• The Export-Import Bank of China has offered Thailand a low-interest loan for construction of a belt and road project linking the country with Kunming and Laos
• But repayment is just one concern, as analysts are uncertain Bangkok will ever turn a profit from the project
• The Kra Canal Remains in consideration if the Chinese “wants to push it.”
Despite Thailand’s vow to rely on domestic funding as it expands its network of high-speed railways, it could soon accept the offer of a low-interest loan from the Export-Import Bank of China (CEXIM) – raising concerns about whether the country is on the verge of falling into a debt trap.
Thai PM’s appearance at the second Belt and Road Initiative forum in Beijing last weekend suggests the luke-warm relations between China and Thailand persist. Whilst both nations portray a strong willingness to progress in their financial partnerships there is still a gulf between the two country’s preferred outcomes in the deals they are forging.
Thailand recently began construction on a phase of its high-speed railway that links its northeastern region to Kunming via Laos
The route, the first high-speed rail project in Thailand and Laos, is seen as a potential channel for China to transport goods to South Asia, Southeast Asia and the Greater Mekong Subregion (GMS), as well as the Malay Peninsula.
Paul Busbarat, lecturer in international relations in the faculty of political science at Bangkok’s Chulalongkorn University said that “The EEC link to the Kra Canal, connecting the Gulf of Thailand to the Andaman Sea, is possible if the Chinese really push it,” he said.
“The grand scheme is the EEC as a hub of industry, from which the Chinese can export through the Kra Canal without going through the Malacca Strait.”
But as negotiations and construction progress, concerns are mounting over how the two Southeast Asian countries can take full advantage of the route’s promised economic potential, as well as how to navigate the alleged debt-laden diplomacy in Beijing’s vision to revive the historical Silk Road.
In January, the Thai government revealed that CEXIM had offered a 2.3 per cent interest rate for loans, better than the average of 2.86 per cent extended by domestic financial institutions.
So far, no deals with the Chinese bank have been announced.