Missing Links

Posted on August 27, 2012

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Mekong region countries must turn ambitious plans for transport links into reality in order to tap their full economic potential.

Countries in the Greater Mekong Sub-region (GMS) need to collaborate in creating more road, rail and maritime links to connect with the major transport routes in each country in order to create true connectivity, according to the Asian Development Bank (ADB).

More roads and rail lines from Asia’s two biggest economies – China and India – are gradually being extended into Asean through the GMS countries. Their completion could bring about major changes in the way goods are shipped to and from Asia, as well as reduce costs and improve competitiveness.

India recently announced plans to build a highway running from Kolkata to Ho Chi Minh City via Myanmar, Thailand, Cambodia and Vietnam. China’s trade, meanwhile, could benefit from the Singapore Kunming Rail Link (SKRL), which will greatly facilitate logistics from Asia’s largest economy to the world’s fastest growing region. Some transport planners even like to spin visions of being able to drive from Shanghai to Paris without a hitch.

However, for most countries the real work still remains to be done at home. They need to create better internal links from their rural hinterlands to backbone road, rail and maritime networks, said Arjun Goswami, director for regional cooperation and operations coordination in Southeast Asia with the ADB.

The GMS countries have plans on the drawing board for backbone transport linking Yunnan and Guanxi provinces in China with the countries in the Mekong basin: Thailand, Cambodia, Laos, Myanmar and Vietnam. These five countries along with Yunnan cover 2.6 million square kilometres with a combined population of 326 million.

Transport connectivity is one of the key goals of Asean, which stresses that being able to move goods and people more efficiently will allow countries to reduce poverty, create jobs, increase trade volume and improve the quality of life.

Asean countries have a combined gross domestic product (GDP) of $1.5 trillion and a combined trade value of $1.7 trillion, but only about a quarter of the trade is within the region’s member countries and this mainly is due to infrastructure constraints that push up logistics costs.

Intra-Asean trade in 2009 was valued at $369 billion. The logistics cost of intra-Asean container movement was estimated at $2.25 billion a year, according to the Asean Logistics Study in 2008. Of the total, 55% represented out-of pocket expenses – transport, terminal and access costs – and 45% was time.

Mr Goswami says that as the region’s countries are mainly agriculture-based economies, the backbone transport routes in the GMS countries are important and most are now under construction.

In 2008, the ADB estimated that Asean would need $596 billion between 2006 and 2015 for infrastructure investment, or $60 billion per year on average. For transport infrastructure alone, the GMS countries may require as much as $15 billion a year between 2008 and 2012.

The major rail project to connect China with Asean is the SKRL. The cost for track alone for the missing links in all six GMS countries is estimated at $15 billion.

The 3,900-kilometre SKRL started construction in 2011. When the full line is completed in 2020, it will take around 10 hours for a train to travel from Kunming to Singapore. It has two lines: the Eastern one through Thailand, Cambodia and Vietnam; and the Western one through Thailand and Myanmar.

Similarly, India recently announced a 3,200km highway from Kolkata to Ho Chi Minh City, with the first phase into Myanmar and down to the Dawei deep-sea port scheduled to be completed by 2016. A feasibility study has been completed and construction will start soon.

Mr Goswami said that apart from agriculture, the growing small and medium enterprise (SME) sectors of the GMS countries require better logistics systems for faster and lower-cost goods distribution.

“Southeast Asia is growing very fast. There are many new entrepreneurs seeking opportunities. An integrated transport network is another key factor to enable them to connect with the world’s consumers and grow in the world market,” he said.

Whether those goods will move mainly by road or rail in the future is a subject of great debate. Rail transport is far more efficient but rail networks across the region are spotty. In Thailand the railway is one of the worst in Asia so nearly all goods transport is done by road, which pushes up the country’s logistics costs.

Road density for Asean nations also remains low, averaging about 11 kilometres per 1,000 people (in Myanmar the figure is just 2km). According to the World Bank, road density in 2009 in Laos was 17 km of road per 100 square kilometres of land area. The figure for Thailand in 2006, the last year for which data were available, was 35 km.

With movement of goods and people expected to expand rapidly after 2015 when the Asean Economic Community (AEC) is formed, already strained transport systems will be overwhelmed. Quality improvement of road networks, missing railway links, inadequate maritime and port infrastructure all need to be addressed.

Thailand and Laos have been doing their part with three bridges over the Mekong River and plans for a fourth, costing 1.4 billion baht, between Chiang Rai in northern Thailand and Bo Keo in Laos.

Both countries expect the bridge to help increase trade volume not only between Thailand and Laos, but also among all six countries in the GMS. The distance from the Thai border to China by this route will be around 245 kilometres. All bridges also facilitate the road transport from Thailand to northern Vietnam.

Vietnam expects to spend between 3.5% and 4.5% of GDP on transport infrastructure, or about $80 billion, during the 2011-20 period. Its goals are to develop a comprehensive communication system with high capacity and ensure connectivity among major economic regions.

Domestically, Chatchart Sithipan, deputy transport minister, said Thailand had already completed 12 road construction projects with a combined distance of 6,669 kilometres that connect with other Asean countries. Rest areas and transport stations on those routes are still needed.

Rail connectivity with neighbouring countries is still weak, however. The ministry requires between 600 million and one billion baht to complete the missing link between Aranyaprathet in Sa Kaeo province and Khlong Luek station, which will connect with Cambodia.

Meanwhile, work will start soon on the link between Thailand and Myanmar’s Dawei deep-sea port. The Bang Yai-Kanchanaburi motorway will cover 96 kilometres as part of a project costing 46 billion baht. An environmental impact assessment has been approved and a feasibility study is now being done.

The motorway would then be extended another 80km to Ban Phu Nam Ron near the Myanmar border to complete the link to Dawei.

Bangkok Post

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