SE Asia rolls out rail renaissance
By Tim Johnston in Pur Andout, Cambodia
Published: October 22 2010 17:52 | Last updated: October 22 2010 17:52
Say Polin runs a small train that he built himself, carrying a few passengers and perhaps some firewood bound for the market in the Cambodian town of Pursat.
But his Heath Robinson-style railway cart on its overgrown tracks will soon be replaced by freight trains a kilometre long thundering between Beijing and Singapore.
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The first leg of Cambodia’s refurbished railway line was formally opened on Friday, marking the beginning of a south-east Asian rail renaissance, with projects planned across the region, spurred on by environmental and economic imperatives.
Vietnam is preparing to overhaul the 1,700km line from Hanoi to Ho Chi Minh City (formerly Saigon), while China is about to break ground on a link from Yunnan province in the south to Laos, and has agreed to a joint venture with Thailand to upgrade some of its railways.
There are also suggestions of a line from Bangkok to an Indian Ocean port to be built at Tavoy in Burma.
Such works are vital if south-east Asia is to face the twin threats of a long-term decline in export markets in the US and Europe and competition from the rising economies of China and India.
With 550m people and a combined gross domestic product of $1,500bn, south-east Asia should be able to generate trade growth among the countries of the region. However, such activity accounted for less than a quarter of its overall international trade last year.
“The financial crisis in 2008 highlighted that one of their weaknesses was an over-reliance on exports,” said Pierre Chartier, a transport economist with the UN in Bangkok. “There is a realisation that they should do more to tap into intra-regional trade.”
The willingness to work together to develop links – as encouraged by the Association of South East Asian Nations – is nowhere clearer than in the ambitious plans to build or renovate rail lines that will eventually connect Beijing to Singapore and the Indian Ocean with the Pacific.
Kunio Senga, head of the Asian Development Bank’s south-east Asia department, said: “Asean integration has been talked about and talked about, and nothing of substance happened. But now, Asean leaders have realised that talk does not lead to substantive integration.”
Asean is pledged to create a common market by 2015, but even if the tariff and customs barriers come down, more investment is needed in infrastructure.
“The bottleneck is huge in terms of infrastructure requirement,” said Mr Senga, whose ADB is a joint funder of the $141m project to refurbish the Cambodian link in the chain.
When complete, the network will not only carry goods between China and south-east Asia, and open up economically deprived areas such as Pursat, but could also act as a land bridge between China and India’s east coast.
The ADB estimates that the initial phase of the programme – the line that runs from southern China down the length of Vietnam before turning north and west through Cambodia and Thailand and then south through Malaysia to terminate in Singapore – will cost in the region of $2.2bn.
The whole project, including a “missing link” between Ho Chi Minh City and Phnom Penh, where there has never been a track, could be finished by 2015, and could produce an economic return of 20 per cent above its development costs, says the ADB.
Shortcomings in the region’s infrastructure and bureaucracy are imposing a hidden surcharge on regional trade. Amadou Diallo, chief executive of DHL Global Forwarding for South Asia Pacific, estimates that about 15 per cent of the value of intra-Asean trade is currently being lost. Given that internal regional trade in 2009 was worth $376.2bn, that equates to an annual cost of $56bn, or 3.7 per cent of regional GDP.
The railway is likely to face competition from the region’s increasingly integrated road networks, but regional manufacturers say it could still make a difference.
For example, Ford produces 275,000 vehicles a year at its production facility in southern Thailand. Ninety per cent of them are exported, almost all by sea. The company estimates that the railway could cut the delivery time from Thailand to Hanoi from 14 days to three.
Say Polin, meanwhile, is nervous about losing his job, but recognises that the rail link could bring benefits deep into the Cambodian countryside.
“Right now we are worried that there will be no more jobs, but we hope that a company will start a factory and bring jobs,” he said.
“That would be great.”
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