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ASEAN eyes rail connectivity to boost regional trade amid global tensions
KUALA LUMPUR: As global trade faces challenges from tariffs amid renewed rivalry, the Association of Southeast Asian Nations (ASEAN) is turning its attention inward to strengthen regional connectivity.
Experts said expanding intra-ASEAN trade hinges on improving rail links, with collaboration among member states key to unlocking the success of the ASEAN Rail Corridor that was launched last year.
A seamless and reliable regional rail freight service is seen as vital to boosting the bloc's total trade volume, which is projected to reach US$4.5 trillion by 2030.
LAOS-CHINA RAILWAY
For example, the Laos-China Railway – which links Vientiane to Kunming – was officially launched in December 2021.
Built at a cost of almost US$6 billion, it is part of China's Belt and Road Initiative. The Laos section spans over 400km, while the China stretch to Kunming spans almost 600km.
Rail experts said that this may usher in a new era in rail travel for ASEAN.
"(It could be) a high-speed train that you could take … from Beijing all the way down through to Vientiane, all the way down to Bangkok, all the way down to Kuala Lumpur, and possibly divert through an undersea tunnel to Jakarta. I think it's not impossible to imagine that at all,' said Suhaimi Yaacob, chief corporate officer of Malaysian railway company KTMB.
Laos, the only land-locked country in ASEAN, has already benefited significantly since the railway began operations.
Last year, tourist arrivals in the country increased more than 30 per cent to 4 million.
The Thanaleng Dry Port, which was the first international inland port in Laos, began operations in tandem with the railway launch.
Since then, it has handled more than 200,000 twenty-foot equivalent units (TEUs) – a general unit of cargo capacity that represents the space occupied by a standard 20-foot shipping container.
Last year, the volume of TEUs it handled grew by 30 per cent from 2023.
Shipments passing through Thanaleng are bound not only for China but also markets in the Middle East, Central Asia, and Europe.
A notable technical challenge at the port is the difference in rail gauges between Laos and Thailand.
Laos' rail system, built by China, uses a standard gauge, while Thailand and Malaysia use a metre gauge. This means cargo arriving at Thanaleng must be transferred to another train continue its journey.
On average, it takes about two to three minutes to move a single container box.
In rail transport, track gauge refers to the distance between the two rails of a railway track. Several different track gauges exist worldwide, presenting a barrier to wider seamless operation on rail networks.
Nevertheless, Thanaleng Dry Port's managing director Sakhone Philangam told CNA the gauge change is manageable.
"This location is ideal for consolidation (of goods). For example, you cannot (always) match the timing, (if) there is a delay in connection, we can always store your container here safely," he said.
In April, the dry port signed a memorandum of understanding with Malaysia's soon-to-be-operational Perlis Inland Port, located at the Thai-Malaysian border.
Malaysia is investing over US$90 million in the facility, which is expected to handle up to 300,000 container boxes annually when it is ready in mid-2026.
ASEAN RAIL EXPRESS STALLS
But Malaysia, the chair of ASEAN this year, is facing significant obstacles in facilitating smooth rail trade.
Disparate standards in cross-border customs clearance led to the double handling of cargo on the ASEAN Rail Express – a cargo rail service launched mid last year that aims to connect Malaysia to the Chinese city of Kunming via Thailand and Laos.
The need to change train gauges mid-route also added to delays and confusion. As a result, the ASEAN Rail Express failed to take off – the service was suspended barely a few months after its launch.
'If you need to physically check the cargoes in each border, that will slow down the process,' noted Malaysia's Transport Minister Anthony Loke.
In May, Loke met with his Thai counterpart in Bangkok to form a joint ministerial committee tasked with improving trade facilitation for goods in transit.
The cooperation plan includes technical collaboration and joint procurement of trains to achieve better value.
The Thai authorities have also pledged to ease legal obstacles and streamline procedures at customs.
'Every country wants to protect itself from competition but we must look at the bigger picture when we are facing this kind of geopolitical tension right now,' said Loke.
'Among member states of ASEAN we have to break down barriers, we have to cooperate and corroborate among each other more so that we can grow together. ASEAN cannot look at each other as a threat. We have to look at each other as partners.'
Industry players told CNA they are looking forward to the resumption of the ASEAN Rail Express, which could reduce travel time by up to 40 per cent compared with sea shipping.
'It's probably the cheapest way for us to export our products to either Thailand, Malaysia or maybe Singapore,' said Stanley Yu, deputy CEO of Shanghai Guohui Green Technology.
Watcharaporn Phootong, CEO of Kuala Lumpur-based food and beverage exporter Andamex, said: 'I prefer to use train – save more time, save more cost, and reduce the damage that may be incurred. Even though I have to pay a bit more, it's a good trade off.'
