Railways Must Look East
In the highly competitive world economy of today, transport cost is a significant determinant of competitiveness, which makes an efficient surface transport network a concomitant for better economic integration. Somehow, the surface transport networks in several parts of Asia continue to be fragmented, and consequently their potential as instruments of economic growth at the regional level has not been fully realised.
The idea of linking the railway networks of Asia, to provide international connections—not only between the region’s countries but also with the Middle Eastern and European systems—was first expressed in the ’60s by initiating the Trans-Asian Railway (TAR) project. The objective was to shorten transit times between nations and regions and serve as a tool for their economic growth through expansion of international trade. Besides, because transporting goods by rail is faster than through the sea, rail connectivity was expected to reduce transport cost substantially. Rail can also carry a much higher volume of freight traffic than road.
The TAR envisages the creation of an integrated freight railway network across Europe and Asia. When the idea was conceived, the objective was to provide a continuous 14,000km rail link between Singapore and Istanbul, with possible onward links to Europe and Africa. Today, the network has about 81,000km of rail routes—the 12,600km Southeast Asia corridor, the 32,500km Northeast Asia corridor, the 13,200km Central Asia and Caucasus corridor and the 22,600km South Asia-Iran-Turkey corridor—and connects 28 countries.
In a major policy decision, the Indian Railways has agreed to participate in the TAR link between Europe and Southeast Asia. The project, being considered by the United Nations Economic and Social Commission for Asia and the Pacific under the Asian Land Infrastructure Development Project, will help identify and evaluate the development and operation of a network of routes between South Asia and Europe. The routes are supposed to run via Bangladesh, Myanmar, India, Pakistan, Iran and Turkey. The growth of international trade, continued surge of containerised freight through the ports of Asia-Pacific and the recognition of greater regional integration are encouraging countries to seek efficient connectivity through transport networks. It provides the railways of the region an opportunity to upgrade their existing infrastructure with the aim of defining and operating international corridors.
With this in mind, the countries involved decided to define a framework within which they can discuss and plan the future expansion and operation of the Trans-Asian Railway Network. The Ministerial Conference on Transport held in Korea in 2006 adopted a Regional Action Programme for Transport Development in Asia and the Pacific. It aimed to promote an integrated approach to transport planning with a view to facilitating efficient logistics in the region. Accordingly, 18 member states signed the inter-governmental agreement on the Trans-Asian Railway Network that formalises the coordinated development of TAR. Other countries, including India, signed the agreement in the subsequent years. It envisages completion of the ambitious project by 2025.
The economies of south and Southeast Asia have been growing rapidly due to easing of trade barriers, increase in foreign direct investment and greater integration with the global economy. However, intra-regional trade and investment has been relatively limited because of various bottlenecks in trade infrastructure. Increased connectivity between the two sub-regions can help improve industrial efficiency and productivity, expanding the market size and ensuring long-term economic prosperity.
India has demonstrated its economic and technological capabilities for further integration with the regional and global economy. Myanmar being the only land bridge between the Association of Southeast Asian Nations (ASEAN) nations and India, its importance as a regional logistics and trading hub cannot be overstated. Rail connectivity between India and Myanmar is completely absent. Indian Railways has, therefore, agreed to build a 350km route between India and Myanmar, which will require about `3,000 crore, part of which will be borne by Myanmar. In the first phase it will take up construction of 97km new rail connection between Jiribam and Tupul (Manipur) costing `728 crore. Later, this link will be extended to Moreh inside Myanmar territory. These links would eventually be integrated into the proposed Trans-Asian Railway Network.
With the construction of a rail corridor between India and Myanmar, India will be linked by rail to Southeast Asia, and eventually to China, its largest trading partner in Asia, registering about $ 60 billion worth of trade last year alone. The recent political reform process in Myanmar now makes possible rail and road connectivity between south and Southeast Asia that did not appear feasible a few years ago. The implementation of the ASEAN-India Free Trade Agreement has further facilitated intra-regional trade and investment liberalisation. It is particularly important in the context of India’s Look East policy which cannot be operationalised without the participation of the Northeast.
For various historical and political reasons, the Northeast has remained cut off from its economic and social ties with neighbouring Myanmar, Bangladesh and China, and has had to depend for almost all its supplies from mainland India only. The new rail connectivity, that shall be a part of the TAR network, will help transform the region’s economy, serving as a corridor for movement of raw material, semi-finished and finished products. It can also play a pivotal role in the development of commerce and cultural exchange with the Southeast Asian countries. Manipur can then become one of the key links not only between India and Myanmar but also between the whole of South Asia and Southeast Asia.
The new Indian government has realised the urgency of fast-tracking infrastructure development of the region by appointing a former Army chief to head the ministry of north east development. This will accelerate the progress of various projects incorporated in the North Eastern Region Vision Document 2020 aimed at promoting the flow of peoples and goods, expansion of communication networks, opening up of markets and generating employment.
The author is a former MD of Railway Finance Corporation.