Cambodia and Vietnam signed an agreement on Saturday that will link the two countries' railways, an important step in the creation of a Southeast Asian rail network that will connect major cities and tourist destinations between Kunming and Singapore.

China will help Cambodia with completion of the rail link with Vietnam, according to an AFP report quoting Cambodian Foreign Minister Hor Namhong. The Cambodian segment of the 5,382 kilometer (3,344 mile) rail network is expected to cost more than US$500 million - Cambodia's domestic rail network is still in disrepair after a civil war that ended in the 1990s.

Improvement of Cambodia's rail connectivity with its Southeast Asian neighbors is expected to boost the country's small but fast-growing economy. Hor Namhong said that Cambodia-Vietnam cross-border trade in the first eight months of this year totaled US$1.7 billion.

The opening of rail traffic between Cambodia and Vietnam will add to existing Southeast Asian cross-border rail connections between Singapore and Malaysia and Malaysia and Thailand. Cambodia has a rail connection to its western neighbor Thailand – with which it has recently been engaged in a violent border dispute – but it has fallen into disuse.

Tags: Cambodia, Hor Namhong, logistics, Malaysia, Singapore, Southeast Asia, Thailand, trains, transportation, Vietnam

Malaysia has called for a clear timetable for the completion of the rail network that will link Kunming with Singapore, a project that has been ongoing since 1994.

Yesterday Malaysian Transport Minister Ong Tee Keat told the rail network's 10th Special Working Group Meeting in Putrajaya, according to Malaysian media reports.

The 5,382 kilometer (3,344 mile) rail network will connect Singapore, Malaysia, Thailand, Myanmar, Laos, Cambodia and Vietnam with Kunming and other cities in Yunnan. The main obstacle to getting the network up and running is the existence of around 550 kilometers of gaps between rail lines around the region. According to Ong:


Ong said that despite concerns about rising costs of construction materials, Malaysia was not going to pressure poorer countries in the region – ie Cambodia, Laos and Myanmar – to meet the generally hoped-for completion target of 2015, although Malaysia's last gaps will be filled before then.


Once completed, the rail network is expected to greatly boost regional trade and tourism as well as contributing to poverty reduction in poorer areas throughout the region. It will also bolster Kunming's position as the primary Chinese logistics hub for trade with Southeast Asian countries.

Tags: Cambodia, Laos, logistics, Malaysia, Myanmar, Ong Tee Keat, Putrajaya, Singapore, Southeast Asia, Thailand, tourism, trade, trains, transportation, Vietnam

In recent years much attention has been paid to the rising prices of oil and commodities, much of it driven by the increasingly voracious consumption of the Chinese economy as it continues down its path toward becoming the world's largest economy.

In March and April however, rice climbed to the front of global consciousness as major rice-producing countries including India, Vietnam, Brazil and Egypt announced that they would limit rice exports in order to ensure sufficient domestic supply. Over the past few months the price of benchmark variety Thai B-grade has tripled to around US$1,000 per ton.

The decrease in supply and increase in price for imported rice has also raised concerns in Hong Kong, Singapore and the Philippines, all of which are major rice importers. The fallout has not been limited to Asia – rising rice prices have led to some North American wholesale chains limiting rice purchases as shipments of rice from Asia to North America have decreased. The jump in price also sparked riots in Haiti on April 4 that left six dead.

With rice's value to the planet increasingly visible – it is the most important crop in Asia and is the second most-grown cereal grain in the world after maize (corn) – major rice exporters are considering new ways to leverage their critical role in global food production.

On Wednesday the prime minister of Thailand, Samak Sundaravej, floated the idea of creating a cartel of rice-producing countries that could operate similarly to the Organization of Petroleum Exporting Countries (OPEC). The proposed cartel would include Thailand, Vietnam, Myanmar, Laos and Cambodia.

"We don't aspire to be like OPEC, but we hope to be just a group of five to help each other in trading rice on the world market," Bangkok-based newspaper The Nation quoted Samak as saying. Samak also told reporters that Myanmar leader General Thein Sein approved of the idea when he raised it at a meeting between the two leaders in Bangkok earlier this week. Thailand's foreign minister Noppadon Pattama said the cartel was likely to be formed during Samak's tenure as prime minister.

