BANGKOK -- Leading Thai conglomerate Charoen Pokphand Group is entering the railway business with help from China Railway Construction, starting with a planned high-speed link connecting three airports in the Bangkok area.
The Thai cabinet approved the contract on Tuesday, propelling the long-delayed project forward. CP Group will ink the deal with the State Railway of Thailand as early as mid-June, with the goal of starting operations in 2024.
The 220 km railway will run from Bangkok's Don Mueang and Suvarnabhumi airports to the U-Tapao airport in nearby Rayong Province. The project is expected to cost a total of 224.5 billion baht ($7.04 billion).
Thailand's government is looking to bring advanced industries like aircraft, robotics and next-generation automobiles to Rayong and its surroundings as part of its ambitious Eastern Economic Corridor scheme. The new rail link would connect the economic zone, which also includes the country's largest port of Laem Chabang and the tourist hot spot of Pattaya, to the capital city in about an hour -- less than half the current travel time.
The high-speed rail linking the three key airports will be the first EEC infrastructure project to begin construction, said Kanit Sangsubhan, secretary-general of the EEC Office, according to a Tuesday report by the Bangkok Post. The government hopes it will help draw more businesses to the corridor.
CP Group won the bid for the railway in November 2018 over a consortium led by BTS Group Holdings, which operates Bangkok's mass-transit system. It will have operating rights to the high-speed link for 50 years.
Nikkei had not received a comment from CP Group as of Tuesday night.
Railway experts have been questioning the profitability of the program ever since it was first announced by the government. Such concerns likely drove away Itochu, a Japanese trading house with close ties to CP Group.
But the Thai conglomerate forged ahead anyway. As a group built largely on food products and retail, it sought partners with experience in railways in order to create a financially sustainable business model.
CP Group's consortium "consists of leading business partners from Thailand and overseas, bringing together world-class knowledge, experience and expertise," an executive had said back in November.
China Railway Construction stepped up to fill the gap in critical technology. The involvement of a Chinese state-run company turned the project into an extension of Beijing's Belt and Road infrastructure-building initiative along old Silk Road routes.
CP Group has made significant inroads into China and is believed to have strong ties to the country's business leaders. The group's connections through its China operations likely played a role in China Railway Construction's decision to join the consortium.
Other members include construction companies Italian-Thai Development and CH. Karnchang, as well as subway operator Bangkok Expressway and Metro.