Announcement of a Twelve Million Dollar Loan for Railways in Thailand on August 9, 1955

FOR IMMEDIATE RELEASE ..LNTE RNATI O NAL BANK FOR ~ECONSTRUCTION AND DEVELOPMENT <WORLD BANK) 1818 H STREET, N.W., WASHINGTON 2!5, D.C. TELEPHONE: EXECUTIVE 3-6360 PRFSS RELFASE NO. 416 FCE. RELFASE SUBJE£T: $12 million loan for railways Aug11st 9.,. 19SS in Thailand. The World Bank today made a loan or $12 million in various currencies to the State Railway of Thailand. The loan will finance part of a five-year investment program which will improve the efficiency of the Railway and enable it to handle increasing traffic. The railways are the backbone of the transporta- tion system and play an important part in the economic develop~ent of Thailand~ • They are the only means ot transport linking all important regions and because the system centers on Bangkok., the largest seaport., they are important to foreign as well as domestic trade. The Bank of America is participating in the loan, without the World Bank's guarantee, to the extent of $1.,10.5.,ooo, representing the first three maturities which fall due from August 15, 19.58 through August 15~ 19S9. This is the second Bank loan for the railways in Thailand. In 19$0 the Bank made a loan of $3 million for the purchase of urgently needed workshop and signalling equipment. All the equipment has been installed, and the central workshops at Bangkok are the best equipped in southeast Asia. The railway system as a whole., however., is still suffering from lack of maintenance and outmoded operating equipment and procedures. In 19$1 the Government established the State. Railway of Thailand as an • autonomous body to operate and develop the railways. The Railway prepared. long range plans to m~ke goed arrears of maintenance and to modernize and expand the  - 2 ... railway system.. The present program, drawn up in consultation with the Bank, con- sists of' top priority items only. It includes both the rehabilitation of' physical properties and improvement in the Rail\iay•s operations, management and administration The Bank's loan will help to finance the renewal of rails on 87.5 miles of track; the purchase of .30 di'esel locomotives, 170 passenger coaches and about 850 freight cars; the installation or 5,800 automatic couplers in place of' the obsolete type now in use; and the establishment of an up-to-date telecommunications system. In addition,. bridges and buildings will be constructed, yards remodelled and sidings extended. The completion of this program will make possible great improvements in operating efficiency. The replacement of wood-burning locomotives by diesels· on all express trains will eliminate the need for refueling stops and speed up running time. The use of modern couplers will enable bigger loads to be hauled. The installation of carrier telephone equipment, teleprinters and traffic telephones over the entire system will improve the control of train movements and the despatching of cars. The total cost of the program will be equivalent to $60 million of which • $48 million is in foreign exchange. Twenty percent of the tot,al cost will be met by the Bank loan of $12 million for imported equipment; 55% will be met from the earnings of the State Railway; the remaining 25% will be provided by the Government as a contribution toward making good arrears in maintenance. The Railway has been operating at a profit since it was established. More efficient and expanded operations which can be expected to result from the program will ensure that the Railway remains financially strong despite its large contribution to heavy capital outlays in the next five years. The Bank's loan is for a term of 1$ years and bears interest of 4-5/8% per annwn, including the statutory 1% commission charged by the Bank. Amortization will begin August 15, 19.58. The loan is guaranteed by the Kingdom of Thailand. This is the fourth Bank loan in Thailand and brings the total lent there to $,)7.4 million. In addition to the earlier railway loan of $3 million, the preVious loans were $18 million for irrigation and $4.4 million for port i.Jnprovements at Bangkok. After having been approved by the Bank's Executive Directors, the loan • documents were signed today by His Excellency Pote Sarasin, Ambassador of Thailand in the United States, on behalf of the Kingdom of Thailand, by Mr. Boonma Wongswan., 1 Financial Counselor of the Embassy of Thailand, on behalf t,Qf the State Railway of \;; 1, I·: Thailand and by Mr. Eugene R. Black, President, on behalf or the World Bank~