Successful organization of a Southeast Asian rice cartel, which is tentatively being called the Organization of Rice Exporting Countries (OREC), would have a major impact on the global rice market. Thailand is the world's biggest exporter of rice, sending around 10 million tons to international markets yearly. Vietnam – the world's second-largest rice exporter – exports roughly half that amount.

According to the Chinese government, the country's rice reserves are enough to last half a year at current consumption levels, yet fears of hoarding and further price rises in the short term are growing. Rice prices in south China have increased 10 percent in recent weeks despite frequent releases from China's state reserves to keep prices low.


Rice production is also facing a serious problem in the form of diminishing global water supplies. Conventional rice production requires large amounts of water – a fact not lost on increasingly thirsty China, which last year announced that it aims to expand its use of aerobic rice, a strain of rice that like wheat is capable of growing on dry soil. China hopes to increase its aerobic rice acreage to 30 percent of national rice acreage from its current level of one percent.

Should OREC's influence on global rice prices eventually parallel OPEC's influence on global oil prices, it is likely that the cartel will need to cultivate a friendly relationship with China, which controls the headwaters of the region's most important rivers including the Mekong and Salween rivers.

Top image: Wikipedia

Tags: aerobic rice, agriculture, Cambodia, food crisis, Laos, Mekong River, Myanmar, OPEC, OREC, rice, Salween River, Samak Sundaravej, Thailand, Vietnam

Today the prime ministers of China, Laos, Myanmar, Thailand, Cambodia and Vietnam and the head of the Asian Development Bank formally inaugurated the final link of the so-called "north-south economic corridor", a 1,800-kilometer (1,100-mile) road network connecting Kunming with Bangkok.

The former opium smuggling route which now links the Greater Mekong Subregion (Yunnan, Myanmar, Thailand, Laos, Vietnam and Cambodia) - or GMS - will dramatically improve road connectivity in one of Asia's most pristine and poorest regions. China is expected to send more tourists to the area while also bringing in natural resources and other commodities from Southeast Asia to feed its ravenous economic boom.

While speaking at the GMS summit, Chinese Premier Wen Jiabao (温家宝) called on GMS members to work together to improve the region's transport infrastructure, streamline transport and trade and increase rural development.

The road network is expected to increase Chinese investment in the region – especially in Laos, where the government has given a Chinese company a 50-year lease for a major tract of real estate near the Laotian capital of Vientiane in exchange for the building of an athletic stadium. Another Chinese company has been given 30-year rights to construct and run a large casino compound.


According to a Xinhua report, trade in 2007 between Yunnan province and the 10 member states of the Association of Southeast Asian Nations (ASEAN) reached US$3.03 billion, up nearly 40 percent over 2006.

Recent rapid growth of trade with ASEAN has made the region Yunnan's largest trading partner. According to Kunming customs statistics cited in the report. Yunnan's exports to the region were up 32.9 percent, reaching US$2.17 billion.

Yunnan is preparing to serve as China's gateway to ASEAN as the two emerging economic regions prepare for the China-ASEAN Free Trade Area (CAFTA), the first phase of which will launch in 2010. CAFTA will reduce and eliminate tariffs on goods moving between the two regions, creating the world's largest free trade area in terms of population.

GMS summit image: Xinhua

Laos highway image: International Herald Tribune

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Tags: Asian Development Bank, CAFTA, Cambodia, Greater Mekong Subregion, Laos, Myanmar, North-south corridor, Thailand, Vietnam, Wen Jiabao

Financial backers are being sought for the estimated US$15 billion regional rail network connecting Kunming with Singapore, according to Malaysian media reports.

China and the Asian Development Bank (ADB) are both being eyed as potential financiers for the project, according to statements made by Malaysian International Trade and Industry Minister Datuk Seri Rafidah Aziz today during a visit to China.

Mrs Rafidah said the ASEAN-Mekong Basin Development Cooperation Council was currently working out the financial side of the 5,000-kilometer regional rail network which will link Kunming and other cities in Yunnan with Myanmar, Laos, Vietnam, Cambodia, Thailand, Malaysia and Singapore.

