Srettha Thavisin, Thailand’s recently elected Prime Minister, embarked on his debut official visit to Beijing from 16-19 October 2023. Joining him were crucial officials, including Suriya Juangroongruangkit, Minister of Transport; Prasert Chantararuangthong, the Minister for Digital Economy and Society; and a substantial private sector delegation consisting of 50 representatives from various industries. This visit underscores a strong focus on economic and commercial matters.
Notably, the trip coincided with the two-day 3rd Belt and Road Forum (BRF) convened in Beijing, drawing 23 leaders from across the globe. The discussions and developments ensuing during and after this bilateral meeting have far-reaching implications, encompassing ambitious infrastructure projects, revised defence procurement plans, and the complex dynamics of geopolitical engagement.
Foreign investments
Srettha’s agenda after taking office prominently centres on economic cooperation and investment, evident from his ongoing visits to various countries, including the United States (US), Hong Kong, Brunei, Malaysia, and Singapore. During the New York tour, he scheduled visits to enterprises such as Microsoft, Google, Estee Lauder, and Goldman Sachs. Furthermore, Srettha is exploring opportunities in the Electric Vehicle (EV) industry, as evidenced by his virtual meeting with Tesla’s CEO, Elon Musk.
Srettha commits to enhancing bilateral cooperation with Singapore in renewable energy and the digital economy.
Thailand currently holds the distinction of being Southeast Asia’s primary hub for producing internal combustion engine vehicles. This status is underscored by significant manufacturing facilities operated by major Japanese automakers such as Toyota Motor and Isuzu Motors. His meeting with Malaysian Prime Minister Anwar Ibrahim has explored the possibility of establishing an EV manufacturing facility in Thailand through collaboration between Malaysia’s Proton and Chinese partner Geely. Additionally, Srettha commits to enhancing bilateral cooperation with Singapore in renewable energy and the digital economy.
China remains an important partner in Thailand’s economic landscape as it is the latter’s largest trading partner with 18.1 percent of exports and 14.4 percent of imports. Chinese investments span diverse sectors, from electronics and automotive, with a US$1.44-billion commitment to EV production since 2020, to data centres and agriculture, notably high-quality fruits and vegetables. From January to August 2023, Thailand experienced a substantial 73-percent increase in foreign investment applications, reaching US$10.1 billion, with Chinese companies contributing US$2.6 billion, nearly tripling the previous year’s figure. Notably, a substantial portion of the 228 investment proposals from Chinese companies received this year is concentrated in the electronics sector.
Sidelines of BRF
On the sidelines of the BRF meet, Xi Jinping underscored China’s firm support for Thailand’s development path that suits its national conditions. Both nations endorse expediting the construction of the China-Thailand Railway, promoting the execution of the China-Laos-Thailand Connectivity Development Corridor, expanding collaboration in the digital economy, green development, tourism and new energy, and promoting cultural exchanges. Additionally, both sides emphasise joint efforts to combat cross-border crimes such as wire fraud and online gambling. Additionally, China is ready to enhance cooperation with Thailand in multilateral frameworks like the Association of Southeast Asian Nations (ASEAN), Lancang-Mekong Cooperation, and the United Nations.
Both nations endorse expediting the construction of the China-Thailand Railway, promoting the execution of the China-Laos-Thailand Connectivity Development Corridor, expanding collaboration in the digital economy, green development, tourism and new energy, and promoting cultural exchanges.
However, the infrastructural projects need a push. The range of projects undertaken in Thailand under the BRI is notably narrower compared to countries such as Malaysia and Indonesia. Up to this point, the Thai government’s cooperation with the Chinese government is limited to constructing Thailand’s High-Speed Rail (HSR) network, linking Bangkok to Nongkhai in the northeast region of Isan, which has faced constant delays. Negotiations for the railway project began in 2014 but encountered significant obstacles related to design, funding, and technical assistance, leading to a halt in progress. In 2016, Thailand decided to self-finance its US$5.32 billion project share due to concerns about high-interest rates associated with Chinese financing and debt scares. China only provides its expertise in technology and railway systems. Construction of the initial phase of the project, a 155-mile rail line connecting Bangkok to Nakhon Ratchasima, has commenced, with plans for it to be operational by 2027. The remaining segment of Thailand’s railway project, the Nakhon Ratchasima-Nong Khai section, is expected to begin construction in 2024. Upon its completion, it will intersect with the Laos–China line at the Laotian capital of Vientiane, linking to the Chinese city of Kunming in Yunnan province.
