The picture shows the first-pile drilling ceremony of the C3-1 section of the first phase of the China-Thailand Railway. (Photo provided by ABC)
At the construction site of the C3-1 section of the first phase of the China-Thailand Railway, workers are working hard to speed up the construction. "The project has overcome many difficulties such as the high difficulty of land acquisition and demolition, the high safety risks of construction on the operating line, and the large number of special span bridges. Currently, the construction progress has exceeded one-third, and the first phase is expected to be completed in 2028," said Lu Yuwei, the financial manager of the C3-1 section, which is constructed by the China Railway No.10 Engineering Group Co., Ltd (hereafter referred to as "the Group").
As a landmark project of the Belt and Road Initiative, the China-Thailand Railway is not only a transportation infrastructure but also a key link for regional economic integration and deepening international strategic cooperation. The on-time progress of the project is inseparable from the "counter-guarantee" service provided by the Agricultural Bank of China Shandong Branch (ABC Shandong Branch). Lu Yuwei said that the "counter-guarantee" service of ABC Shandong Branch had solved the problem of issuing guarantee for the project, providing sufficient credit support for the project at the stage of signing and starting, avoiding delays caused by capital issues, and effectively improving the financing efficiency of the project.
Tailored "Counter-Guarantee" Service Provides Critical Financial Support
The China-Thailand Railway is Thailand's first standard-gauge high-speed railway, designed to run at a speed of 250 kilometers per hour. The first phase of the project connects Bangkok and Nakhon Ratchasima, while the second phase will extend to Nong Khai, a major border trade town in the northeast, which is just across the river from Vientiane, the capital of Laos. This will enable the connection with the China-Laos Railway, allowing travel to Kunming via Boten in Laos and Mohan in China. The total length of the railway is approximately 845 kilometers. This railway is a key component of the Trans-Asian Railway's central route and will become a major transportation artery running through the Indo-China Peninsula upon completion.
The Group had been deeply involved in the Thai market for many years. On July 19, 2023, the Group successfully signed the C3-1 section of the first phase of the China-Thailand Railway. This section is 30.21 kilometers long, including 20.03 kilometers of bridges and 10.18 kilometers of embankments. The Group's success in winning the bid was attributed to its extensive experience in local construction projects in different areas such as housing, municipal works, airports, and water conservancy.
"Construction project requires a huge amount of capital. During the bidding process for the project, the local banks' insufficient credit for the consortium became an obstacle to the progress of the project," said Lu Yuwei.
After learning about the demands of the Group, ABC Shandong Branch leveraged its global service advantages in cross-border finance and proposed a "Counter-Guarantee" service plan based on local conditions. "This scheme is based on the application of the Group. After issuance of our counter-guarantee, the local bank in Thailand issues a non-financing guarantee for the consortium based on the counter-guarantee," said Li Qingyang, the general manager of the International Banking Department of ABC Shandong Branch. This service plan not only broke through the restrictions of the credit limit of the consortium but also met the project owner's requirement for local guarantee in Thailand.
In 2023, ABC Shandong Branch successively issued three counter-guarantees for the Group's China-Thailand Railway Project, covering all the guarantees under the project, with a total amount of 3.739 billion Thai baht (equivalent to approximately 766 million yuan). "This solved the problem of the project lacking of credit support and provided crucial financial support for speeding up the progress of the project," said Lu Yuwei.
One-on-One Full-Cycle Services Unlock Synergized Economic-Social Benefits
The difficulty and challenges of handling guarantees for the China-Thailand Railway project are much higher than other businesses. "First, there are the communication and coordination with local banks in Thailand and the cooperation with the client. Second, it is necessary to deeply understand and master the conventions, rules, and logic applicable to international business. Third, the specific terms of the guarantees must be carefully worded to ensure consistence," Mei Wensong, the deputy president of the ABC Luoyuan Sub-branch in Jinan, Shandong Province, who was involved in the entire process of the project's guarantees, said.
The picture shows the construction site of the China-Thailand railway. (Photo provided by ABC)
To provide convenient, high-quality, and efficient cross-border financial services for the project, ABC Shandong Branch has adopted a "one-on-one" full-process service system. Li Qingyang said that on the one hand, they meticulously sorted out the list of business documents, assisted the client in controlling the terms of the guarantees' text, and established a green channel for credit approval to ensure the efficient operation of each link. On the other hand, they maintained close communication with the Thai reissuing bank, deeply discussed the details of the guarantees' terms, coordinated the text content, and ultimately ensured the timely and efficient handling of the guarantees.
Sun Peng, the deputy president of ABC Shandong Branch, said that as a major state-owned bank, ABC has rich international business experience and a global network of partner banks. By closely cooperating with local financial institutions in Thailand, ABC has actively enhanced its influence in the Thai financial market. "These guarantees for the China-Thailand railway project not only leverage the advantages of local banks in understanding the local market and regulatory environment, but also take full advantage of ABC's strength in capital and credit rating, effectively reducing business risks and safeguarding the interests of all parties, achieving a win-win situation for all," he said.
Sun Peng added that in recent years, ABC Shandong Branch has been deeply focused on the needs of cross-border financial service of enterprises' "going global", striving to enhance the supply of high-quality financial products, and fully supporting key projects along the Belt and Road Initiative. It has helped enterprises achieve high-quality overseas expansion. Currently, ABC Shandong Branch has provided 50 billion yuan in financing and credit support for the Belt and Road Initiative, 47 billion U.S. dollars in cross-border settlement services, and 10 billion yuan in guarantees, serving over 7,000 high-quality enterprises and covering more than 100 countries and regions. This has further strengthened ABC's brand of supporting China's high-level opening up to the world.
Bank, Enterprises Team up to Build Closer, Resilient Long-Term Partnerships
Looking back on the financial cooperation practice between the two sides in the China-Thailand Railway project, ABC Shandong Branch has not only enhanced its brand influence in the field of cross-border financial services but also won high recognition from the Group, deepening the bank-enterprise cooperation. Currently, the Group and its subsidiaries all prefer to handle their guarantee with ABC Shandong Branch. A long-term and stable cooperative relationship has been formed between the two sides. ABC Shandong Branch has also continuously increased the supply of differentiated financial services, fully meeting the financial service demands of the Group. In recent years, ABC Shandong Branch has provided a total of 15 billion yuan in credit support to the enterprise and continuously extended the radius of financial services to ensure the efficient operation of the industrial chain and supply chain. In addition, ABC Shandong Branch has expanded its guarantee business to Latin America and Africa, providing solid support for the overseas business layout of the Group.
With the financial services provided by ABC Shandong Branch, the Group has not only expanded its market share in Thailand but also set a model for high-quality joint construction of the Belt and Road Initiative. "Thanks to financial support from ABC Shandong Branch, the project can proceed smoothly," said Lu Yuwei. The credit support not only reduces the financing costs and risks of the project but also attracts more social capital to participate, serving as an important driving force for the project's construction.
"Where there are roads, there is prosperity." The China-Thailand Railway is expected to be fully operational by 2030. At that time, it will seamlessly integrate into the "China-Laos-Singapore" railway network, further strengthening the interconnection among neighboring countries and playing a significant role in promoting regional social and economic development and improving people's livelihoods. (By Jia Yunpeng)
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