With the ASEAN Economic Community (AEC) due to kick off at the end of the year, transport links are high on the agenda of most national governments. The holy grail is high-speed rail, and the region’s two most committed investors, Japan and China, are both keen to grab as many projects as they can. BY MICHAEL SAINSBURY.
While the territorial dispute between China and Japan in the East China Sea has grabbed all the headlines, it’s the commercial battle between the two giant Asian rivals that looms in the near future.
At the centre of the battle is the multi-billion dollar promise of infrastructure projects – in particular high-speed rail – as both countries vie to provide nations around the region with funding, technical advice and ideally the contract to build.
The European Rail Industry Association expects the global market for high-speed rail to average annual growth of 21 trillion yen in 2013 to 25 trillion yen in 2019, with worldwide growth of 2.7 percent and 4.1 percent in Asia Pacific.
At present China has chalked up some early wins, largely by virtue of its all-encompassing Kunming to Singapore Rail network – on paper at least the prize project. China has proposed three routes: a western line through Myanmar, a central line through Laos and Thailand, and an eastern line through Vietnam and Cambodia. All three would connect with the existing rail line between Bangkok and Singapore.
But Ruth Banomyong, Professor of International Business Logistics and Transport at Thammasat Business School, Thammasat University, says the situation is not as cut and dried as it looks. The Kunming to Singapore strategy continues to stall, he explains, and most Southeast Asian countries have started exploring their own national networks.
“The problem is that regional priorities and not the same as national priorities,” he says.
China recently inked a major deal with Thailand, and is in talks with a range of other countries including Indonesia. Japan is eyeing a Thai deal too, but has stumbled on Vietnam’s long delayed Hanoi to Ho Chi Minh City link.
Meanwhile Malaysia is building its own links and is pulling ahead of rivals with the electrified line to the Thai border.
The question many are asking is whether ASEAN nations are entirely committed to a Southeast Asian high-speed rail network.
At a meeting of chief executives of ASEAN train operators in Hanoi last November a need for “closer connectivity” was discussed, though what role a high-speed rail system would play was unclear. Before a network could be built ASEAN members would have to standardise equipment and systems. And then there are immigration procedures, visas on arrival, new or expanded stations for international arrivals and departures to consider.
“Progress has been so slow on the regional network that many individual projects are likely to become part of that network – eventually,” Ruth explains.
Singapore and Malaysia have agreed to build a 400km high-speed rail link between the island city and Kuala Lumpur. The project would commence in 2016 and both governments until recently expected it to be operational by 2020 at an estimated cost of $10 billion. The high-speed link will take 90 minutes with six stops, but while flights take 45 minutes, Kuala Lumpur International Airport is 70km outside the city. The current rail service between the two cities takes six hours.
The link is being built as a public-private partnership with strong government participation from both countries.
“It will be on the basis of private sector funding with the two governments providing structural support and participation,” Malaysian Prime Minister Najib Razak said when the project was announced in 2013.
In an effort to sharpen its advantage, China is in the process of merging its two main rail companies, China Railway Construction Corporation and China South Railway Corp. Ltd (CSR). According to CSR this will be to “avoid wasting resources due to competition between domestic makers and to accelerate the internationalisation of the industry.”
At a December 21 meeting of the Greater Mekong Regional Summit, Chinese Premier Li Keqiang offered to provide substantial financial and technical support for infrastructure development projects in the region. Li said that a memorandum of understanding (MOU) for a $10.6-billion standard-gauge railway showcasing transport development in the region was signed between China and Thailand days earlier while he was in Bangkok.
Li presented five proposals on transport links, investment schemes, financial support and environmental protection in the Mekong basin countries – Cambodia, Laos, Myanmar, Thailand and Vietnam.
There are 92 high-priority projects at an estimated total cost of $30 billion that form a Regional Investment Framework Implementation Plan for 2014-2018 that were adopted at the summit. Ninety percent of all expenditure will go towards transportation. Li said, “you have my word. Chinese rail is high quality, high standard, high technology and high speed.”
Right now Thailand has become the focus of China and Japan with billions of dollars in contracts up for grabs. The military government that took charge of the nation on May 22 is under pressure to launch long-touted high-speed rail projects to boost the country’s flagging economy.
In Bangkok, on December 19, 2014, a memorandum of understanding was signed by Thailand’s Transport Minister Prajin Juntong and Xu Shaoshi, chairman of the National Development and Reform Council of China.
The two lines to be developed under the agreement are: Bangkok to Nong Khai Railway on the border with Laos, and Bangkok to Hat Yai / Padang Besar Railway, near the border with Malaysia.
This deal saw rising pressure from Japan to be involved in the projects. In April, on a visit to Japan, Thailand signed an (MOU) to launch a feasibility study for the construction of two new high-speed rail services. The Bangkok to Chiang Mai route and the shorter Kanchanaburi-Bangkok-Chachoengsao-Laem Chabang route. Both lines will provide an alternative to current transport services to the popular tourist destinations of Chiang Mai, Kanchanaburi, Ayutthaya and Sukhothai. In addition the two sides will also explore the Bangkok-Chachoengsao-Aranyaprathet route.
In a talk at the Foreign Correspondents Club of Thailand in May the country’s Deputy Transport Minister Akhom – a long-time proponent of high-speed rail – insisted that the current government plans would not go the same way as all unexecuted plans over the past two decades.
Despite his assurances, for all the summits, memoranda of understanding, government promises and jawboning about high-speed rail, the reality remains far off with no substantial services likely to appear before 2020 and possibly sometime afterwards.
On May 5, the Malaysia-Singapore link was the latest to stall with an admission it was at least seven years away and would miss its 2020 timetable.
“The original timeline [for] 2020 is not realistic,” Singaporean Prime Minister Lee Hsien Loong said. “We have to take a bit more time to do it well.” Right now that seems to be the story across the region.