Announcement of Three Loans Have Been Granted to the Kingdom of Thailand on October 30, 1950

INTERNATIONAL BANK FOR RECONS'l'RUCil:ON AND ~EVELO~IE?f!i F()R THE Pl1$SS Preas Release No. 224 Octob~r 30, 1950 . 1 The International :Bank for ~ec,o:nst.~ctidn and DevelopJnent to4,ay ann<;:>Unced tha:t thJ;"ee loans totall!ng $25,400,000 we~e gx-anted to the Kingdom of 'l'hailand for the rehabilitation of the Royal State Railways, the ·deve,iopxnent of the port c:>t' Bangkok, and for 1rr1gat1on, drartnage and water c~unications in the Central:, Plain. Tbeee are the f~rst loa~~ to be made by th~ Ba~ to a coi1ntry 1~ southeast \\ Asia, and bring the tcrhal amount oi J.,oana · granted by the :Bank to piore th.ap. one b.illion dollars.~ ~e renabilitation of tlle ratlwaya 1ij the most important measure .~t1ll ·to be comple~ed in :f;he r~conatruction of ';I.1hailanc;l after the war.. Of prilJle importance in -the dev~l~p~en~ of ~ho country are t~provements to the facilities at the port of Ba:pgkok ~1:1~bling larger vessels to enter the po;t't, and the ir:a:-igation of tlle • Cent.ral ~:Lain., whioll will add e.pp~eciably to th, production c;>f \';:rice,. "The ·loa·n .for _the rehabil:t.tatiop. of the railway'3 amouP-ts to $3..,000,000. It w.:tll "be use<t spec-if'ically to f!nano.e the proour~ment of urgently needed a:p.are parts for rqlling stock, the procurement and inetallatton of ai8Jlall1ns equipment for those stations which a~e at present ineutficiently protected an4 the rede• stsnins and. l;"e ..equi:pl)ins of the railwa;~rworkshopa at .~kkasan on t;he outskirts ot , ('-- > I) Bangkok. - {!, The loan for the develop:Jllent of the port 9f Banl3kok aJD,ounts to $4, 40Q>, 000. The channel throu~ the bar at the moutll o~> the Chao ~ya ;River ~ll be deppene!i · and w1d.ened to pe;-!Pit slaps of l.O, 000 DWT to ente~ tl:\e pol;'t.. Addi ttonal equipment w:1.n be ·insta]J.ed at th(;) te'rmllnaJ. at ''KlOP.G ']:oj. near Banskol\: to handle tp.e '''.ex;pected 0 :lncre~ee in fre~s}lt. The pl;"oc~ede of the :BaP,k 1 s loan w~U be used to meet the •• " C ' e.Qsts of tlle ·@~~ns to be done by ~ oont:r.acto~ and to purchase port equii,ment • !I . ···'~  .. 2 .. The third loan, amountir..g to $i8,ooo,000 1 is for financing the foreign ex- • csanse costs of a project for i~gation of r:toe land.Qin tbe Ce~tral r1a1n. The (( project consista,·;of-the conet~et1on of a b~ge ao;ro~a the Ch~o Phya riv~;r near .. Chainat, about 100 miles above Bangkolt, and of canals ancl water distribution sys« texns, which are designed to provide an assiu-ed water supply to an ~.ee. of .about 2,260,000 acres in1;the Centx-al Plain. It:t.:ts estimated that after thf3 completion of ) the project and after allowing for inc:t;"eaaed inte~l conSUillption, there should be a~ inc:r:ease of appl;'oximately 470,000 nietrtc tons apnually in the quantity of rice availabl~ for export. In addition, there should be about 75,000 tone: of soya beans available for e~o~ aP,llually. The bar~ase near Clla:t;nat wtlJ. be ,~onstru.cted. to a1:1ow for the later installation of an hy~ulic powe~ plant to Ei111ppleme.nt t4e • ..· ~ • ,<·, \\ thermal oapac!ty in Bangkok. T~e· railway and ~ort loans a~e for a terni of 15 years each and ca;r~y an in~ tereet_. r~te of 2 3/4'/o pe~ annum, plus eommiss1on at t~e rat~ of J,.1(, which, 1n. ac- ~• cordanc.e Witll the Bank's Articles of J\gl;'ee+nent, iP allocated to its special ra•. serve f~~~· .Axnorti~ation pa~nts, ealc\'llated tQ ret:!.