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Rail to become a major driver of Thai transportation sector growth

The government is seeking to transform Bangkok into a regional railway hub.

Key Projects Database (KPD) from Fitch Solutions has forecast that railway will be the biggest contributor to the growth of the transportation sector in Thailand, with over 78% of the total transportation projects in the rail sector. The projects aim to improve connectivity and accessibility across the country and to transform Bangkok into a regional railway hub.

The data also found that the country’s central location within the Mekong region makes it an important transport corridor for China’s Belt and Road Initiative (BRI). As China’s interest in the Thai rail sector has increased over the past few years, Fitch Solutions believes that Chinese enterprises will continue to play an important role in supporting proposed rail projects.

According to KPD data, the government has awarded 43 rail projects to Thai construction companies, six to Chinese companies, and four to Japanese builders. China Harbour Engineering Company (CHEC) is working on the Bangkok Mass Rapid Transit (MRT) Green Line Northern Extension project and has already completed Chachoengsao-Khlong Sip Kao-Kaeng Khoi Rail Line Double-Tracking Project. Japanese involvement is represented by Sumitomo and Tokyo Construction Co, contractors to the Bangkok MRT-Dark Red Line project and Bangkok MRT-Purple Line project, respectively.

The biggest factor in the growth will be high-speed rail (HSR) as more than 70% of the total value of the rail project pipeline corresponds to HSR, KPD found. The second largest component in the pipeline is found to be urban transit projects.

A $7.18b Public-Private Partnership (PPP) deal for the Don Mueang–Suvarnabhumi–U-Tapao Airport HSR, was agreed in October 2019 between the Thai government and a consortium led by the Charoen Pokphand Group. The project is currently scheduled to be completed by 2028 and is slated to be a crucial piece of infrastructure enhancing the connectivity between Bangkok and the eastern provinces, boosting the attractiveness of the Eastern Economic Corridor (EEC).

In contrast, the proposed northern and southern routes, linking Bangkok with Chiang Mai and Surat Thani respectively, have progressed slowly. The slow progress was attributed mainly to the low population in the provinces and the impact of COVID-19 in the tourism sector.

Thailand’s State Enterprise Policy Office (SEPO) has released a list of 92 priority PPP projects worth $33.4b targeted for development from 2020 till 2027, of which 12 are rail and urban transit projects, the report added.
 

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