The joining up of the Southeast Asian railway network will boost trade volumes and increase productivity
The Association of Southeast Asian Nations (ASEAN) is already an economic powerhouse. Its 10 members, spanning countries as diverse as Singapore and Cambodia, have a population of 630 million and a combined GDP as large as the UK’s.
To unlock its true economic potential, however, ASEAN needs to invest for the future – especially in transport infrastructure.
Take rail as an example. Trade between ASEAN and China is expected to double between now and 2025, but vast improvements in rail transport will be needed to support the projected increase.
The Southeast Asian railway network project, one of seven transport routes planned under China’s Belt and Road Initiative, is part of the solution. It involves building more than 7,000 kilometres of rail from China’s Yunnan province through Laos, Cambodia, Thailand, Malaysia, Singapore and Indonesia, as well as spin-off lines linking these countries’ industrial and commodity-rich areas with major shipping ports.
Many of these projects have started to take shape. For example:
In August 2017, the Thai government approved USD5.5 billion for the construction of a 252-kilometre line connecting Bangkok to the hub of Nakhon Ratchasima in northeast Thailand.
Up to USD75 billion of the USD85 billion that Malaysia intends to invest in transport infrastructure in the years to 2020 is being dedicated to railway development. This includes the USD2 billion Double Tracking Rail project, which involves upgrading 197 kilometres of track. The project will cut the travel time from the south of Peninsular Malaysia to Kuala Lumpur from six hours to three-and-a-half hours.
In April 2017, China and Indonesia agreed to terms for the building of the high-speed rail link between Jakarta and Indonesia’s fourth largest city, Bandung. The 142-kilometre track, which will cost an estimated USD5.5 billion, will cut the journey from more than three hours to 40 minutes.
Towards the end of 2017, the governments of Singapore and Malaysia are expected to announce tender arrangements for their respective legs of the USD15 billion, 350-kilometre Kuala Lumpur to Singapore high-speed railway. The project has a target completion date of 2026 and will cut travel between the cities to just 90 minutes.
More than 7,000km of new track will be built in Southeast Asia
The joining up of the Southeast Asian railway network will be a paradigm shift for the region. Apart from removing bottlenecks in the flow of goods between China and Southeast Asia, it should boost the volume and efficiency of intra-regional trade; get goods to ports more quickly; and increase the productivity of each country by helping people get about more efficiently.
Projects of this scale do not always run smoothly. Large infrastructure needs appropriate planning and design to ensure value for money and address environmental and social concerns. Practical differences in construction and operational standards, as well as legal and regulatory inconsistencies, could also raise challenges.
But the creation of ASEAN 50 years ago laid the groundwork for regional economic cooperation. Today, the Southeast Asian railway network presents an opportunity for ASEAN members to demonstrate their ability to coordinate complex projects.
And such projects will deliver long-term benefits. Closer ties between ASEAN’s 10 member countries and with neighbouring China will help to unlock the economic potential of one of the world’s most dynamic growth regions.