Of AEC trucks, trains, and automobiles, part 2/3

In our last issue we covered the concerns by Credit Suisse economist Santitarn Sathirathai who suggested the planned four high-speed rail links in Thailand will almost certainly take longer to build than the government’s projected seven years.

In this article Khun Santitarn outlines some of the problems such a project will face.

‘While the government has not provided many details about the planned rail line, the high-speed train trip could take roughly three hours,’ Khun Santitarn said.

‘High-speed trains are flashy and catchy, and politicians favour them, but they’re difficult to pull off in a Thai context,’ he added.

Credit Suisse has estimated that it would take 300 years of ticket revenues to recoup the network’s estimated 970 billion baht price tag, an amount equivalent to 8.5 percent of Thailand’s GDP.

The economist suggested Thailand will find it difficult to overcome the fact high-speed rail networks work best in countries where most citizens have reasonably high incomes. Although China fails the high income test it has been predicted by 2025 it will have 221 cities with populations above one million each and this provides a wider base of potential ticket-buyers.

Perhaps an even bigger problem for the planned Thai network is that technically it is impossible to construct high-speed tracks alongside existing railways, as the current plans suggest because the existing lines bend and curve, and high-speed trains require straight tracks to run at speeds of about 240+ kilometres per hour.

This will mean the government will have to acquire land and ‘route high-speed

tracks through mountain passes, which will in turn require blasting out tunnels. All of that adds to the cost and complexity of the projects and all but ensures that there will be significant delays,’ wrote Khun Sathirathai.

Given that there have yet to be serious environmental and engineering assessments undertaken, it means the high-speed rail network remains only an idea on the drawing board and, realistically, could not be completed much before 2025 even if it began in late 2014 or early 2015.

With Myanmar’s economy now expected to grow at some speed, and with Cambodia and Laos also driving forward quite strongly in economic terms, Thailand needs to be looking at these next door neighbours as important cogs in its own economic expansion.

Of course, there is also the government’s plan to expand the existing rail network so that it becomes two lines, thereby permitting travel both ways at the same time, reducing logistics costs.

And it is logistics costs which are exceedingly high in Thailand at present. According to an article in the April 2013 edition of Infrastructure Investor, Thailand’s logistics costs equal 15 percent of GDP. Malaysia’s logistics costs run to 13 percent of GDP while the United States is a mere eight percent.

Next issue: roads and railway improvements in Thailand’s near neighbours