Eastern Economic Corridor must continue

About 500 Japanese investors on a business tour of the Eastern Economic Corridor attend a forum hosted by the Industry Ministry in September last year. (File photo by Pornprom Satrabhaya)

As the election looms, the government of Prime Minister Prayut Chan-o-cha will likely leave behind a very mixed legacy. Far from being a clean-up crew against graft and a technocratic team for effective policy performance when it seized power more than four years ago, this outgoing government has had its fair share of unaccountable corruption allegations and policy directions that merely served its own vested interests of staying in power after the polls.

If there is one major project to highlight under Gen Prayut and his politicised team of experts who are behind a pro-junta electoral vehicle named Palang Pracharath Party, then the Eastern Economic Corridor (EEC) is it. This is a mega pro-growth project that should be continued no matter who enters government after the election.

Thitinan Pongsudhirak teaches International Relations and directs the Institute of Security and International Studies at Chulalongkorn University.

In view of the lack of progress on the bigger mega-project that is supposed to link Bangkok to Nakorn Ratchasima and Nong Khai to Kunming in southern China, Thailand's rail development has made more inroads on the domestic front. The Kunming-Bangkok rail is supposed to be one of six corridors that link China's Belt and Road Initiative. But while the Kunming-Vientiane rail is being built, there is no railway in sight that will link Thailand to China. However, rail development within Thailand is making considerable headway.

Take, for example, the extensive and ongoing monorail network in the greater Bangkok metropolitan area. It would have been inconceivable in past decades to imagine commuters taking a rail network across Bangkok's environs and its main Chao Phraya River. In the past, river crossings combined with buses, taxis and tuk tuks were the only way to get around. Rail is changing the way greater Bangkok works in terms of logistics and mobility. And more is on the way.

For its part, the Prayut government has touted its EEC infrastructure development strategy as the centrepiece of its administration. Known in Thai as khet pattana setthakij pak tawan og, with the literal translation as the Eastern Special Economic Development Zone, the EEC was promulgated very recently, on 15 May 2018. It is set up as a public-private partnership, with full government backing which comes with tax and other investment incentives. The EEC is located in the three eastern provinces around Bangkok, namely Rayong, Chon Buri and Chachoengsao, with a combined area of more than 13,000 square kilometres and a planned investment of US$50 billion over five years, mostly from foreign direct investment.

The idea behind the EEC is to replicate the phenomenal success of Thailand's first-generation Eastern Seaboard development in the 1980s. The Eastern Seaboard, which was shepherded by the National Economic and Social Development Board (NESDB) under the government of Gen Prem Tinsulanonda, became the lynchpin for Thai export-led growth for more than a decade prior to the 1997-98 economic crisis. Back then, the NESDB was headed by a technocrat, Dr Snoh Unakul, who was shielded from vested interests and elected politicians by Gen Prem. It is uncertain if the EEC Office, headed by Dr Kanit Sangsubhan, will be similarly protected after the election.

Nevertheless, the EEC envisages similar undertakings as the NESDB but in an upgraded fashion for the digital development era known under the rubric of Thailand 4.0. Overall, EEC maps out investments in ten targeted "S-Curve" industries, namely next-generation cars, smart electronics, affluent medical and wellness tourism, agriculture and biotechnology, food, robotics for industry, logistics and aviation, biofuels and biochemical, digital and medical services.

To attract foreign investors, the Thai government has initiated a range of public infrastructure investment projects to boost connectivity, led by a high-speed train connecting the three airports around Bangkok -- the main Suvarnabhumi and secondary Don Mueang as well as (Vietnam War-era) U-Tapao near Pattaya City. A public-private partnership, its cost has been set at 200 billion baht (US$6 billion) on a 50-year concession basis, with operations set for 2022-23. The terms of reference for construction bidding have been issued, although the political uncertainty associated with the upcoming poll may delay the plan.

In addition, under the EEC, U-Tapao airport is geared to be developed into an international hub serving Thailand's eastern region as a hub for the former Indochina countries of Cambodia, Laos and Vietnam. U-Tapao is slated to be integrated with Pattaya City, a longstanding and famous beach resort, and its surrounding areas. The scheme imagines a work-life balance that can eclectically combine EEC work while having a sea resort livelihood.

Apart from the U-Tapao aviation project, Laem Chabang Deep Sea Port is to undergo a Phase III upgrade to accommodate more containers and cars that are shipped through it. Located in Chon Buri province, Laem Chabang was the cornerstone of the earlier Eastern Seaboard success. Similarly, whereas Laem Chabang deals with bulk shipments, Map Ta Phut port handles natural gas and raw fluid materials, serving Thailand's petrochemical industry. A third-phase upgrade is also earmarked for Map Ta Phut, which is located in adjacent Rayong province. In the same province is the Sattahip Commercial Port, a former US-built naval base during the Vietnam War. Sattahip is planned for handling cruise liners and luxury yachts.

This cluster of sea and aviation ports underpin the EEC. The most concrete so far is the high-speed rail linking the three airports but even there progress is still incremental, without any results on the ground as yet. However, the rail linking the three airports is likely to be built eventually because it makes too much commercial and development sense to be ignored. Apart from the rail lines in greater Bangkok, this is another rail connection that is likely to change how the Thai economy grows.

Moreover, the EEC's infrastructure projects appear the most suitable to plug into the China-Indochina corridor because of proximity and complementarities. China needs north-south railway development from Kunming. Any rail development through mainland Southeast Asia would be a boon for the EEC as it would boost critical mass and generate more traffic.

Thailand needs to build consensus around the EEC. Irrespective of the government of the day, this is a win-win project for the country, a new node that can boost and deliver economic growth. Although it began under a military government, its potential and promise as a second-generation Eastern Seaboard that could provide growth drivers to the Thai economy for the next decade and longer should appeal to all major political stakeholders.

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