Thailand maintains balance of ties with Asian powers

THAI Prime Minister Prayut Chan-o-cha is expected to head to Tokyo in the coming weeks to meet his Japanese counterpart Shinzo Abe.

Thai officials have talked up the chances of a bilateral rail deal, following an agreement with China last December to jointly develop a route linking north-eastern Thailand to a coastal industrial area down south.

Japan's response has been cautious.

"From our point of view, nothing has been decided yet," Japan's ambassador to Thailand, Mr Shigekazu Sato, told The Straits Times last Thursday.

Local reports say Thai officials plan to offer Japan - Thailand's top investor - a choice of railway routes for joint development.

Observers say Bangkok appears to be trying to placate Tokyo after the post-coup government swiftly accepted Beijing's aid to build almost 900km of dual-track rail linking the Thai-Laos border to Bangkok, as well as a key industrial estate and port.

Thailand has long maintained a delicate balance of allegiances with all major powers in Asia and the West.

The coup last May altered the equilibrium, alienating Western democracies. Now Thailand's infrastructure projects are likely to pose dilemmas in balancing the competing interests of its long- time Asian investors.

China's shadow looms large over infrastructure projects in the region. It is backing a massive dam in Myanmar, a light rail system in Vietnam's capital Hanoi, as well as a high-speed rail network in Laos.

It recently launched the Asian Infrastructure Investment Bank, and talks of creating a Maritime Silk Road across South-east Asia.

Even before the coup, Thailand was keen on Chinese participation in its future rail network.

University of Sydney scholar John Lee, in a 2013 paper published by Singapore's Institute of Southeast Asian Studies, wrote: "Conversations with Thai officials and academics confirm that the future economic and political consequences of not awarding the contract to Chinese bidders are being closely considered.

"No such concern was detected if bidders from the other countries were to fail."

The coup pushed Thailand further into China's embrace.

While other Western countries as well as Japan expressed concern about the overthrow of an elected government, China kept silent.

Instead, it received visits from junta leaders, eventually signing a deal to buy Thai rice as well as help Thailand build its railways.

Strategically speaking, the Sino-Thai rail deal does not pose much of a concern for Japan, say analysts.

Mr Seiichiro Takagi, a senior associate fellow at the Japan Institute of International Affairs, says Japan has always been more interested in creating an East-West corridor that can allow shipments to bypass the Strait of Malacca.

China, by contrast, is more preoccupied with creating outlets for its own regional centres.

But diplomatic sources privately express frustration over how Thailand's future national rail network is being carved up and parcelled off to potential investors, asking if there is any coordination involved.

Meanwhile, Bangkok has revived water management plans shelved after the coup, more than doubling the value of the proposed work to 900 billion baht (S$37 billion).

That move could help lift the economy tipped by the United Nations Economic and Social Commission for Asia and the Pacific to grow at 3.9 per cent this year.

Political considerations will play a big part in how Thailand handles these infrastructure projects as it tries to balance the interests of its long-time Asian investors, notes Mr Daniel Giles, a director at investment advisory firm Vriens and Partners.

These concerns are also likely to grow with China's clout.

For now, says Mr Giles, the Thai government is not too perturbed about the possibility of overbearing Chinese influence as it tries to buttress its own legitimacy through public spending to boost economic growth.

"They are more concerned about how they can realise some of these infrastructure projects quickly," he says.

tanhy@sph.com.sg

This article was first published on Jan 19, 2015.
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