Belt tightening | Bangkok Post: business

The dream of a pan-Asian railroad network has been around for decades, but so far the story has focused on false starts and missing links.

. Rail transport has taken a further step forward, thanks to the vision of Chinese President Xi Jinping's Belt and Road Initiative (BRI)

The Belt and Road is considering a series of new trade and communications routes land, supplemented by a "maritime silk route" served by strategically located ports. The land and maritime components hold great promise for Southeast Asia, but challenges remain.

The Kunming-Singapore railway network, for example, still has many anchoring points. They extend from Vientiane to Laos to Nakhon Ratchasima in Thailand and from Kuala Lumpur to Singapore

In the first case, Thailand has resisted strong pressure from China for more financial, commercial control and operational. In the latter case, the new Malaysian Prime Minister Mahathir Mohamad believes that his predecessor in the scandal has reached a terrible financial agreement with China.

No one disputes that the Asian nations need better infrastructure and the prospect of 1,000 billion US dollars. related investments in railways, roads, ports and other projects are dazzling. But concerns ranging from a lack of involvement of local workers to heavy public debt are on the rise. Critics warn of a "debt trap" and are pointing to Sri Lanka and Laos, who have contracted more financial obligations than they can comfortably bear.

KUNMING-VIENTIANE-BANGKOK

Great corridors covering various parts of the Asian continent and beyond. The China-Indochina Peninsula Economic Corridor (CICPEC) comprises three proposed high-speed rail routes: the central road linking Kunming in Yunnan Province to Vientiane, Bangkok, Kuala Lumpur and Singapore; East Road from Kunming via Hanoi, Phnom Penh, Bangkok and Kuala Lumpur to Singapore; and the Western Road from Kunming through Yangon, Bangkok and Kuala Lumpur to Singapore

The goal is to connect the southwest China region, including the provinces from Yunnan and Guangxi, to the markets of Southeast Asia. Yunnan's gross domestic product (GDP) was 1.5 trillion yuan ($ 221 billion) in 2016, compared to 68 billion in Myanmar, 16 billion in Laos and 203 billion in Vietnam. However, the per capita GDP of the province was only $ 5,500, compared to an average of $ 9,800 for all Chinese provinces and $ 20,000 for Beijing.

This mbadive disparity between rich East cities and the rest of the continent has prompted the central government to a $ 112 billion high-speed rail network in January of this year. The plan plans to add 30,000 kilometers of new high-speed lines by 2020, connecting most major cities.

Yunnan's growth prospects, as well as existing rail and road links between Kunming and major Chinese cities include Beijing, Shanghai and Guangzhou. the province is an attractive investment destination. According to the Yunnan Statistical Yearbook foreign direct investment increased from $ 777 million in 2008 to $ 3 billion in 2015.

Meanwhile, bilateral trade between Asean and China reach a record $ 514.8 billion in 2017% yoy, the fastest growth between China and one of its major trading partners. A direct link between Yunnan and Asean would clearly help Southeast Asia to trade even more efficiently with Mainland China

But travel will not necessarily be as fast as many people think , warns the Asian Infrastructure Investment Bank (1965b). First of all, many governments call (Kunming-Vientiane) a high-speed train, but I will not call it at high speed, "said Supee Teravaninthorn, general manager of the Operations Department. investment at the BAII, Asia. Focus before the annual meeting of the bank in Mumbai last month.

"In technical terms, we call it at medium speed. The real speed is KL in Singapore because it has a top speed of 320 to 350 kilometers per hour."

Any train with a speed maximum of less than 300 km / h is not considered at high speed. Various reports indicate that the China-Laos Railway, with bridges and tunnels representing 63% of its total length of 414 km, is designed solely for pbadenger speeds of 160 km / h and the freight. in 2015 with an investment of $ 5.8 billion, 70% of China and the rest of Laos. The first stage is under construction through mountainous terrain, mostly unpopulated. Now 25% done, it should be completed by December 2021, according to Dr. Supee. Laos was the first country in ASEAN to sign a BIS project.

"I am sure that the Lao people will be able to see this railway even before the Thai people make a decision (on the line) from Nong Khai to Nakhon Ratchasima," she said,

however With a project cost of nearly one-third of the country's $ 16 billion GDP, there is concern that the debt burden in Laos outweighs the benefits.The public debt has reached 68% of GDP in 2016 (it is less than 50% in Thailand), raising the level of debt from moderate to high in the recent debt badysis of the World Bank / IMF.

leader of Asean in terms of external debt to gross national income at 93.1% compared to the regional average of 26% for all developing countries, according to FT Confidential Research, a unit of The Financial Times . Cambodia, Vietnam, and Indonesia then have the following highest debt ratios. of Asean, respectively

. The IRB is however consistent with the goal of turning the country from "landlocked to land". say. The railway will reduce travel time from the Mohan-Boten border to Vientiane to less than three hours, even at medium speed.

China promised that the railway would provide 5,000 jobs to local people and focus more on the plight of 4,400 families displaced by the project. They have not yet received the compensation promised by the government.

"Laos is not ready to move from landlocked to land, at least not with this project," said a source at the Foreign Ministry of Laos. Bangkok Post last month

His main concern is that the amount of debt incurred and unbalanced deals mean that China will ultimately be the sole beneficiary of the project. He said the Vientiane government would not be able to solve the problems caused by the project, especially the compensation and relocation promised to the affected residents.

The Vientiane Times reported that Bounchanh Sinthavong, Minister of Public Works and Transportation, payments would begin at the end of June. He said the loss of all property, including land, buildings, fences, crops and trees would be offset, but nothing has happened so far. The total cost of compensation, which will be the responsibility of the Ministry of Finance, has been estimated at $ 297.7 million.

