New Gateway to China

Thailand stakes its claim on OBOR

Thailand strongly states its intention to connect the EEC to OBOR.

A minivan drives past skyscrapers in Kunming, Southern China. Eastern Thailand is set to be connected with Kunming and beyond as part of the One Belt, One Road initiative.

It seems that faced with the uncertainty Donald Trump created on the Western higher seat of power, Asia is waking up and scrambling to once again become owner of its own trade destiny.

Just this week, the Thai Deputy Prime Minister Somkid Jatusripitak took another step toward making the world care more about Asian trade than border walls by affirming its strong intention to connect the lauded Eastern Economic Corridor (EEC) to China’s One Belt, One Road (OBOR) initiative.

The EEC is a plan to develop Thailand’s Eastern provinces and turn them into a trade and industry hub and tap into the wider ASEAN markets. The provinces of Chonburi, Rayong, and Chachengsao will host a 13,000sqkm corridor in the Gulf of Thailand, particularly directed at developing next-generation cars, smart electronics, medical and wellness tourism, agriculture, industrial robotics, aviation, biochemicals, and digital and medical services.

This would be no small feat. Expected to be concluded by 2021, the EEC will offer special conditions for investors and provide new and improved connections and access to the neighboring Asian economies via land, water, and air.

The plan has received more than a little interest from investors so far. According to official state figures, foreign direct investment in the EEC from Hong Kong and China alone reached USD14 billion and USD16 billion (Bt485.2 billion and Bt554.2 billion) respectively by the end of 2016. If the trend continues, it shouldn’t be difficult to fulfil the government’s expectation of seeing USD43 billion in investment in the EEC over the next five years. Furthermore, most of the investment has so far focused on small and medium-sized enterprises, a cornerstone of the EEC plan to potentiate employment and innovation. Officials suggest that 100,000 jobs could be created in the area in the run up to 2020.

But there is a lot of work to still to be done. Infrastructure will need to be built or improved, tourism will need promotion, and new smart cities will need to be designed and created to ensure that technological requirements are met.

Connectivity will be essential for investors to consider the area as a priority investment spot. Maritime routes are being devised between Thailand’s Eastern port of Laem Chabang, which is undergoing an expansion, and the new Dawei port in Myanmar, Sihanoukville in Southern Cambodia, or Vung Tau port in Vietnam.

The expansion of the U-Tapao airport in Rayong will more than triple its capacity to 3 million people per year, and create both an aviation hub and an easy port of entry for tourism in the region. Later, a high-speed railway will improve land connectivity.

Hold the OBOR!

OBOR’s appeal to Thailand is no surprise. With new free trade deals on the table, billions of dollars in loans for infrastructural development, and an easy direct route both by sea and land to middle Asian, North African, and European markets, OBOR is simply too big to miss out on. Cooperation with the EEC also works well for China in the sense that it is one less branch of the OBOR it will have to promote just by itself. The door to the rest of ASEAN will be well placed in the Gulf of Thailand.

For now, the stage is set. The Thai government has openly stated that the EEC will reach China via a high-speed train connecting Bangkok to Nakhon Ratchasima, Nong Khai, Vientiane, Laos and Kunming in China. Submarine cables will connect Bangkok with Hong Kong and mainland China, promoting the development of new information technology solutions, while routes will connect export zones in the EEC through the so-called Maritime Silk Road to Eastern Asian ports and around the Indian sub-continent’s shores. From there shipping will have access to the Middle East and through the Suez Canal to Mediterranean Europe, or via Iranian ports and then by land to the Caucasus and Northern Europe.

Simply put, it is the single largest organized shift in global trade ever seen. Even if it is being named after an old trade route between China and Europe, the sheer size of investment and of political engagement necessary to make this project work is unprecedented.

Thailand is making sure that it is not left out, and it is working. Already, Chinese companies are setting up shop in the EEC. At the Thai-Chinese Industrial Zone at Rayong, more than 80 Chinese companies now have manufacturing facilities, research centers, and operational hubs set up.

This May 14th, at least 29 world leaders will gather in Beijing, along with President Xi Jinping, for the Belt and Road Forum, where representatives from countries from all around the world will come to learn more and see how much they can take from the initiative.

From Thailand, the Minister of Foreign Affairs Don Pramudwinai, Minister of Transportation Arkhom Termpittayapaisith, Minister of Commerce Apiradi Tantraporn, Minister of Digital for Economy and Society Pichet Durongkaveroj, and Minister of Science and Technology Atchaka Sibunruang are all set to attend, ensuring that all bases will be covered.

The battle for the future of trade is on, and, at least for now, the US doesn’t seem interested in participating.

In the run up to the Forum, over a series of articles TBY will cover the different aspects of this complex initiative to give you a clearer view of what the initiative means for global commerce in the future.