Rail transports about 7 per cent of global passengers and 6 per cent of global freight but accounts for only around 1 per cent of transport emissions – despite diesel providing 53 per cent of the energy that powers the global rail industry.
Rail transport’s full potential emerges when networks in different countries harmonise interoperability and standards. However, rail networks in Southeast Asia are fragmented and operate under different standards, making it difficult and time-consuming to transport goods across borders.
The region’s geography also makes building railways difficult and expensive. This is one reason Southeast Asian countries have prioritised infrastructure spending on projects such as roads that are cheaper and have a faster return on investment.
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China-Laos railway to start cross-border passenger service as ticket sales begin
China-Laos railway to start cross-border passenger service as ticket sales begin
If Southeast Asian countries were to collectively purchase Chinese rail technology, it would increase their bargaining power for better prices, terms and ability to require the adaptation of Chinese rail technology to better suit the conditions of the region. This would also help harmonise business operations, operational services and information processes.
Beyond the technical and institutional capabilities required for Southeast Asian countries to expand and interconnect their rail networks, increased financing is needed. Most rail projects are cash-hungry and revenue-poor. Investment in the rail industry can struggle to get good returns as rail assets are expensive to procure, build, maintain and overhaul.
The China-Laos railway: a white elephant or the way out of poverty?
The China-Laos railway: a white elephant or the way out of poverty?
The right to use the land over or under railways is a valuable asset which can be used to finance rail projects. Additionally, land value capture in railway investment requires sophisticated taxation so the windfall gain of landowners from a railway investment can be used to offset the investment cost and fund other important public services.
Being able to capture the economic value of improved access and reduced pollution, and redistribute those benefits, can make the rail sector more attractive to investors. Private sector investment, particularly from multilateral development banks, is key for accelerating and expanding rail development and connectivity.
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Is Indonesia’s China-made railway on track to launch? Jakarta says it’s ‘under control’
Is Indonesia’s China-made railway on track to launch? Jakarta says it’s ‘under control’
Potential approaches include raising awareness of the benefits of rail freight, highlighting successful examples of rail freight in other regions such as Europe and China, securing commitments from government and businesses to invest in rail freight and establishing a Southeast Asia rail freight fund.
In addition to more investment, greater international support is needed in policies, organisations and capacities for sustainable transport. Dialogue is key to ensure that investment and capacity-building support future policies rather than past priorities.
Yuen Yoong Leong is director of sustainability studies at the UN Sustainable Development Solutions Network and a professor at Sunway University
Wing Thye Woo is vice-president for Asia at the UN Sustainable Development Solutions Network, a research professor at Sunway University and visiting professor at the University of Malaya