AEC AND CHINA-ASEAN CONNECTIVITY PLAN IN THE REGION
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1 The 7 th China-ASEAN Think-Tank Strategic Dialogue Forum Nanning, China, Sept 2014 AEC AND CHINA-ASEAN CONNECTIVITY : CASE STUDY OF CHINA S RAILWAY PLAN IN THE REGION Dr. Aksornsri Phanishsarn Associate Professor, Faculty of Economics Thammasat University Director of Thai-Chinese Strategic Research Center (TCRC) National Research Council of Thailand (NRCT) THAILAND Dr.Aksornsri Phanishsarn 1
2 China-ASEAN Community of COMMON Destiny Dr.Aksornsri Phanishsarn 2
3 ASEAN-China FTA (ACFTA) since 2010 ASEAN Economic Community (AEC) in the year 2015 Economic Profiles of ASEAN Nations (2013) Source: Dr.Aksornsri Phanishsarn 3
4 Economic Potentials of ASEAN ASEAN Economic Community : AEC Dr.Aksornsri Phanishsarn 4
5 AEC BY 2015 Dr.Aksornsri Phanishsarn 5
6 AEC and Beyond 1. Single market, single production base 2. Free movement of skilled labors 3. Integrate with the global economy 4. Constructive engagement ASEAN-EU FTA ASEAN-Japan CEP ASEAN China FTA ASEAN India FTA AEC ASEAN South Korea FTA RCEP ASEAN Australia New Zealand FTA In pipeline Source: Bryan Cave (Thailand) Adapted from Department of Trade Negotiation, MOC RCEP: Regional Comprehensive Economic Partnership Dr.Aksornsri Phanishsarn 6
7 IMPORTANCE OF ASEAN ASEAN = China s 3 rd largest trading partner ASEAN = 600 million consumers with higher and increasing income and purchasing power ASEAN s GDP > 1.86 trillion US$ ASEAN s Trade > 2 trillion US$ ASEAN s FDI > 76 billion US$ China is the largest trading partner of ASEAN. ASEAN is the third largest trading partner of China. Dr.Aksornsri Phanishsarn 7
8 PROPORTION OF ASEAN AND THAILAND S TRADE WITH CHINA China is Thailand s largest trading partner since Dr.Aksornsri Phanishsarn 8
9 China-ASEAN Trade Statistics Dr.Aksornsri Phanishsarn 9
10 China-ASEAN Investment Dr.Aksornsri Phanishsarn 10
11 China-ASEAN Tourism Dr.Aksornsri Phanishsarn 11
12 ASEAN PLUS Dr.Aksornsri Phanishsarn 12
13 : VIA LAO PDR Only Vietnam, Lao PDR and Myanmar share direct borders with China. Majority of trade share with China occurs with Malaysia, Singapore and Thailand whose main freight transportation t ti is via ocean shipping. China-ASEAN railway connectivity will significantly boost economic ties within the region. The 7 th China-ASEAN Think-Tank Strategic Dialogue Forum, Nanning, China, Sept 2014 Dr.Aksornsri Phanishsarn 13
14 CONCEPT OF RAILWAY LINKAGE BETWEEN CHINA AND ASEAN * The concept of railway linkage between China and ASEAN nations has been in place for over five decades. * The study of Trans-Asian Railway (TAR) project by ESCAP in 1996 for the Indo-China and ASEAN sub-region identified several routes, all of which linking Kunming and Singapore. * However, the Singapore-Kunming Rail Link or SKRL term had only begun to be used in the feasibility study by ASEAN in 1995 and by ADB through the GMS program. * Recently, China has been actively promoting the rail link, as it stands to gain from this connectivity both in terms of economic and strategic importance. * This move by China is likely to speed up the implementation, particularly the missing link in Lao PDR. The 7 th China-ASEAN Think-Tank Strategic Dialogue Forum, Nanning, China, Sept 2014 Dr.Aksornsri Phanishsarn 14
15 The Singapore-Kunming Rail Link or SKRL All routes link Kunming and Singapore and have a common section from Bangkok to Kuala Lumpur and Singapore. Case study of the SKRL route via Lao PDR. Dr.Aksornsri Phanishsarn 15
16 Components of the SKRL Route via Lao PDR Route Section Status Route Length Track Gauge (km.) (mm.) PR China Kunming- Yuxi In operation Yuxi-Jinghong-Mohan Missing link Lao PDR Boten-Vientiane Vientiane-Tha Naleng Missing link Missing link Thailand Nongkhai- Padang Besar In operation 1, Malaysia& Singapore Padang Besar-Singapore In operation Sub Total In operation Missing link 2,642 1,061 Total 3,703 Remark: 1-Route length shown in the above table came from various sources. For links whose data is not available, route length is obtained from Google Map using highway distance between sections as indicative figure only. Actual length of these missing links will not be known until detailed design is carried out. 2-Track gauge for the missing link in Lao PDR is shown to be 1435 mm gauge which will provide continuity to Chinese railway. Dr.Aksornsri Phanishsarn 16
