Chinese Loan Deal Rejected By Thailand But Rail Link Will Still Go Ahead

China has demanded high interested rates and tough penalties for loans afforded to Thailand to construct the planned high-speed rail link. However, the Thai financial team have rejected the offer but say the project is still on course.

The Minister of Transport Arkhom Termpittayapaisith spoke to Thepchai Yong, group editor-in-chief of the Nation Multimedia Group about the Bangkok to Nakhon Ratchasima project, where he revealed the problems over the loan deals.

China has offered the Thai government loans amounting to 25% of the cost to build the railway, which is 253 kilometres in length and has a projected cost of over 179 billion baht.

Thailand have concerns about the loan contract, which could see China seize other assets from Thailand, should they default on the payments.

In a similar deal with Laos, China can lay claim to five mine's should they fail to pay the loan back within the terms of the agreement.

However, the minister of transport has refused to give in to China's demands and insist they will borrow from somewhere else, rather than agree to the stringent demands of the Chinese.

Mr Termpittayapaisith said "Thailand is an honest debtor and have never failed to repay foreign debts".

It also appears that Thailand would have to pay a greater interest rate than that of Indonesia, who borrowed from China, which again, did not appeal to the authorities.

The minister said “Our sovereign credit rating is higher than Indonesia and some other countries in the region".

Despite Thailand's lack of interest on borrowing from China, the rail link project is not under threat and negotiations will continue.

Source: The Nation Content: TPVS