HSBC sees opportunities in Thai rail investment

As construction kicked off last week on the first section of a high-speed rail line that will connect Thailand with China, HSBC banking executives said railway projects in Thailand and Southeast Asia present “significant opportunities” for international businesses and investors to tap into “an economic powerhouse in the making.”

“The opportunities are both in the construction, engineering and architecture phase and in the second and third stages of each particular project which include long-term and downstream opportunities around sectors such as real estate, retail, healthcare, and new job creation also,” said Sunil Hiranandani, head of the Belt and Road unit at HSBC Commercial Banking.

The banker said that the Thai-China high-speed railway is the key to the completion of a viable China to Singapore rail route that would greatly enhance connectivity in the region.

On Thursday, Prime Minister Prayut Chan-o-cha presided over a ceremony to inaugurate construction on the first section of that railway. It will link Bangkok with Nakhon Ratchasima in the northeast and cost about $5.4 billion. It is part of a line that will eventually run to Kunming in Yunnan province in China, while also connecting with a line running to the northern Thai province of Nong Khai opposite Laos.

Those rail lines are one small part of the massive infrastructure upgrade that is a signature policy of the Prayut administration.

The upgrade is worth between $60 and $100 billion and involves rail lines, roads, ports and airports, along with other logistics facilities. It is being funded through public-private partnerships, presenting myriad opportunities for investors. But HSBC said that the Thai government should clarify the risk-sharing agreement associated with the partnerships to secure all the investment it needs.

HSBC said about $41 billion worth of rail lines are planned or are under construction around Southeast Asia.

A Southeast Asian railway network is part of China’s Belt and Road initiative. It calls for rail lines from Yunnan province through Laos, Cambodia, Thailand, Malaysia and Singapore. It also involves building spin-off lines linking industrial and commercial zones with major ports, such as the Eastern Economic Corridor (EEC) in Thailand.

“Overall, it is a very ambitious plan … but over the last 12-24 months we have seen a significant increase in terms of actual announcements, funding and various activities within the infrastructure projects where they are started, under way or being completed,” said Jim Cameron, HSBC’s head of infrastructure and real estate in Asia Pacific.