~e t~e loans by mat~i ty, will etarti on April 15,1954, 'lhe IJ:TigatiQn lo~ is for a terJn of. ao years, and carries an interest rate of 3% pe~ allllum, plus the usual 1% coxmo.ies;!.op. fol·· allocation to the .special reserve .fund. Amortization paymetltB will start on Apri.l l"5, 1956. ~e ecop.~ of Thailand 1'3 tn~inly agr1.cu,lt'\U'al, with nioet of the cultivated area devoted to rice. ·Expo;t'te of this commod.1ty f~sh more than half of Tha.il~d'~ ~~reisneexcllanse eanunss.·~lte count:ey•s otller ~jo~.e,cpo~s ~e ~bbe;r:-, tin and "\~·~, teak~ The financial pQJ:Jition of ~:f:la~d, both intern~ly al)d e;>cteniaUY ,.:ts strons. Tlla1J.an.4's debt record ha~ b,en aoo4. ~he se~vioip~ of foreign loan~ WQ.S inter~l)ted d~ing the eeCQnd wox,ld we.r but .was ~eeumed in 1947 witll the.full settlem.ent of·:u ~rreara. • A Ba~ nd.ssion viaiteQ. ~ailand early :tn 1950, and lo~n negotiations were started in Waf1111Paton v;tth a Thaii deleg~tion at tlle $Ud or" A~8"'3t 1950. After  . .u l . ~· 3 ... c-\ a:pprovi::r.C by the l3ank 1 a Executive Directors th~ Lo~n Agreements were sisned on • Octobere7, l950 by H.R.H. Prince. Wan W~ithayakon1 ~basaador of· Thailanci in Washington, D. c. on behalf of the K1,;Q.8dom of ~ail~p.d a,:Qd by Eugene ' ( :a~ President, on behalf ef the Internat1.on~l l3a:Qk for Beoonstruction and Development. Black, \ \~ •  ' / SUPPL"EMEN.r.AL (STAT'.EMENT ON THE L.OANS TO THE Kn'GDOM OF TRAIIAND I •• 1. '!Econ0ll11c Si tua~io:rt ~of_J.fua11and The eco;riomy of Thailand is mainly agricultural with 80% of.the working popu~tion en.eased in agriculture. Most of the cultivated a~ea is devoted to rice and, in additio~, to meeting d()'1leat1c needs, yAiS comm.o<tity furnishes more than on~- half of her foreign e~change earning~. Th~iland now ranks first in the world in rice ~xporta, followtd by. B ~ an(\ the U.~.A. HQr otller Jnajor e.:x::port items are rubbe~, tin and teak. In spite of the disloc~tion and destrtJction cau~ed by the wa~, the financial position of Thailand, both !nte~al and external, is st~ong. The Govern~ ment has been able to meet from curr~nt revenues ]]lost capital eX!)end1tures as well· as ordinary expenditures. · The internal public debt of Thailand is small. In June 1950 1t a.mounted to Bahts 1,173 m:t.llion (the equivalent of $93,840,000 at the official rate of excha11ge),.nearly all o;t' which was incu~ed during and since tne wa~. 'l'hailand's foreign debt record has been good. ~e ~ervicipg of foreign loans ·was intel'l~pt·ed dlll'ing the second world war but was ree~ne~ in 1947 with the f~ll eettiement of all arrears. At present, Thailand's for(,ign debt consist(3·,of fil.5 million and a U.S~Gove~ent Surp~ua Property Credit, tihe outatand:tng balance of wbich is $5.4 million. · While the circulation of notes ex:panded abo~t nine times during the war, mai~y &B . a result of advances to the Japanese Government, the Government has been • succossf_'ul in recent yeara in ar~eating f'\U'tAer inflation by keel)ing budget de- f.1c1 ts small an~ by sterilizing the fo1•eisn exchange profita of the Banlt- of Thailand. The :fncrease in c~ency circulation has lassed