Construction of a high-speed railway using Chinese technology is at the center of Thailand’s plan to become the logistics hub of ASEAN. All eyes are on what kind of influence China can gain by helping Thailand build its infrastructure.
The government has already begun the construction of some routes and will keep calling bids for the project, according Thai Deputy Minister of Transport Pailin Chuchottaworn.
The Thai government is pursuing an ambitious plan to build a rail network linking Thailand to other countries in the region, like Singapore and China.
China has only a decade or so of experience operating high-speed rail. But it has already caught up with Japan’s shinkansen in terms of technology .
The road to Singapore and China
“Thais will be able to take high-speed trains to the Chinese capital and Singapore from a railway station in Bang Sue in the future,” said Deputy Transport Minister Pailin Chuchottaworn.
Bangkokians may find it hard to imagine that their next trip to Beijing could begin in Bang Sue wrote recently the Bangkok Post
That will be possible once the construction of four routes for Shinkansen like high speed trains is completed and the Bang Sue railway station will be a hub of the “Trans-ASEAN Line”.
But China’s high-speed rail ambitions in Southeast Asia don’t end in Bangkok says Nikkei Asian Review. Under its planned 3,000-km pan-Asian railway network, Chinese rail lines will extend even further south, stretching through Malaysia and feeding into Singapore.
Under the government’s plan to make Thailand the logistics hub of ASEAN, the high-speed trains will be at the heart of the country’s new infrastructure system. It will be the first time Thailand will have such a modern transport network, which will cover 3,193 kilometres at a cost of about
2.07 trillion THB (67.3 billion USD).
The plan is part of China’s $1 trillion Belt and Road Initiative designed to create transport infrastructure for China to import energy and other vital resources.
The rail route will link Bang Sue with Chiang Mai in the North, Laos in the Northeast, Cambodia in the East and Malaysia in the South.
Bang Sue will be a grand station, expected to be the largest in ASEAN, according to the plan. The four-storey station will cover an area of 300,000 square metres and is planned to be surrounded by commercial areas.
Faster trips to Laos and Beijing
The first route, a Thai-Sino project linking Bangkok and Nong Khai in the far Northeast, is now under construction and is scheduled to be completed by 2023.
The route will make transport more convenient and are expected to drive the national economy forward in the long term, the official noted.
From the border line, another rail route will run to the Lao capital of Vientiane, and the last leg will take passengers to Mohan, a border town in Yunnan Province, China.
The station will also be connected the city’s Blue Line, Airport Rail Link, and rail routes to upcountry provinces.
Assessing the economic impacts of COVID-19 on ASEAN countries
All ASEAN countries are dependent on tourism flows but Thailand is probably the most dependent.
Author: Jayant Menon, ISEAS–Yusof Ishak Institute
The COVID-19 pandemic is first and foremost a human tragedy. Measures introduced to deal with the pandemic could save lives but are having wide-ranging economic effects and inducing economic contagion.
There are already studies estimating the economic impact of the virus. But greater focus is needed on the transmission mechanisms of the economic contagion and in critiquing how assessments of the economic impacts are made, concentrating on the ASEAN region.
The effects of COVID-19 are hitting ASEAN economies at a time when other risk factors, such as a global growth slowdown, were already rising.
COVID-19 is disrupting tourism and travel, supply chains and labour supply
Uncertainty is driving negative sentiment. This all affects trade, investment and output, which in turn affects growth. Tourism and business travel, as well as related industries, especially airlines and hotels, were the first to be affected. And the conditions are worsening as more countries go into shutdown.
The supply disruptions emanating mostly from China will reverberate throughout the value chain and disrupt production. Since China is the regional hub and accounts for 12 per cent of global trade in parts and components, the cost of the disruption in the short run will be high.
The negative effects of quarantine arrangements on labour supply could also be high depending on duration and sector. Manufacturing has been hit harder than service industries, where telecommuting and other technological aids limit the fall in productivity.
All these disruptions will lead to sharp declines in domestic demand. And their impact on economic growth will further propagate these disruptions. This compounding effect can magnify and extend short-run effects into the long run.
The highest economic cost could come from the intangibles
The effects of negative sentiment about growth and general uncertainty — which is already affecting financial markets — will feed into reduced investment, consumption and growth in the long run.
Rolling recessions around the world now appear inevitable, despite the stimulus measures being contemplated. If so, there will be sharp increases in unemployment and poverty. Some degree of decoupling from China, or de-globalisation in general, may also be a permanent reminder of this pandemic.
Among ASEAN countries, Singapore, Malaysia and Thailand are heavily integrated in regional supply chains and will be the most affected by a reduction in demand for the goods produced within them. Indonesia and the Philippines have been increasing supply chain engagement and will also not be immune.
Vietnam is the only new ASEAN member integrated into supply chains with China and is already suffering severe supply disruptions.
Given time, supply-side adjustments will alter trade and investment patterns. The main adjustment will involve relocating certain activities along the supply chain from China to ASEAN countries. Although the pandemic will disrupt the relocation phase, ASEAN countries can benefit from the new investments, mitigating overall negative impacts.
Thailand is probably the most tourism dependent Asean country
All ASEAN countries are dependent on tourism flows but Thailand is probably the most dependent. Cambodia and Laos receive most of their investment and aid from China, and a marked growth slowdown in China will affect them the most.
The Philippines and Mekong countries have large overseas foreign worker populations and restrictions on their movement or employment prospects as COVID-19 spreads will affect sending and receiving countries. Brunei and Malaysia are net oil exporters and the price war indirectly induced by the pandemic will hit them hard. Others will benefit from lower oil prices, as will the struggling transport sector.
In measuring the impacts of COVID-19, it is important to separate its marginal impact from observed outcomes. This is important because the remedy may vary depending on the cause of the disruption. This requires an analytical framework that can measure deviations from a baseline scenario that incorporates pre-existing trends. A model-based analysis, rather than casual empiricism, is required to reduce the problem.
Even before the outbreak, risks of a global growth slowdown were rising
The restructuring of regional supply chains had started, driven initially by rising wages in China and accelerated by the US–China trade war. While COVID-19 may further hasten the pace and extent of the restructuring, it is only partly responsible for what may happen. It would be misleading to attribute all of the current disruption to COVID-19. Had the trade war not preceded it, COVID-19 may have resulted in greater disruption to supply chains.
Any assessment of impacts must recognise that the spread of COVID-19 is unpredictable, and so too the response by governments. It is difficult to estimate the impacts of a shock that is uncertain in itself. This reiterates the need for rigorous modelling and scenario analyses. The current trend points to risks rising, often accelerating, as with previous epidemics. This uncertainty underscores the need for caution in assessing, and regular recalibration in producing assessments.
Jayant Menon is a Visiting Senior Fellow in the Regional Economic Studies Programme at the ISEAS–Yusof Ishak Institute, Singapore.
A version of this article first appeared in ISEAS Commentary.
This article is part of an EAF special feature series on the novel coronavirus crisis and its impact.
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