By Matt Rusling
Bangkok – In Thailand, the gap between rich and poor is palpable, and a drive just a couple of hours outside of cosmopolitan Bangkok reveals a much less affluent rural landscape.
But with government plans to build a high- speed rail system to connect less wealthy areas to the capital, experts expect a boon to the economy that will help bridge the rural-urban income gap.
Thailand’s Senate recently approved a bill allowing the country to borrow tens of billions of dollars to construct high-speed rail lines and other transportation infrastructure over the next seven years.
The projects will create high-speed rail lines that will connect Bangkok with places including Chiang Mai in the north, the Laotian border and Thailand’s industrialized eastern seaboard.
With completion planned for 2020, the project is expected to boost Thailand’s economic growth and create 500,000 jobs in a country that already boasts one of the world’s lowest jobless rates, as well as improve confidence in the economy and investments, Gene Panasenko, a financial consultant and wealth manager at LPL Financial, told Borderless News.
The improved infrastructure is expected to close the rural-urban income divide amid recent growth spurts in areas far from Bangkok.
“The benefits will substantially improve infrastructure, speed up the emergence of a new middle class, crate higher incomes of (the) local population” and increase people’s buying power in terms of consumer goods, he said.
The move comes on the heels of a five-year growth surge in rural areas that continue to lag behind Bangkok in terms of overall economic development.
Isaan, a lower income area in the country’s northeast that accounts for around half of the country’s population – and home of Prime Minister Yingluck Shinawatra’s political base –has reached 40 percent GDP growth, against 23 percent for the nation as a whole.
It has even outpaced greater Bangkok, whose GDP has seen 17 percent growth, although per capita GDP in Isaan was still less than one-eighth of Bangkok’s $1,600 a year in 2011. In sharp contrast, Bangkok’s per capita GDP was $12,000, according to the National Economic and Social Development Board, Thailand’s state planning agency.
“Any decent infrastructure is going to bring more jobs,” Panasenko said, adding that rural areas in the northeast of the country will be among the beneficiaries. “The railroad… is going to bring more jobs and really intensify the development of the infrastructure.”
Still, while better transportation links will help even out incomes in the country, it will take some time before rural areas including Chang Mai, Chang Rai and Isaan begin to rival those of Bangkok residents, experts said.
The opposition Democratic Party disagrees with the project’s financing, the Economist reports, although the project is not expected to create a mountain of unsustainable debt.
Thailand’s project is happening at same time as China’s plans to connect Vientiane in Laos to Thailand, another huge project in the region, Panasenko noted.
Disclosure
:
LPL Financial, Member FINRA/SIPC
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