behind the rise in gold and'' foreign e,c;change holdings of the Bank pf Thailand. At :present the Govern- ment budget· is tending t9wards balance and the GoverilIJJ8nt is determined to·avoid inflationary financins. Wholesale prices and t~e cost of living have been virtually stabilized at a level below thei~ post~wav peak of 1947. $ince the war ~h~iland 1 s exte~~l trade has been steadily increa~ing and has again reached its traditional export ~l~s pcaition. i:i:'lle balance of payments showed a sur~lus on current account in 1948 and 1949 and a surplus is again expected in 1950, both in hard and soft currencies. :L'l,lailand is t:q.e only country in So'1th East Ast.a with. a free excllapsemarket,. but thel;'e is 14 operation a limited system of m~ltiple e~ohange rates which acts as an ex;&ort tax on rice, tin and rubber, and as an import subsidy for petroleum p;rod~ctij-=~~nd Gove;t'nment purchases abroad. The lon~ range trade pl;'ospects ap~ear favorable. No difficulty should be. encountered in ma~k~~Jng al~ the rice avai,la'ble for eXl)Q:rt since rice sho:rtages are likely to continue --1n Sol.lth East Asia :f'Qr sQmetinle, Rubber and,. tin e:q,orts are in a good competitive poQt tiQn and show ap. upward trend, 'n:lailand is also developing new expo:rts including atieklac, wolfram, ~nt1lnony, hid.es a:qd skiIU:J, cocoanut oil., tapioca, aalt a,nd eemi:"precioua stonee. ·2. The Rozal State Railways Rehabilitation Project • •• l • • -, • • . • ·- • • • • • . • ' ' " The r.ailway syete~ consi~te of 3213 lane. of track radi.atins from Bans].cok to the northe~., eo~thern,. ancl nort~eaet~rn ~:r~as of Thailand. It has been .built ove~ tlle: past 50 1,ars p~ima;t"ilY to se~e these a~as wM.ch, µ.nl1lte tll.e Cent~l  - 2 - ;. Pl.am, have no navigable ~tern.ya and tew roads ·.except feeders to the railway. During the war the principal 'bridges., stations; and workshops lfe" destroyed and about halt of the rnllinS stock was rendei'ed ·unaerviceab1e:. As a result ot the . destruction of the workahops;and ~k· of spare-parts, loc.om~\1fta and rolllns 11tock have not been prope:rly :rna1ri~1ned. Moreove:i-, renewal ot Nils is long overdue •... The Thai Govei-n.ment has financed the- replacement ot much· of th~ damaged roll1ns stock from its own resources. -It has,also:placed orders 1n the United ICqg4am for the repair of three larse bridges and-··in Japan for structural.. ~teel to repair the rema1nins principal brtdps. · The 1oan from· the knk will be used · ma:lnl.1' to f:f:mmce the redesigning and re-1~qu:lppins of the. railway workshops-.,_ which are of prime importance, not only for the 4fly-to"'"da7 maintenance of loco- . motives and roU:lns stock, but ai~o for catchinS up on arrears of •:tntenance.·... The loan will also be used for the purchase bf' signal ling equipment., which, by ureducins acc:lde.nts and factli tatins movement· ot -trains at nisht, sbould do mu~· to increase the capacity of the railways. . The :Royal State Railways vhich ~t present are operated as a depa~ent of.the Miniatey of Communications·will be reoraanized shortly as. an autonomous, public authority. ) 3. Dev~lOJ)ll1!nt. otc~e .Port ot· Bangkok Banskok is situated on both be:nks of the Chao P.llya river about 50 lq;t~- llietera from its moutll. It is the only port of importance in