Malaysia to tap into the growing Asean rail network

The 1,000km long Lao-China Railway has transformed how goods and people move across the Mekong region, with spillover benefits for Malaysia, Thailand and other Asean countries. Seen here is a passenger trainset (right) at Laos' Luang Prabhang station, while cargo wagons are parked at the sidings to be moved according to schedules that do not clash with passenger services. — MENG YEW CHOONG/The Star

HISTORY was made on June 27, 2024, when ambassadors and representatives from China, Laos, and Thailand gathered at Kontena Nasional’s yard in Petaling Jaya in Selangor, Malaysia, to send off the inaugural Asean Express, a cargo train hauling 20 wagons laden with various goods from Malaysia for the export market.

The cargo wagons left Malaysian territory at Padang Besar, Perlis, before heading in to Bangkok, crossing the Mekong River that divides Thailand and Laos, and entering Lao territory at the Thanaleng freight yard near Vientiane.

For the containers to make it past Laos, physical transfer of the containers from the wagons at the Thanaleng cargo yard is necessary as the Lao-China railway runs on standard gauge (1,435mm), while the State Railway of Thailand (SRT) runs on metre gauge (1,000mm), similar to KTM Bhd’s (KTMB) gauge.

From Thanaleng, the Lao-China railway (LCR) does the job of moving the containers to Kunming, which is Yunnan province’s rail hub in China, a distance of around 1,024km. The train will eventually end up in Chongqing, a further 900km away, so that the goods can be further disseminated all over China, as well as moved to Europe.

In a statement during the launch, KTMB said the Asean Express Freight Train Service embodies a transformative leap in regional logistics, linking Asean (primarily Malaysia, Thailand, and Laos) to China, a distance of over 2,000km, with seamless railway connectivity.

The 1,000km-long Laos-China railway has introduced an attractive option to move transboundary freight from Malaysia across Thailand and Laos to China, and to the rest of the world. Seen here is a cargo handling yard at Vientiane South freight station, where a rotator truck can be seen loading a 20ft container onto the freight wagon. — MENG YEW CHOONG/The Star

“This service facilitates swift and efficient transport of diverse cargo, from perishable goods to industrial materials, ensuring reliable deliveries while minimising environmental impact,” said KTMB CEO Datuk Mohd Rani Hisham Samsudin, to Sunday Star.

The Lao-China Railway

Moving cargo by rail to China now takes no more than nine days compared with the sea passage which needs between 14 and 21 days. This land route also presents cost savings, said Mohd Rani.

This is only possible with the completion of the Lao-China railway (LCR), a 1,024km-long standard gauge track from Vientiane to Kunming that was opened for service on Dec 3, 2021, after several years of construction.

With 422km of the 1,024km network running through Laos, the LCR, which is part of the broader Laos-China Economic Corridor, is practically a lifeline for Laos, which is mired in poverty following prolonged periods of war and internal strife. On Dec 4, 2021, a day after opening the railway for passenger service, Lao Prime Minister Phankham Viphavanh opened the Vientiane Logistics Park, one of a total of nine logistics centres in Laos.

In all, the LCR will be able to fit in 32 stations, of which 21 have already been built, with 10 being passenger stations, and 11 cargo stations.

Cross-border trade using rail will be a big thing from now on, with approximately 20,000 TEUs available from the China-South East Asia market to be transported by rail annually, said KTMB, adding that the Asean Express is capable of moving 40 TEUs per trip to China. (A TEU is a measure of volume in units of 20-foot long containers.)

For landlocked Laos, the only South-East Asian nation not to have a seaport, the construction of the LCR has been a tremendous boost to its economic potential, as it is not only connected to China now but is also ready to be connected to Vietnam, Cambodia, and Myanmar when funding becomes available.

Before the completion of the standard gauge track within Laos, the only thing that qualified as railway was a 4km metre gauge track that brought cargo in from Thailand and vice versa.

The train currently operating between China and Laos has already reduced the transportation time for Thai goods from Bangkok to Kunming from two to three days to just 15 hours. Adding to that immense gain in efficiency are improvements in customs clearance processes by Chinese, Lao, and Thai authorities.

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While waiting for the rest of the Pan-Asian rail network to take shape, Thailand is already tapping this improved connectivity with China. Last year, Thailand exported almost US$32bil (RM150.7bil) worth of goods to China, consisting of fruits – including durian – and rubber products, while imports from China totalled US$65.3bil (RM306.3bil).

DP World Asia Pacific, a global logistics player with a strong presence in Asean, is looking forward to reduced transportation costs and faster delivery times, according to its executive vice-president for South-East Asia. In his speech at the Asean Express flag off, Xavier Eiglier said this “cargo superhighway” will promote trade and commerce across the region and all the way to China.

“The economic impact of this rail network is clear. By connecting major cities and industrial hubs, we are facilitating a swift and efficient movement of goods, with reduced transportation costs and delivery times. As a result, we can enable businesses to tap into new markets and opportunities, fuelling economic growth and job creation.

“Beyond an infrastructure project, this is also an important step towards sustainable development. By facilitating and prioritising efficient rail travel, we are taking a decisive step towards reducing our carbon footprint,” he said.

Long road to seamless passage

The electrified LCR cargo trains move at speeds of up to 120kph, while the medium-speed passenger trains serving the line are capable of hitting 160kph, reducing the journey time from Vientiane to Kunming to a mere 10.5 hours, including immigration clearance time. If the time for immigration is not factored in, the train actually completes the journey in just 8.5 hours.

Viewed from a broader perspective, the long-awaited Pan-Asian railway is slowly but surely taking shape, with various governments in the Mekong region cognisant of the need to upgrade their rail infrastructure for wider mutual benefit, including being seamlessly connected to China.

To be sure, it was not all smooth sailing when the idea of a Lao-China rail connection was raised nearly 25 years ago, but after the dust settled, Laos is now liberated from its geographical disadvantage and stands to gain even more as more rail links are envisioned for the Asean region.

The first talks about the LCR began in 2001, with Somsavat Lengsavad, a former Lao deputy prime minister credited as the prime mover for the project in his country. Progress was painfully slow initially, as it was only in October 2010 that plans were announced for a 530km standard gauge railway linking Vientiane and Xishuangbanna in China’s Yunnan province.

Between January 2021 and December 2021, the LCR transported over one million passengers and 500,000 tonnes of cargo, according to the operator of the line, the Laos-China Railway Co Ltd. This figure increased exponentially quickly, with data provided in early March 2024 showing the railway has carried over 30.2 million passengers since its opening, and 34.24 million tonnes of cargo, with cross-border shipments exceeding 7.8 million tonnes.

Responding to this, China increased the number of daily passenger trains from 35 to 51, while Laos added eight more daily passenger services to the four already running.

Naturally, observers are also hopeful that Malaysia’s East Coast Rail Link (ECRL) – which is due to enter service in three years to provide connectivity from Kota Baru to Port Klang – will see a similar warm reception from both logistics companies and passengers.

Geng: 'China took the lead in establishing a comprehensive strategic partnership with Asean, with the vision of building a closer China-Asean community with a shared future, working closely with Asean to bring development and prosperity.' — MENG YEW CHOONG/The Star

Responding to these encouraging developments, Geng Hailing, Counsellor of the Chinese Mission to Asean, said: “China took the lead in establishing a comprehensive strategic partnership with Asean, with the vision of building a closer China-Asean community with a shared future. Here, China is working closely with Asean to push forward practical cooperation in all areas to bring development and prosperity.”