Thai Trains Siemens Courts the Junta

German industrial giant Siemens is seeking to secure lucrative rail contracts from Thailand's military-led government as competition from Japan and China takes over market share.
The Bangkok metro is run by Siemens.

The guest of honor sat in the first row – not on a chair, like everyone else at the Siemens conference in Bangkok, but on a wide sofa.

The German industrial giant had actually invited the Thai military government's transportation minister to attend the event. But it is also courting his deputy, who attended the conference instead of the minister and who talked about plans for a massive infrastructure project to expand the country rail network.

"We are very interested in these projects," said Jochen Eickholt, the head of the Siemens rail technology division, directing his comments toward the sofa from his position on the stage. "And we would very much like to become involved."

There is a clear reason for the charm offensive toward the junta, which came to power in a coup a year ago. As the company has learned, Thailand expects to invest €8 billion ($8.8 billion) to expand Bangkok's elevated railways and metro in the next four years alone.

But even though Siemens has been instrumental in developing the city's mass transport system, the company risks losing out to the competition.

Mr. Eickholt already suffered one defeat when a Japanese consortium was awarded the contract to supply the technology for the Purple Line currently under construction. This was unprecedented, as Siemens had provided the equipment for all lines in Bangkok until now, the Skytrain, the metro and the airport express. The company provided turnkey systems, from trains to signaling equipment to control systems. "We cannot assume that we will have a 100-percent market share here in the future," said Mr. Eickholt. "We know that we are not the only ones."

Despite its strong track record, Siemens has failed to score points with the junta – unlike the competition.

Now Siemens aims to convince the military regime through personal relationships. The company has confirmed that board member Roland Busch recently traveled to Bangkok to meet with Transportation Minister Prajin Juntong. During his visit, Mr. Eickholt tried to win over Thai officials with an event called the "Siemens Mobility Day."

He has achieved some impressive successes. In its advertising, Siemens cites a 99.96 percent operational availability rate for the Skytrain and metro in Bangkok. This means that breakdowns and delays are almost never caused by technical problems, partly because the company maintains the trains itself. Siemens employees working at the subway depot receive 30 to 40 trouble reports a day. Most are minor issues involving broken ticket machines, for which the company dispatches technicians who can solve the problem within 30 minutes. Trains experiencing problems are sent to the shop after the end of rush hour.

Despite its strong track record, Siemens has failed to score points with the junta – unlike the competition. Last year, Prime Minister Prayuth Chan-o-cha and Chinese Premier Li Keqiang agreed on a preliminary contract for the construction of a rail line in northern Thailand. In late May, the government signed a declaration of intent with Japan to build a high-speed line. Siemens feels that it is at a disadvantage. "Huge amounts of money are being used to secure geopolitical interests," said Mr. Eickholt, alluding to competitors that can use government funds to solicit business. "Germany has a hard time with this sort of thing."

This is especially true in Thailand after the military coup. German Foreign Minister Frank-Walter Steinmeier had condemned the generals' takeover, and the European Union is also critical of the junta. On Tuesday, it called for the release of a group of students who had been arrested after a rally and are to be tried in a military court. The students could face up to seven years in prison.

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Despite the human rights situation, Siemens executive Mr. Eickholt still considers the government a business partner. "I think doing business here is the right thing to do," he said. He sees himself as a guest. "As a guest, you aren't entitled to comment on everything." Instead, Mr. Eickholt does his best to foster good relations. Standing on the stage at the Siemens conference, he handed the government envoy a gift. His employees later reveal what was in the package: a beer stein from Munich.

Mr. Eickholt also announced in Bangkok that a Siemens-led German consortium of 15 German companies is bidding to help India expand its transportation infrastructure, including high-speed railways.

In addition to Siemens, Deutsche Bank and several mid-sized engineering firms are participating in the initiative. “I also hope that Deutsche Bahn will become involved, but I don't yet have a confirmation,” said Mr. Eickholt.

The German consortium is hoping to profit from a campaign promise by Indian Prime Minister Narendra Modi, who wants to link the capital New Delhi to the country’s financial center Mumbai more than 1,100 kilometers to the southwest.

Mr. Eickholt said that a high-speed railway of that length typically cost €20 billion to €30 billion. “Large projects are really large in India,” he said.

 

Mathias Peer reports from Bangkok for Handelsblatt. To contact him: [email protected]