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Connecting Malaysia to China's "Iron Silk Route"

Editor: Li Kun 丨CCTV.com

12-24-2015 14:25 BJT

By Mathew Maavak, a doctoral researcher in Security Foresight at Universiti Teknologi Malaysia (UTM)

Asia is experiencing a high-speed rail boom, while China stands on the verge of completing 19,000 kilometers of operational High-Speed Railway (HSR) lines, representing 60 percent of total global capacity.

 
In just eight years, China has built the world's largest network of HSRs. One notable project could transport freights and passengers between Beijing and Moscow in 33 hours.

Beijing is negotiating HSR projects with more than two dozen countries, fulfilling the age-old dream of connecting transoceanic and transcontinental trading routes and hubs into a single matrix.

The Trans-Asian Railway (TAR) – aka the "Iron Silk Road" – is being transformed from a 50s-era United Nations (UN) dream into a concrete Chinese project today. One of TAR’s southern spurs would create economic synergies between China and the Association of Southeast Asian Nations (ASEAN).

The 10-member ASEAN, with a combined GDP of US$ 2.6 trillion, has surpassed Japan to become China's largest trading partner.  The ASEAN-China trade comprised 13 percent of global trade in 2010, and this percentage is growing as rapidly as the economies of East Asia.

Infrastructure is the locomotive of development, and China possesses uncanny foresight in laying down future tracks. Prior investments in rail technologies are generating cutting-edge dividends.

The Beijing-based CRRC (China Railways Rolling-stock Corporation), the country's largest train manufacturer, has recently unveiled a new 690-kilowatt traction system for bullet trains that may exceed 500km per hour.

Even Germany, the traditional pacesetter of railway technologies, may soon be outsourcing components from Chinese manufacturers.

South East Asian Spur

Malaysia, one of the most-developed economies in ASEAN region, is experiencing a rail boom, particularly in the Kuala Lumpur-centered Klang valley.

The Malaysian government may spend up to RM160 billion (CNY 240 billion) on rail-related projects until 2020, but facing a shortage of railway engineers, technical support and funding for projects, such as the 350km Kuala Lumpur-Singapore High-Speed Rail (HSR) line.

The link will cut travel time between both metropolises to 90 minutes, compared to the current 4-5 hour journey by road.

Ticket prices are projected to cost under RM400 for a return-trip – a highly economical rate considering the RM55 price tag for a one-way Express Rail Link (ERL) that connects the city center with Kuala International Airport, 57km away.

It is a curious comparison that prompted AirAsia founder Tony Fernandes to quip that it was "cheaper to fly." 

The KL-Singapore link, expected to cost RM40bil (S$14.8 billion), will benefit both nations, which bring the two metropolises closer, and may draw MNCs (multinationals), especially Chinese companies, to consider Kuala Lumpur as a regional motherlode vis-a-vis Singapore.

It could alleviate rising real estate and office overcapacity bubbles in Kuala Lumpur, while relieving the need for expensive land reclamations in Singapore. The rail line would decrease congestion along the Johor Baru-Singapore Causeway.

Business meetings would amount to crossing gleaming new tracks to the other side of the same city.  Hence, Chinese companies are wasting no time seizing opportunities.

A China High-Speed Railway Showcase was held in Kuala Lumpur to demonstrate the country's expertise in research, engineering, equipment manufacturing, construction, technology innovation, operations and maintenance, as well as personnel capacity building.

China's high-speed electric multiple units (EMU) and inter-city train systems were highlighted at the event.

Japan raises stakes; China lowers costs

China is facing stiff competition from Japan in the Asian HSR market. Fresh from bagging a $15 billion project in India, Tokyo is eyeing the Kuala Lumpur-Singapore HSR contract, backed by the technical prowess of Hitachi and Mitsubishi Heavy Industries.

The Japanese package however is not as generous. The Chinese HSR may cost half as much, and could be completed as early as 2020, if construction begins by 2016 as scheduled.

It took Chinese companies only three years to complete the 1,318km Beijing-Shanghai HSR line in 2010. Beijing's infrastructure projects worldwide are recognized for its common sense modes of financing.

When China agreed to fund the dual-track Bankok-Nong Khai, Bangkok-Map Ta Phut, and Kaeng Khoi-Map Ta Phut routes in Thailand, loan repayments were provisioned in the form of rice and rubber!

Such flexible financing schemes wean the region away from a dollar dependency, and ring-fences long-term projects against the vagaries of currency fluctuations.

Furthermore, China has been busy positioning itself in Malaysia and the region for some time. In 2013, its leading railway manufacturer, China South Locomotive and Rolling Stock Corporation, began erecting a manufacturing and maintenance center for the ASEAN market in Batu Gajah, Malaysia. 

China is the main supplier of rolling stock in Malaysia, cornering 80 percent of the market. Accordingly, China enjoys an advantage over the KL-Singapore HSR link.

Completing the Iron Silk Road

The Kuala Lumpur-Singapore link is part of a wider Southeast Asian HSR blueprint, which stretches from Kunming, China to Singapore via Laos, Cambodia, Thailand and Malaysia. Nearly all regional HSR projects involve Chinese assistance.

The next phase of the Southeast Asian spur may entail a HSR line for the northern half of the existing Bangkok- Singapore rail link. The primary obstacle happens to be an Islamic secessionist movement in southern Thailand.

However, judging by China's track record in global infrastructure development, Beijing may temper geopolitical bumps in a way other entities could not!

Faster Chinese trains will mesh with Beijing's "Belt & Road" initiative that link infrastructure, trade and investment networks throughout Asia, Africa and Europe. The Iron Silk Road is a priority project for Asia.

According to the World Bank, emerging economies have only earmarked $400 billion on infrastructure projects. Yet, Asia needs $15.8 trillion in infrastructure funding over the next 15 years to maintain its growth trajectory.

So, it was prescient for Beijing to establish the Asian Infrastructure Investment Bank (AIIB).

 

( The opinions expressed here do not necessarily reflect the opinions of Panview or CCTV.com. )

 

 

Panview offers a new window of understanding the world as well as China through the views, opinions, and analysis of experts. We also welcome outside submissions, so feel free to send in your own editorials to "globalopinion@vip.cntv.cn" for consideration.

Panview offers an alternative angle on China and the rest of the world through the analyses and opinions of experts. We also welcome outside submissions, so feel free to send in your own editorials to "globalopinion@vip.cntv.cn" for consideration.

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