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Railways May Build the New ASEAN Community

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BANGKOK – The leaders of the Association of Southeast Asian Nations (ASEAN) will gather in the Laotian capital Vientiane from September 6-8 for their first summit meeting since the ASEAN Economic Community (AEC) came into being at the beginning of this year. However, one item which is crucial to such community building, the construction of new rail lines linking most of the 10 member nations may not be a major agenda item.

A report by the Lao News Agency (LNA) ahead of the meeting drew attention to this fact, when the ongoing Laos-China railway construction project was described as a game-changer in community-building in the region. The project, a 427 km railway built by China, will have 72 tunnels and 170 bridges and stretch from the Laos-China border in Phongsaly to the Lao capital Vientiane near the Thai border.

A recent report by the Laotian Ministry of Pubic Works and Transport suggests that the project will ensure that the Laos would have strong economic infrastructure that meets its vision of transforming from a landlocked to a land-linked country and help achieve the external cooperation and connectivity strategies the government has envisioned with other ASEAN member countries.

In an interview with LNA on the eve of the summit, Yao Bin, the chairman of Krittaphong Group, one of Laos’s biggest construction companies, argued that the rail project will help to turn Laos into an attractive logistic centre and will encourage neighbouring countries to cooperate with Laos in developing better logistics systems in the region.

“Today one of the most important aspects of a country is its transportation facilities. If a country becomes a transport hub, then it will become a trade centre and finally a financial centre bringing with it prosperity for the people,” said Yao.

The rail systems in the region were first built by French and British colonial rulers, often to transport produce from the plantations they established in the interior or mineral resources from mines to the ports for shipment to Europe. These colonial trade systems have existed until very recently in the region where countries looked at export-led growth with its markets mainly in the rich European and North American continents.

But, China’s rapid economic rise in the past two decades has changed such thinking and countries in the region are now looking at markets in the neighbourhood where the middle classes are rising and so are their purchasing power.

China’s ‘One Belt, One Road’ project, which some have dubbed the ‘New Silk Route’, is tapping into this potential – and creating rail linkages are a major component of this project. The thinking behind this strategy is different to the European colonial strategy, because the railways are built to link communities, where both goods and people will be transported. In the latter case, it will increase regional tourism and people-to-people links, thus helping to build an ASEAN/Asian community.

An agreement signed in October 2006 by 19 Asian and Eurasian countries to build a Trans-Asian Railway network will create a rail network that links China right across Southeast Asia to Singapore. The missing links are now being built, mainly with Chinese rail technology and financing.

As Yao pointed out, goods now transported from coastal ports of Thailand to Chinese ports take at least one month to reach their destination. But, once the Laos-China link is completed, goods from Thailand could go through Laos to China’s Yunan province and into any Chinese city and vice-versa within a day. Millions of Chinese tourists who come to Thailand every year could also take this route and Laos could benefit as a transit point.

After a few hiccups, a Thai-Chinese high-speed rail project to improve rail connections between Bangkok and the Lao border near Vientiane has finally got under way with construction due to begin before the end of the year of a dual-track 870-km transport link. Under an agreement that was finally signed between the governments of Thailand and China, the latter will buy Thai rubber and rice in increased quantities and help build the broad-gauge railway with Chinese technology.

With both China and Japan expected to play a role in building and improving rail networks in Malaysia, a high-speed rail network is expected to be established between Chinese cities across Laos, Thailand and Malaysia to Singapore within the next few years. The first phase of China’s ‘One Belt, One Road’ dream will thus become a reality.

While China holds 70 percent and Laos 30 percent in the US$ 7 billion rail project in Laos, the Thai government decided to be the sole investor of the US$ 10.6 billion project and hire China to develop the project, after failing to negotiate a low interest loan from China. However, China has promised to buy two million tons of rice and 200,000 tons of rubber a year – that would represent a doubling of Chinese imports of those Thai commodities.

“Only China has such a big market and a huge purchasing power which could consume the big agricultural production of rice, rubber and others of Thailand,” said China’s Premier Li Keqiang after the two countries signed the Memorandum of Understanding almost two years ago.

However, while the rail projects have a strong community-building potential, there are also some sore points that needs to be ironed out as the projects roll on. Compensation for people that need to be moved out for these rail lines to be built is threatening to become an issue in Laos, and so are Chinese companies’ plans to develop commercial projects on acquired land adjoining the route.

Meanwhile, China is seen as a front runner for the lucrative contract expected to be given next year to build a high-speed train link between Kuala Lumpur and Singapore, after beating the Japanese to a similar project in Indonesia in March this year to build a high-speed rail between Jakarta and Bandung.

China is a relative newcomer to the arena of building high-speed trains. Japan, Germany and France have been the traditional powerhouses and China has first studied their technology and in the past 13 years built the world’s biggest high-speed rail system.

As Malaysian transport planning consultant Goh Bok Yen notes, “they picked up from the middle road, they picked up new technology, did their own research and development (R&D) and modernised the technology acquired.”

In fact, China can now boast the fastest high-speed railway development in the world. Its nine bullet rail systems covered a total rail line distance of 19,000 km in 2015, accounting for 60 percent of the world’s total line distance.

“Due to China’s R&D on major train projects and super lengthy tracks, China has developed the most cost-effective rail system in the world that nobody can compete with,” says Goh.

While the international media are preoccupied with real or imagined conflicts in the South China Sea, China and its neighbours are developing rail networks that could make the South China Sea irrelevant in developing transport and trading links in the region.

These railway projects are not only building community links in the region, but also bringing governments closer together. Relations between China and its ASEAN neighbours Laos, Thailand and Malaysia have never been better than they are today.

Source: International Press Syndicate