17 CASE STUDY OF SKRL ROUTE VIA LAO PDR links four capitals and a number of major cities Total length 3,700 km. 2,642 km. in operation 1,061 km. missing link MoU China and Lao PDR in 2010 to build the 421 km. missing link in Laos Joint Venture (70:30) Standard gauge Chinese railway technology The 7 th China-ASEAN Think-Tank Strategic Dialogue Forum, Nanning, China, Sept 2014 Dr.Aksornsri Phanishsarn 17
18 Missing Link in Lao PDR Since the 2010 MoU, construction has not started. Changes in development scheme. China s representative had been changedfromministryofrailwaysto Ministry of Commerce. Change from a joint investment (China/Lao PDR) to a loan (by China to Lao PDR). In a process of negotiation on terms of loan. Missing Link in China No project commitments to construct this section in the near future, subject to development of new rail link in Lao PDR and railway development in northeastern part of Thailand. The 7 th China-ASEAN Think-Tank Strategic Dialogue Forum, Nanning, China, Sept 2014 Dr.Aksornsri Phanishsarn 18
19 The 421 km. missing link in Lao PDR cost about 7 billion US$ (GDP of Lao PDR is about 9 billion US$) Revenue generated from the railway service will likely to be small in comparison to a huge capital required. Significant benefits will be better access to Lao PDR s rich natural resources such as minerals and forestry reserves. Some forms of financial assistance from China may be required. The 7 th China-ASEAN Think-Tank Strategic Dialogue Forum, Nanning, China, Sept 2014 Dr.Aksornsri Phanishsarn 19
20 Railway alignment runs thru vast forestry reserve. Possible negative impact on environmental issue such as lost in natural habitat has to be minimized. Land acquisition and relocation of houses in the planned railway corridor, if done carefully can provide opportunity for better town planning. The 7 th China-ASEAN Think-Tank Strategic Dialogue Forum, Nanning, China, Sept 2014 Dr.Aksornsri Phanishsarn 20
21 Fortunately, China has more stable and close relations with the Laos Government. Construction of the railway of this scale requires large labor force of various skills. Lao PDR has low population density at 28 persons per square kilometers (6.5 million total population). Thousands of foreign workers in certain areas can outnumber local residents and may cause anxiety to some extent. A sensitive issue that the project contractor/developer has to handle carefully with local community. The 7 th China-ASEAN Think-Tank Strategic Dialogue Forum, Nanning, China, Sept 2014 Dr.Aksornsri Phanishsarn 21
22 Railway network in ASEAN is mainly meter gauge (1,000 mm.) The network in China is mainly standard gauge (1,435 mm.) The 7 th China-ASEAN Think-Tank Strategic Dialogue Forum, Nanning, China, Sept 2014 Dr.Aksornsri Phanishsarn 22
23 Agreement on rail access charge. International insurance has to be in placed especially for freight transport. Custom clearance and formality, immigration i and quarantine (CIQ) is another issue that could impede smooth operation of cross border train. The 7 th China-ASEAN Think-Tank Strategic Dialogue Forum, Nanning, China, Sept 2014 Dr.Aksornsri Phanishsarn 23
24 *ASEAN is geographically and strategically located as a major transport route in the world. *With upcoming AEC in 2015, China tends to benefit from a closer connectivity with the enlarged markets of AEC. *In this regards, railway connectivity could enhance China s trade, investment and tourism with ASEAN. *Thus, China will benefit greatly from railway connectivity with ASEAN for both economic and strategic importance. *Need to bridge various missing links. *For the missing link in Lao PDR, financial assistance is required. Dr.Aksornsri Phanishsarn 24
25 Implementation of regional railway connectivity involves with many challenges ranging from technical, operational, financial, social, security to political aspects. The entry into force of any related Intergovernmental Agreements shall provide institutional framework for all parties to work on. Sincerity and concrete commitment is crucial for this ambitious China-ASEAN rail link plan. The 7 th China-ASEAN Think-Tank Strategic Dialogue Forum, Nanning, China, Sept 2014 Dr.Aksornsri Phanishsarn 25
26 Thank You ขอบคณค ขอบค ณคะ com Dr.Aksornsri Phanishsarn 26
27 Dr.Aksornsri Phanishsarn 27
28 Dr.Aksornsri Phanishsarn 28
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