Thailand Freight Transport Report Q4 2010
by ReportLinker.com on Dec 07, 2010
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The Thai government was in early August said to be considering a joint venture (JV) with the Chinesegovernment to build Thailand's first high-speed railway system, Thailand's Finance Minister ...
The Thai government was in early August said to be considering a joint venture (JV) with the Chinesegovernment to build Thailand's first high-speed railway system, Thailand's Finance Minister KornChatikavanij said. According to government sources, the railway system is expected to cost aroundTHB57bn (US$1.76bn), as cited by Thailand Travel News. BMI believes that the costs of the projecttogether with doubts over the demand for such a project raises serious questions as to the economicviability and necessity of this venture. According to the Bangkok Post, Korn stated that the 240km highspeedrailway line will include four stops and connect from Makkasan in central Bangkok to RayongCity. The railway system is expected to reduce the total travel time between the cities from an originalthree hours drive to about one hour. The entire project is estimated to be completed within three years.This target appears ambitious to say the least, and with Thailand's deputy prime minster cited by ThailandTravel News as stating that environmental impact assessments are expected to take one to two years tocomplete, the three-year timeline appears doubtful.In BMI's view, four factors raise questions over the project's viability and necessity; First and foremost,the potential demand for the high-speed railway system is limited. Second, the level of human trafficbetween Bangkok and Rayong is uncertain. Unless the Chinese government is financing the wholeproject, Thailand will find it difficult to raise funds in an environment where many investors are stillcautious about providing lending for major projects. Finally, the State Railway of Thailand (SRT) has apoor track record in investment and has only managed to spend half of its annual investment budget peryear over the past decade. BMI notes that having a high-speed railway line could attract more tourists andspur further economic development within the connecting regions, thereby increasing the number ofpeople using the railway. However, given the four factors listed above, the necessity and thereforeeconomic viability of the project is uncertain.Thailand continued to suffer from an ongoing and intermittently explosive political crisis, but as thecountry progressed through H210, it was enjoying a period of political respite and strong economicgrowth, to the benefit of the ports and shipping sector. The economy was driven by inventory restockingin the early part of the year, and this was followed by signs of a reasonably well-based recovery in privateconsumption, supported by low unemployment and rising consumer confidence levels. A package of taxincentives introduced in May seemed to be doing its job to attract more foreign businesses to invest in thecountry. BMI therefore reaffirmed its relatively conservative projection of 3.6% GDP growth in 2010,followed by 3.7% in 2011. On economic grounds alone, there is upside risk to this projection; but thepossibility of a resumption of the political crisis ahead of planned elections in early 2011 points in theother direction.Thailand's air freight sector is forecast to post a year on year (y-o-y) increase in 2010, with BMIpredicting a growth of 7.2% as the country's air freight sector recovers from the downturn in 2009, whichsaw cargo volumes carried by air fall by an estimated 10.8%. If these projections play out, the air freightsector will carry approximately 1.25mn tonnes, just under Thailand's 2007 air freight volumes andconsiderably lower than the 2008 air freight boom, where cargo volumes reached an estimated 1.31mntonnes.According to BMI estimates the port of Laem Chabang managed to defy the downturn in 2009, posting avolume increase of 4.1% y-o-y and handling 46.2mn tonnes of cargo. This year, the port is seeing furthervolume growth, with a gain of 11.5% to 51.47mn tonnes. The port of Bangkok, according to data from theport authorities, posted a decrease of 12.4% y-o-y in 2009, with the facility handling just 15.6mn tonnesof cargo. However, in 201
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