Settle Sino-Thai rail project FOR THE REGION’S BENEFIT

Prime Minister Prayut Chan-o-cha made a surprising announcement in March that Thailand would solely finance construction of the first phase of the rail line linking China to Thailand – the track from Bangkok to Nakhon Ratchasima – instead of seeking financial assistance from China as planned.

According to media reports, Thai Transport Minister Arkhom Termpittayapaisith said contentious issues included the interest rate at which China has offered a loan to finance the deal, and the total cost of the investment.

Last month, Arkhom suggested the interest rate should be reduced from 2.5 to 2 per cent. He added that since the US$5-billion project is a venture between two governments, Beijing should have offered a loan at a “friendly rate that takes into consideration relations between China and Thailand”.

The two sides also failed to see eye to eye on the total investment cost, with Thailand’s estimate much lower than China’s.

The loan terms and investment cost are undoubtedly important factors that both sides in any business deal must carefully consider. Similarly, any agreement needs to accommodate both sides’ interests and concerns.

Thus, for one party in a project to unilaterally declare that they plan to go it alone is not good practice – either in a business venture or in a bilateral cooperation project like the China-Thailand railway.

According to Arkhom, the construction of the train line won’t now begin until the end of the year – several months later than the planned launch of the project in May.

Thai authorities need to be reminded they should take into consideration the broader picture of bilateral relations before making any such unilateral decision.

The bilateral railway project is widely regarded as a barometer of ties between Beijing and Bangkok. The latest turn of events is perceived by some as a setback to both the project and bilateral relations.

Under such circumstances, the two governments, as well as enterprises and companies on both sides, need to show stronger cooperation and greater sincerity to steer clear of obstacles that stand in the way of an ambitious regional rail network.

The 250-kilometre rail line is part of a mega-network to link Bangkok with Kunming in southwest China’s Yunnan province, through Laos in the north and stretching to Malaysia and Singapore in the south. On completion, all the countries along the route will benefit from the regional transport arteries, with Thailand, placed at the hub of the network, expected to perhaps benefit the most.

The China-Thailand railway project is part of an irreversible trend of greater regional connectivity, for which both China and members of the Association of Southeast Asian Nations (Asean) have been staunch advocates as well as active participants.

Admittedly, the rail line also caters to China’s Belt and Road Initiative, announced by Chinese President Xi Jinping in 2013. The trade and infrastructure projects aim to revive the ancient land and maritime Silk Roads. The overland routes seek to link China with Europe through central and western Asia while the maritime links aim to connect China with countries in Asia, Africa and Europe.

Last month, Chinese Premier Li Keqiang said the country looks to combine its Belt and Road Initiative with the development strategies of other countries in the region. The initiative aims to foster a new pattern of regional development through integrated planning and production as well as coordinated actions.

Indeed, China’s proposal could be a timely remedy to the huge funding shortfall for infrastructure development in Asia – and help drive regional connectivity. The Asian Development Bank estimated in 2009 that Asia needs about $8 trillion in investment by 2020 to improve the region’s battered infrastructure and keep its economies humming.

To provide funding support to the initiative, China proposed the Asian Infrastructure Investment Bank (AIIB) as a new multilateral lender. The AIIB was formally launched in December last year with 57 founding members. To further boost connectivity between countries covered by the initiative, China also set up the Silk Road Fund with start-up capital of $40 billion.

The Belt and Road Initiative, together with the AIIB, has won increasing support from many nations, including some in the West. The countries along the proposed routes recognise it as a golden opportunity to upgrade their outdated infrastructure while others foresee the new business prospects that will follow China’s endeavour.

No doubt, efforts to shore up regional interconnectivity serve as a prerequisite to the more ambitious goals of the Asean Economic Community, as envisaged in the bloc’s development blueprint for the region.

Yet, the new uncertainties that have emerged in the China-Thailand railway project show different countries may have different expectations when they respond to China’s overtures. Besides, there are other competitors vying for the same market and even meddlers who seek to put a spoke in the wheels.

All this could pose a challenge to the smooth implementation of China’s development strategy.

To avoid a lose-lose scenario, patience, a sober mind and a spirit of cooperation are the keys to ironing out obstacles and reaching an agreement that could eventually deliver a win-win result for both sides.

Concerned Chinese enterprises and companies also need to differentiate between reasonable and unreasonable demands, heighten their awareness on risk control and stand their ground in order to safeguard China’s legitimate business interests.

On the other hand, self-interest should also give way to the larger picture of regional integration and interconnectivity.

Judging from the remarks of Thai authorities that the country still plans to work with China to construct the rail line by obtaining Chinese-made trains and contracting Chinese engineers to build the line, Thailand still wants to ride with China on this train of bilateral cooperation. To cite another example, the two countries held a groundbreaking ceremony in December to showcase the project.

But as a business axiom tells us, time is money, and each undesirable turn in the joint project will offset both sides’ best efforts so far in setting the rail on the right track.

Worse, each policy flip-flop that has plagued cooperation on the China-Thailand railway project in the past two years, negatively impacts both partners’ development opportunities.

As Premier Li rightfully pointed out recently, to achieve development and prosperity in Asia, we must make sure that no one is left behind. After all, the goal of interconnectivity and integration cannot be truly achieved without the full participation of all countries in the region.

Having accumulated wealth and production capabilities after three decades of economic success, China is willing to make greater contributions to global and regional development.

Let us hope that this goodwill on China’s part will not be misunderstood and misjudged, but rather be greeted with positive and prompt responses from across the region. Only then can all countries work together in harmony to usher in a better future for themselves and the region as a whole.