strait, one of the world’s busiest shipping lanes. The new facility could attract 20% of the freight on the sea route generating income for the country as well as boosting regional connectivity and access to export markets.

Thailand’s Minister of Transport is set to oversee a revolution in the kingdom’s infrastructure with the launch of a national shipping line next year and a proposal to build a ฿300 billion landbridge linking the Gulf of Thailand and the Admanan Sea which is gaining credibility and momentum. The proposed infrastructure overhaul is in line with advice from the World Bank and the International Monetary Fund (IMF) which have consistently urged the government to boost capital expenditure both to boost the economy and improve the country’s competitiveness.

thailand-plans-infrastructural-overhaul — Minister of Transport Saksayam Chidchob (centre) has already finalised the launch of a new shipping line to commence operation in the summer of 2022. It comes as his ministry is believed to be looking carefully at a ฿300 billion plan for a landbridge linking the Gulf of Thailand and the Andaman Sea. This week, Mr Saksayam met the Italian ambassador to Thailand, Mr Lorenzo Galanti, to discuss Italian involvement in an overhaul of the country’s rail network and other transport infrastructural projects.

Thailand’s Minister of Transport, Saksayam Chidchob, has revealed that Thailand has had discussions with the Italian ambassador, Mr Lorenzo Galanti, about the involvement of Italian firms in an overhaul of the kingdom’s rail and transport infrastructure.

The Ministry of Transport is currently studying and formulating plans for a large infrastructural programme designed to boost the economy and also make it more competitive.

Kingdom urged to invest in infrastructure projects that boost the country’s competitive position

The government has been consistently urged by both the World Bank and the International Monetary Fund (IMF) to boost capital expenditure.

Spending on infrastructural development of the country’s transport system is of particular importance to an economy that is so dependent on exports and trade.

At the end of September, Mr Saksayam announced the refloating of a national shipping line which is expected to commence operations in the summer of next year.

Transport ministry looks at launching Thailand’s own shipping line to support economic growth

The new company, known presently as the Thai National Shipping Line, will see the government as a 49% shareholder and will be a private commercial enterprise.

New shipping line to replace state-owned enterprise that went under in 2011 due for launch in 2022

The state’s shareholding in the new venture will be held by the Port Authority of Thailand.

The fleet will initially consist of rented freight vessels with some repair and support craft.

It will replace a now-defunct state-owned enterprise that ran from 1940 to 2011.

There are multiple reasons for the launch of a shipping line to serve Thailand at this time including an ability to boost the country’s outgoing trade and exports but also the security situation.

Rising geopolitical tensions in the region mean that security is rising as a factor in this decision

The current geopolitical tensions between China and western countries as well as the supply chain disruptions caused by the COVID-19 crisis have raised questions among governments throughout the world about their ability to maintain trade and industrial production into the future.

There are rising fears, for instance, of an outbreak of hostilities between the United States and China over Taiwan, an event that would cause enormous disruption to trade because of the strategic importance of the South China Sea.

It is no mere coincidence that the previous Thai shipping line was formed in 1940 just before the outbreak of hostilities in the Asia Pacific region and a year before the invasion of Thailand by Japan.

Resurrection of a project dreamed of over 300 years ago by a Thai King may yet be timely and practical

The launch of the new shipping line at this time is also seen by observers as a step towards supporting the resurrection of the long-held Thai dream of a link connecting ports across the Malay peninsula, first conceived of as the Isthmus of Kra canal over 300 years ago by Thai monarch, King Narai, in the 17th century.

This may become a reality as a landbridge from the coast of Chumphon province to Ranong province.

The project, a 90 km highway, which has been initially budgeted at ฿300 billion, would link the Pacific and Indian oceans and experts estimate it could divert 20% of traffic currently being carried by freight through the Strait of Malacca.

The links from the Gulf of Thailand to the Andaman Sea would offer traders and exporters a saving of 2 days on the current shipping route if it goes into operation.

Currently, only 10% of Thailand’s freight is handled by national shipping firms with a loss to the economy

Speaking last month, Mr Saksayam explained that the new shipping line meant enhanced security for the kingdom while offering greater support to the country’s merchants and exporters.

Presently, only 10% of Thailand’s freight is handled by Thai registered vessels which represents a severe weakness to the overall Thai economy which is very much dependent on external trade.

The country’s economy spent over ฿574 million in shipping and freight costs in 2020 alone. This was in a year of falling output for the economy including exports because of the COVID-19 shutdown.

‘With Covid, we’re facing container shortages, so a lot of our goods can’t be shipped and some products will perish. Losses are incalculable,’ the minister said when briefing the media in September. ‘The shipping line can increase security and support the country’s ambition to become a logistics hub.’

Italian ambassador praises the foresight and ambition of the Thai government after this week’s meeting

The Italian ambassador to Thailand, Mr Lorenzo Galanti, after meeting with the minister this week, praised the ambition and foresight of the Thai government.

He believed that Italian firms would be both able and eager to participate in the range of projects on the table including the rail line linking Bangkok and the Eastern Economic Corridor connecting three airports including Don Mueang Airport, Suvarnabhumi Airport and U-Tapao Airport in Rayong province.

Mr Galanti made particular reference to the government’s plans for the landbridge in southern Thailand and its potential to boost trade and exports from the country.

State Railway of Thailand looking at private-public partnerships to fund an upgrade of rail network

The minister and the ambassador also discussed plans by the State Railway of Thailand to upgrade the rail network across the country as part of a public-private investment initiative as well as the continuous expansion of Bangkok’s mass transit system connecting new lines and suburbs of the metropolis.

A study is presently being carried out by consultants for the State Railway of Thailand into this which will take 12 months to complete on how best to organise such initiatives.

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About the Author

Joseph O' Connor

Joseph Anthony is an expat from Ireland who has lived in Thailand for the last decade. He has worked extensively in the media including editorial positions in Ireland and Thailand. He is focused on economic and business stories in Thailand as well as the expat lifestyle.

All posts by Joseph O' Connor