Malaysia is acting as project coordinator for a feasibility study of the rail network, which has a target completion date of 2015, although it is still unclear whether this is an attainable goal.

Tags: business, Cambodia, Laos, logistics, Malaysia, Myanmar, Singapore, Thailand, trains, transportation, Vietnam

The combination of this year's dry season with the effects of two dams in Yunnan has lowered parts of the Mekong river to water levels under one meter, according to a Bangkok Post report.

The low water levels have slowed cargo movement along the Mekong - known in Yunnan as the Lancang River - to a snail's pace. Cargo boats which once took three days to travel between the ports in southern Yunnan's Jinghong and Chiang Saen in northern Thailand's Chiang Rai province are now taking one month.

The effects of this year's dry season on the Mekong are compounded by the two recently completed dams at Manwan and Dachaoshan along the Lancang River in Yunnan. There are plans for six more hydroelectric dams to be built on the river, the next one scheduled for completion in 2010.

Although water levels on the Mekong are expected to rise again after this month, it is uncertain if an annual drying of the Mekong can be avoided. Aside from becoming nearly impassable for boats, lower fish counts are being recorded on the river, which sustains the livelihood of millions of farmers and villagers in Myanmar, Laos, Thailand, Vietnam and Cambodia.

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Tags: Cambodia, dams, environment, Lancang River, Laos, Mekong River, Myanmar, Thailand, Vietnam

Countries of the Greater Mekong Subregion (GMS) met in Beijing on Tuesday and signed off on the remaining components of the GMS Cross Border Transport Agreement, which will facilitate trade amongst members of the region.

The agreement between China, Myanmar, Laos, Vietnam, Thailand and Cambodia will streamline customs inspections and visas for persons involved in transport operations as well as establishing regionwide standards for cross-border transit and commercial traffic rights exchanges.

This removal and reduction of non-physical trade and transport barriers is expected to stimulate the economies of the region, including Yunnan province, by increasing efficiency and reducing transport times on selected transport routes (see map).

The agreement has been in place since 2005 on the Laos-Vietnam border at Dansavanh and Lao Bao. Six new GMS border crossings will be included in the agreement this year.

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China receives first oil delivery via Mekong River

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Tags: business, Cambodia, Cross Border Transport Agreement, GMS, Laos, logistics, Myanmar, Thailand, transportation, Vietnam

Dancing in Nanning: China and ASEAN

It's been a busy week in the courtship between China and the Association of Southeast Asian Nations (ASEAN). Malaysia announced that it is donating used rail tracks worth more than US$2 million to Cambodia to expedite completion of a China-ASEAN railway network that will connect Kunming with Singapore.

On Monday the first shipment of tracks left Malaysia for northwest Cambodia, where they will be used to fill in a 48-kilometer (30 mile) stretch of missing rails.

The US$15 billion rail network will cover 5,000 kilometers (3,000 miles) and will connect Kunming to cities and towns in Myanmar, Laos, Vietnam, Cambodia, Thailand and Malaysia, as well as to Singapore. The project is expected to be completed by 2015, by which time China and all the members of ASEAN will have entered the China-ASEAN Free Trade Area. With 1.8 billion people the FTA will be the world's largest economic bloc in terms of population.

Meanwhile, in neighboring Guangxi Zhuang Autonomous Region, the China-ASEAN Business and Investment Summit was held in the capital city of Nanning. Trade between China and ASEAN member countries, which also include Brunei, Indonesia and the Philippines has been growing more than 20 percent annually since 1991.

One of the major announcements at the summit was a plan for US$5 billion in preferential loans by the Chinese government to assist Chinese enterprises in establishing joint venture operations in ASEAN states.

China-ASEAN trade in 2005 totaled US$13 billion. At the Nanning summit, Chinese Premier Wen Jiabao said he expected trade volume between China and ASEAN to reach as much as US$200 billion by 2010.

Tags: ASEAN, business, CAFTA, Cambodia, Laos, Malaysia, Myanmar, Thailand, Vietnam, Wen Jiabao