"No official from any department came to talk to us," an inhabitant told Radio Free Asia. He reported that 12 households in Muang Xay in the province of Oudomxay were recently informed that their compensation payment would be delayed "indefinitely".

PAIN IN THE HARBOR

Those who are concerned that Laos has dug into a deep hole point to the unfortunate experience of Sri Lanka and Pakistan with the megaprojects of the # 39; IRB. Gwadar Harbor in Pakistan on the Arabian Sea is a great place for a deep water port and now the centerpiece of the Sino-Pakistan Economic Corridor (CPEC).

About 1,000 people, half of whom are Chinese, are now working as container terminals. China will now be able to link its landlocked western region to the port of Gwadar, which will allow ships carrying oil and other goods from the Persian Gulf to avoid the chokepoint in the Strait of Malacca. China also pledged to spend $ 63 billion on power plants, ports, airports, highways and other support infrastructure in Pakistan.

But Pakistan's trade deficit with China has been rising since all projects related to China. If the country is not able to repay the debt, the Sino-Pakistani corridor "will undoubtedly change the situation in Pakistan, but we must be careful," said Ehsan Malik, general manager of the Pakistan Business Council. . Nikkei Asian Review in March. "Ten-year tax concessions, 90-year leases for Chinese companies and cheap imports will affect the competitiveness of existing domestic industries."

According to the Committee for the Abolition of Illegitimate Debt, an international network of activists, Pakistan will have to repay about 100 billion dollars to China by 2024 on a total investment of 18.5 billion of dollars. Beijing has become Pakistan's largest lender, surpbading Japan's $ 19 billion. CPEC loans will add $ 14 billion to Pakistan 's public debt by $ 90 billion by June 2019.

"Someday, China will turn Pakistan into its own semi-colony as it is. recently with Sri Lanka, "writes Panos Mourdoukoutas. economist at LIU Post, a private institution of higher education in New York, Forbes last April

Indeed, China's takeover of the deepwater port of Hambantota in Sri Lanka Lanka raised sovereignty concerns. Under the $ 1.12 billion deal, China Merchants Port (CM Port), which is owned by the state, will operate the $ 1.5 billion facility in China with a 99-year lease and the payment will serve to reduce the Sri Lankan government's debt to China. 19659004] The first phase of the project, which ended in 2010, cost $ 361 million, with the China Export-Import Bank financing 85%. The lack of commercial activity meant that the Sri Lankan government was struggling as the external debt reached $ 48.3 billion in 2017.

Meanwhile, its annual external financing needs reach $ 11 billion roughly the same annual tax revenue. Sri Lanka's debt to China now stands at $ 8 billion and bears interest at 6%.

A plan to give 80 percent stake in the Chinese firm triggers protests from Sri Lankan trade unions and opposition groups. limit China's role in the management of business operations. But the Chinese company still holds a 70% stake in a joint venture with the Sri Lanka Ports Authority.

The joint venture is part of a plan to convert Chinese loans of $ 6 billion into equity. The Colombo government also said that CM Port would invest an additional $ 600 million to make Hambantota operational.

Other issues related to BIS projects include delays, growing deficits in some partner countries and growing sovereignty concerns, according to a study by the Japanese publication. The Banker and the Reconnecting Asia project of the Center for Strategic and International Studies.

In Indonesia, construction of the country's first high-speed railroad through a tea plantation in Bandung, with an estimated value of 6 billion, is currently experiencing delays. The 142 km line between Jakarta and Bandung was launched in January 2016 but in February 2018, only one-tenth of the work was completed as its cost increased.

"Since the launch of the project, there has been virtually" A local villager was quoted as saying by The Banker . "No tracks, nothing, the work only restarted three months earlier, for the underground tunnel."

According to the publication, only half of the land required for the railway was acquired. This delay, coupled with rising land prices, is also boosting the $ 5.5 billion price since its launch two years ago to $ 6 billion currently.

The China Development Bank agreed to cover 75% of the project It has also delayed disbursements several times since the signing of the loan agreement in May 2017, further slowing progress.

Similar delays were observed in IRB projects in Kazakhstan and Bangladesh. raised in Sri Lanka, Pakistan and the Maldives.

STUCK AT THE STATION

In Thailand, a 250 km railway worth $ 5.2 billion in the first phase is expected to connect Nakhon Ratchasima to Bangkok. It is under construction, barely, since December 2017 and should be operational in 2021.

The complete line is expected to extend over 873 km, linking Thailand and Laos to Nong Khai. The construction of a 3.5-kilometer symbolic line at Nakhon Ratchasima was launched in December, primarily to save the face of both sides, who have been fighting over financial, commercial and operational issues for three years. The link between Nakhon Ratchasima and Nong Khai is only in the master plan phase.

"The 3.5 km are still far, far from what is expected," said Dr. Supee

. the different BRI alarm signals is Dr. Mahathir. Last month, he commissioned a review of all BIS projects in Malaysia, including the KL-Singapore high-speed line. However, AIIB remains optimistic about the results.

"Dr. Mahathir said it was going to be delayed for a few years and that would be fine," said Dr. Supee. "We have heard about the delay … as they are the body in charge of the investment, MYHSR (Malaysia High Speed ​​Rail Co.) is about to be dismantled, but this is not a concern because the agreement has already been concluded.

She also noted that the AIIB, which is one of the leading Chinese agencies charged with funding much of the IRB, has not yet disbursed a single baht for the construction of proposed railways in Southeast Asia. "The AIIB did not participate in the IRB financing in Laos because the Laotian government had already developed its financial plan, including loans from Chinese Bank Exim and Chinese government investments, "she said, think we will participate in KL in Johor Bahru but that does not happen with the new government, while Thailand has never wanted to borrow money to p because it wants to mobilize national funding. "