i'pailand., handling 9~ ot the imports and a5i of the expo~tsc: ot the countey'. . At the mouth of tl?,e. · river 1a a sanci bar, extend.ins about 15 ldlomete:rs into the sulf' ·ot Tha;l.land, • which has been created by th~ deposit of silt carried downstremn by the river, .. Thi~ bar prevents vesslea over 4,ooo to 51 000 DWT trQrl enterins the river fUlly:: laa.en althoUSb there is ample depth for much lerser ships in the river itself,. Large vessels must thereto~ anchor 1n an open road.stead :ln the-lee of the is~· of KQh Sichans·al>out 56 kilometers from tlle river mouth., and there discharge .carso into lishters. In add:ltlon to this handicap., the port facilities upriver at :Bangkok, which are mostly privately owned, are inadequate •. In 1933, :ln response to a request f:rom the Government of Thailand· for. th' advice, the t,eagu.e of Nations appointed a cOJIDQi ttee of. eX!)erts who., . after stuccying · the situation,me,de, recommendations· for improvement of· the port of l3angkok and · its approaches. The Government of Th.ail.and decideA;:~o 1mpl~nt these recommenda~ t:lons,"~nd ensased an expert to prepare plans for ·the. const·ruction of a port ter- m1JUO;"~t Klong Toi. In 1938 cc.,nstructi'on work· wa·e .started.: and.. a year later dredsinE opere,t:lona· were beguJl on the ba~~ All work was ~i>.terrupted :ln.1942 by the war •. \ 0 Althouab the ·dred1J:lris.. was resumed in· 1949., the e,cist:tns pl,ant can barely maintain th- channel at tts p;reaent. depth.· TJie Gov-,rnment now 1nten4,s to go ahead w~th deepen1ns.$n<l ,nd,enins the channel.to pe%'Jllit the passage ot vessels· ot 10,000 ~WT •. The ».Jop Jlar't o:f this work ~Ube 9arried out uiider contract by e. t:lrm spec1aliz1ns in dredf31ng operations. ,, The port terminal ~t pJ9esent con,;,ists. ot·1600 metera of quay wall, sheds, adJd,rdstrat:tve buildings and road and. rail access :J.n·to the are~. The s.lleds were partly . d8111Ntf4.tby bombing ~uruis t~ ~ , · Otily ~nor worlt and, repa1;rs have been carried out ainoe the war. To copo W1~ th$ .exi,e~ted :lncrQa.se in· eh:tppJ:ns ·wh~n t:he ch~l thro'18b the bar is cOJrll)le.ted; a(\dit:lonal.oe.x-so bandlins and othex-  • - 3 .. equtpment JJ111st be 1nstalledtr It will also beneeeasart to· prov~dt a smell :power • sene~tingplant bece.ueo of the inadequate senerati~g ' ,_ . capaoJty at. :eangk:ok, The Bank's lo'1n wiU be ~ed to finance a cont~oct for the dredging of the channel, tQ purchas,;, a 1rus, :,:iavigatjonal aids ''for markins the channel .through the bar., ~quiprient and·~ power plant. It iA;J estimated tllat the fre1s}lt bancU.ed at the pox-t; ten,ipal in l.9,4-9 amounted.to about 500,000 metric tons, ot wh1cll some 400,000 tons were impo~t$·an.d 100,000 tons ex.ports. After completion ot the ~hantlel and. the 1m.itallation o:r equipment at the po~ terminal it is e~eQted that.JJ1ore ships.nl; be 4ttracted to the port te:nnina,l, resultins in an ino:re~se in the freis}it turn-ovo;r and a su.b- st~ntial increat1e in port reven\le~. ~e el)Jlual i;tQ.ViXJ8 by el1JD1nation of' ligherage and other sh1pp:lns CO$t~ C:Ltter ct?mple~1on of the p;'o~e·et is eet1=,ted at about. 36,000,000 babts ($2,aeo,·000 at the off'~c1~l rate of exch~e) •. T~e porl, wl>.1ch at. pres~nt. is operated by the 'l1r811~port~t1on ttnd Harbor Departments of the-!41m.stry 9f Communicat1o:r;is, Will be reorsat.iized shortly as an autonomous public authority .. 