Landbridge proposal
A suggestion floated by Thaksin has been a longstanding idea of the Land Bridge proposal during the BRF. The vision of creating a land bridge connecting the coasts of the Andaman Sea and the Gulf of Thailand, known as “One Port, Two Sides,” is an ambitious initiative. It envisions the development of deep-sea ports in Chumphon province on the Gulf of Thailand side and Ranong province on the Andaman Sea side, along with a 90-kilometre corridor featuring a six-lane expressway and standard gauge railway tracks. This project leverages Thailand’s strategic geographical location, positioning it as a pivotal transportation and trade hub in Southeast Asia, with a target completion date of 2039.
Srettha expressed confidence that the land bridge project will seamlessly integrate with the Belt and Road Initiative (BRI) infrastructure, enhancing the global transportation network. He has directly pitched this idea to Li Qiang, the Chinese Premier, during his visit and has garnered support from his Chinese counterpart and investors.
The vision of creating a land bridge connecting the coasts of the Andaman Sea and the Gulf of Thailand, known as “One Port, Two Sides,” is an ambitious initiative.
Some analysts have raised concerns about shipping companies’ willingness to use the land bridge, which may entail extended transit times and increased costs. In this respect, effective planning and implementation will hold a key. Additionally, conducting an environmental assessment study will be essential to understand the ecological conditions of the surroundings.
Furthermore, to avoid geopolitical apprehensions, the Thai government needs to diversify its investors and take the Western nations into confidence. This approach is crucial in light of China’s evolving economic challenges, which may impact its investment capacity and, subsequently, Thai initiatives and strategies. The growing economic influence and presence of China in Thailand have raised concerns among previous ruling parties and its Western and neighbouring partners. To maintain its autonomy and strike a balanced approach, Thailand has consistently sought to manage its relationships with various global powers, a trend that the Srettha administration is expected to continue.
Swapped deal
A significant development that transpired after the China trip was Thavisin’s endorsement of a revised deal to acquire a frigate rather than submarines at this time. He underscores that, despite the higher cost, this decision is in Thailand’s best interest. Defense Minister Sutin Klungsang echoed this perspective, citing a comprehensive assessment of the contract’s legal implications as the rationale behind the decision. This change in procurement plans resulted from Germany’s refusal to export the MTU 396 engine, originally intended to power the submarines. Germany cited adherence to the European Union’s (EU) embargo on arms exports to China, which has been in place since the 1989 Tiananmen Square incident. While China is yet to agree, a meeting with the Chinese counterparts and the Thai navy is scheduled for further discussions in the coming weeks.
A significant development that transpired after the China trip was Thavisin’s endorsement of a revised deal to acquire a frigate rather than submarines at this time.
The choice to opt for a Chinese Navy frigate instead of submarines is a diplomatic manoeuvre, reflecting Thailand’s commitment to maintaining stable relations with China while postponing a more intricate and politically sensitive decision regarding submarine acquisition. This decision offers several strategic advantages, including a stronger negotiating position, enhanced naval capabilities, and the ability to influence regional security dynamics, particularly concerning disputes in the South China Sea.
Moreover, if this plan succeeds, to fully harness the frigate’s potential, comprehensive training programmes and necessary infrastructure development should be prioritised.
Thus, while Srettha’s visit holds significance for Thailand’s economic and strategic interests, the success of the land bridge project and the procurement of a frigate, coupled with potential geopolitical considerations, will require meticulous planning and diplomacy to ensure they benefit all stakeholders.
As Thailand navigates its path of economic development and geopolitical engagement, it will be essential to remain vigilant, adaptable, and open to collaboration with various partners, both in the East and the West, to maintain autonomy and stability in the ever-evolving global landscape. The coming years will undoubtedly witness the unfolding of these strategic initiatives and their impact on Thailand’s position in the international arena.
Sreeparna Banerjee is a Junior Fellow at the Observer Research Foundation.
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