Announcement of Twenty-Two Million US Dollars Railway Loan in Thailand on April 28, 1961

FOR IMMEDIATE RELEASE WORLD 1818 H STREET, N.W., WASHINGTON 25, D. C. TELEPHONE: EXECUTIVE 3-6360 PRESS RELEASE NO. $1 SUBJECT: $22 million railway April 28, 1961 loan in Thailand The World Bank today made a loan equivalent to $22 million to the State Railway of Thailand to assist in the execution of a six-year pro- gram of modernization. The program will increase the capacity of the rail- ways, improve operating efficiency and reduce operating costs, mainly through the addition of more diesel locomotives. Thirteen commercial banks are participating in the loan, without the World Bank's guarantee, for a total amount of $1,955,000 representing • the first four maturities and part of the fifth maturity wh:i.ch fall due between December 1, 1964 and December 1, 1966. The Mitsui Bank, Limited, New York Agency The Chartered Bank, New York Agency The participating banks are The Hongkong and Shanghai Banking Corporation, New York Agency Mercantile Bank, Limited, London Crocker-Anglo National Bank, San Francisco The Bank of Tokyo, Ltd., New York Agency The Bank of Tokyo Trust Company, New York Bank of America National Trust and Savings Association, San Francisco Irving Trust Company, New York The First National City Bank of New York Girard Trust Corn Exchange Bank, Philadelphia Banque de l'Indochine, Paris Grace National Bank of New York The railway program is part of Thailand's National Economic Plan for the years 1961-66, and is essential to the proper functioning and sound growth of the Thai economy. Under the program, the State Railway will pur- chase about 65 main line and shunting diesel locomotives, and about 1,650 • freight cars, will replace about 36o miles of track with heavier rail, remodel  - 2 - • station yards and construct or extend sidings, replace about 350 wooden bridges with steel or concrete, install signaLing and telecommunications equipment at 100 stations, and purchase machinery and equipment for repair shops. The Bank's loan will finance the diesel locomotives a.nd freight cars and most of the steel for bridge construction. The railway radiates from Bangkok, the capital and commercial center, and extends some 2,175 route miles throughout the country. It is the only year-round means of inter-regional transportation in Thailand, since natural conditions restrict river transport largely to the Central Plain and much of the highway network is unsuitable for heavy traffic or all-weather service. The railway is faced with growing traffic demands. The volume of freight amounted to 3.7 million tons in 1960, an increase of BO% in ten yearso Cement products, rice, petroleum products, timber, garden crops and lignite • account for 58% of total tonnage carried by the railway. Passenger traffic earns as much revenue for the railways as freight. There has been an increase in the numbers of the traveling public; some of this has been attracted to the highways, but the number of rail passengers has been increasing and reached almost 40 million in 196o. The Bank has participated in two earlier programs to improve the railwayso A loan of $3 million made in 1950 was used mainly to re-equip the Makasan Workshops near Bangkok, and a loan of $12 mil..lion in 1955 ·was used for the procurement of 170 passenger ca.rs, 850 freight cars, 5,745 sets of automatic couplers, and modern telephone and teleprinter equipment. The rolling stock is in operation; the installation of automatic couplers was completed last year; and the efficiency of train dispatching and car distri- • bution ha.s been greatly improved by the modern telecommunications system •  •· .... - 3 - • operations. The current program will further improve the efficiency of the Railway's The new diesels will make it possible to haul longer trains at greater speed, thereby increasing the capacity of existing track. Furthermore, they will reduce by 40% the Railway's annual requirements of firewood for steam locomotives, and will thereby ease Thailand's serious problem of deforestation,, Of the new freight cars, 650 will replace obsolete equipment, while the other 1,000 will. meet the increase in traffic expected during the next six years. Renewal of track with heavier rails and replacement of timber bridges with permanent steel or concrete structures will accommodate heavier trains and yield substantial economies in maintenance. The enlargement of station yards and sidings will reduce turn-around time and speed up operations. The total cost of the program is estimated at the equivalent of $54.6 million, with a foreign exchange component of $34.6 million. The State • Railway of Thailand will finance 6o% of the total cost from its own resources; the balance will be covered by the Bank loan. Procurement of all imported goods and equipment will be on the basis of international competitive bidding. The loan is for a term of 20 years and bears interest of 5-3/4% per annum including the 1% commission which is allocated to the Bank's Special Reserve. Amortization will begin December 1, 1964. The loan is guaranteed by the Kingdom of Thailand. This is the seventh loan made by the Bank in Thailand and brings the total amoimt lent there to $128.6 million. In addition to railway development the earlier loans 1,{ere for improvement of the Port of Bangkok, irrigation a.nd electric power. After having been approved by the Bank's Executive Directors, the loan documents were signed by His Exc~llency Visutr Arthayukti, Ambassador of Thailand • in the United States, on behalf of Thailand; by Mr. Yukta na Thalang, Comp- troller, State R~~l.-!18.Y of Thailand, on behalf of the borrower; and by Sir William Iliff, Vice Presici€:i'il, on bE1hal:f of the Bank. His Excellency Sunthorn Hongla- darom, Minister of Finance of Thailand, was present at the signi:cg ceremonies •