4. ~e Cha<? .Ph:m, I~itp~~ox.iz. Drai!u.16,i an~ ~-~~atio~s. i;p~oJ,ot nie e~ort o'.f :rj.ce :Ls Thailand's principal source of fore:tgn excbanse •. However, the surpluses available :.('or eXl)ort will ~nish if dOinestio co~~tton. conti.nues to jncrease witb tllo srow~a popul~tio'2 and t;here. ~a uo co~es~o;nd:tna. 1:nc:r~ase. in production, In view of the wo;rld sJ:iortage o:r rice,. Tl:tailan.cl.':s: sur..: . • :pluses in this eommod.1 ty ~e of sr~at 1mportance to otJler rice o'oneuming countries • The Gove~ent of Tbail~nd llas .prepared seveX'al pla~s aW.ns.~t a~ incre&:J.§.e·~n rio~ ·production both, tor internal; consumption and, for e:q,ort, .Amolls these,. the Chao.Phya l'toJect 1s the most important. . . Tlle essential feat'\U:'e of t}le. projeqt is a rein:ro;ttced ooncrete ba~se to be constructed near Cllai~t on the Chao Phya.,'i~iver abc~ut i6o k;tloineters. nQ~h ot B~ot, Tl\e the raisins and J.owe:r1ns of the sates 01r the ba~ge it. wiU ·pe · · possible to cont~Ql the ups·tre~ ~ace l~vel ot the i'i~;er 1:n Qrde~ to feed ·the 1rr1satton canal,~at all. stages ot flow in tb.e river. ffitt :Not ~d'' S\.lphen .et~ fluents· wtll ·be used as the -in canals to irrl;Sf.'~e tb.e ~;rea. c>:n. the we~t of the Chao Pbya :ttive~ whi~e in the area east ot the river new ttlatn cal)al~ w1U be conat$c:rt·ed. . The p:r~Ject is deeisned priJQaril.y to p;rov:tde 8I~ aas,u,eq. water 1,i1pply1 l>r<>• perly controllecl. and cl1$trtbuted., to an a~a of al>out 2, 4 ~60,oqo ~c~s,; ~ther benef1ts Will be obtained tn the ;ro~ of b7clroelect:rio .pc,wer ~4. sreat uiprove~ me:nt11 1n wte~ co~c;at~ona tllroushot\t 'lthe ~rea, Prov~1a1on. for the installation at a 'lator ~te ot hydroelectric se~;ratori, has been lll8d~" 1n the . ~esi;sn of th, llarragc, in .conneotton with comtemplat«,d· electric "??owe~ develo,~iiit. I.n ·tei,ns of ~~creased :production of ~ce and othe~ crops, tlte benefits o.t the proj.eot Will bt substanti~. · It is eet1-,ted th~t atteJ;- the .. complet1on of 1 the p~jec;t tlle total annual prod"cticm of ;paddy.will inc;reae, ~1 840,,500 1181;ric tons ot soya beans, After e,l~owina for 1nQreased intern~:1 coXtSumptiori tll~te· . ( should be· &n 1-reaee!].Of.i4'l)QQ.\ 470 1 000 tq~ :J.n ~' ~U&nt;tty Of rJce and ot 75,00.Q tons 1n th.a qtJanttty Qf. ,oy• b,en, av~ilt\l>lf fQ'i: ,,~o~ ~ve'f:t Yi'~, Thus . the · •·· Pl,'OJect nU ma.lee a 41\\bet~tieJ. COt\t:r$bu.tto~ tQWVtlJJ nan-otd,ng the e;:tsting pp ·between wo:rld dema1'ld tor nee and i'1Qe :p;-0.4uc;tl01'; · C)  - 4,_ The Goverzwe.nt has :ln:rortQe<l. the Ballk that it proposes to charge moderate rotes tlu:'~out the !rrigatedarea_atter comp1etion of the project. The revf:?nue th~ obtained wiU cover·tlle operation. and maintenance coi,ts ot the p;rojact. The proceeds or· the Bank· loan in the elflOlUlt of $l8.,ooo.,ooo w1U be applie<l ·to for.eien exchange eXl)enditures for the const~ction plantf pel'IQane~t eq_'11pment, ~terie.ls and worlcshop equip~nt tor the_QJrrag~, pcve~ house extension and di$trib1.1tion syste:tn., for equiPJQent :ror-''the Oe:Q~x-al Wo;rtahops Qf the aoyal :U-rigation Depart,Dent at. B.anskok, and tor the oontrac;,to~'s an~l consulrtins ens:tneer•s fees,, • ,, ' D "\ /I 11 ,I