Written by: Geoff de Freitas, Special Correspondent, Bangkok, HKTDC
According to a number of key indicators, the Thai economy is more likely to be fundamentally undermined by the coronavirus than that of any other Asian nation, with the possible exception of Japan. Indeed, it is widely seen as likely to fall into recession should the outbreak continue unabated.
At the time of going to press, Thailand had the second‑highest number of confirmed cases in Southeast Asia, after Malaysia, with the rate rising from 42 on 1 March to 1,044 by 25 March. Despite this, the Thai government has largely opted to maintain a ‘business as normal’ approach, with the country’s borders, airports and ports all remaining open until relatively recently. Somewhat belatedly, according to many, as the infection rate continued to climb, a partial lockdown was imposed on 21 March. Then, four days later, General Prayut Chan‑o‑cha, the country’s Prime Minister, declared a formal state of emergency, which will remain in place until the end of April.
One of the inevitable consequences of this escalation will be massive disruption to many of the country’s Belt and Road Initiative (BRI) backed rail transport developments. With railway infrastructure at the core of the country’s economic expansion plans, the past two years has seen construction go full steam ahead on one particularly high‑profile project – the 253km Bangkok‑Nakhon Ratchasima high‑speed rail (HSR) link. This is a key element in a wider programme designed to enhance connectivity between the Thai capital and Nong Khai, the nearest city to the Laos border. Ultimately, this wider network will itself be integrated into a yet larger trans‑Asia high‑speed railway service, connecting Bangkok, Vientiane (the Lao capital) and Kunming, a city in southwest China.
With commercial operations scheduled to begin in 2023, the first 157km stretch of the HSR line is currently under construction in the northeastern Nakhon Ratchasima province, with work largely being conducted by several previously appointed Chinese contractors. Now, though, considering the travel restrictions, the reduced container throughput at many Thai ports, the two‑month long disruption to the supply chain and the recently imposed state of emergency, it seems highly unlikely that the anticipated deadline can be met.
Similarly compromised is a high‑speed railway project intended to connect the country’s three biggest airports to the resort town of Pattaya and the Eastern Economic Corridor (EEC). Already considerably delayed when it was finally signed off by the State Railway of Thailand (SRT) in November last year, the lead contractor on the THB224 billion (US$6.9 billion) project is Eastern High-Speed Rail Linking Three Airports, a consortium comprising Thailand’s Charoen Pokphand Group, Ch.Karnchang; Bangkok Expressway and Metro Plc, the Italian-Thai Development Plc and the China Railway Construction Corp.
As envisaged, the project will provide HSR links between downtown Bangkok and the city’s two international airports – Suvarnabhumi and Don Mueang – as well as the Gulf of Thailand’s U-Tapao International Airport. Originally scheduled to come online in 2024, the 220‑km U-Tapao link will allow up to 10% of the flights currently connecting to the highly congested Bangkok terminals to be switched to their coastal counterpart.
It is hoped that such a move will improve local air quality and facilitate faster rail access to the BRI‑backed EEC – the network of special economic zones (spanning the Rayong, Chonburi and Chachoengsao provinces) that accounts for 80% of total foreign investment in Thailand. To date, more than 120 Chinese companies have established operations in the Thai-Chinese Industrial Zone alone.
The consortium announced in February that – despite growing concern over coronavirus infection levels – it was ready to commence construction on the three airport HSR lines. As the SRT has yet to complete the required clearance across a substantial portion of the land allocated to project, however, it is thought construction is now unlikely to commence before next year, with the ongoing pandemic certain to impede any more imminent progress.
Infrastructure development problems aside, the country is also reeling from the virtual shutdown of its tourism industry, which accounts for some 11.5% of its GDP. Despite not closing its airports to tourists until 25 March, the number of inbound Chinese visitors had already fallen 85.3% year‑on‑year as of February 2020. This is a massive blow given that, last year, China was the source of 10.99 million of the 39.8 million visitors to Thailand, with such arrivals collectively spending THB544 billion (US$16.7 billion) during the course of their stay. As a consequence, the Tourism Authority of Thailand is now predicting a minimum shortfall in 2020 tourism revenue of THB500 billion.
Geoff de Freitas, Special Correspondent, Bangkok, of the Hong Kong Trade Development Council wrote this article and we republish this article by kind permission of the HKTDC. For more information on the activities, events and research of the Hong Kong Trade Development Council, please visit them on the web at: https://hkmb.hktdc.com/en