BANGKOK — Foreign loans for the Thai-Chinese, high-speed rail project will be minimal and not bound to China’s whims, officials said.
The Finance Ministry announced today that it will seek funding for 80 percent of the project from domestic sources to address criticism the massive investment would put the country in debt bondage to Beijing.
“The Ministry of Finance will search for appropriate sources of loans with the best conditions compared to domestic sources,” the statement said. “For example, low interest rates, long-term contracts and a lack of any binding condition that would put Thailand at a disadvantage.”
The loans would be used in the construction of a high-speed rail connecting Bangkok with Nakhon Ratchasima in the northeastern region. The project is estimated to cost 179 billion baht. Loans would provide up to 166 billion baht of those funds.
The project was encouraged by the Chinese government, which aims to link Thailand to its railway network in Laos as part of its expansive “One Belt, One Road” initiative. Chinese engineers brought in to do the work in 2017 were exempted from certification required by Thai law.
After critics raised fear such a project would subject Thailand to China’s growing “debt empire,” a finance official told the media earlier this month that the Thai government had yet to decide on taking loans from China.
Jindarat Viriyataveekul from the Public Debt Management Office said China, Japan and the Asian Development Bank are all potential loan sources.
“Thailand is the sole investor of the high-speed railway system. China is not a co-investor,” Jindarat said. “This makes Thailand the sole owner of the project, China will merely provide services in technology and system development.”
When Sri Lanka failed to pay back massive debt to China in 2017, its government handed over a port and the land around it to Chinese control for 99 years.
Media reports in December also suggested that a Kenyan port in Mombasa – financed by China – is at risk of a Chinese takeover if loan payments are not met. Kenyan president Uhuru Kenyatta later disputed those claims as “pure propaganda.”
More than a year after work first started, construction on the first phase of the 3.5-kilometer-long route in Nakhon Ratchasima’s Pak Chong district remains far from complete.
The government said the project may be finished by 2022 at the earliest.